I often get asked questions like, “Where did the idea for REA come from?”, “Why did you start REA?”, or “Why Property Accounting?” To answer these questions, we have to go back about 21 years.
When I started college, I didn’t know what I wanted to major in, but I was interested in business. After talking to a couple of my uncles, I was encouraged to pursue a degree in accounting, as it was the ‘language of business.’ Assuming I pursued the CPA, I would graduate with a professional credential that would provide job security (solid advice for a naïve 18-year-old, I’d say!). Fast forward five years, and I had received both undergraduate and master’s degrees in Accounting from Arizona State University.
Post-graduation, I believed there were only two tracks—audit or tax with the Big 4. Although there were plenty of other options, that’s all I was focused on. I spent the next six years in public accounting (three years in audit, three years in M&A financial due diligence), earning my CPA and eventually the CFA Charter holder designation.
Key checkpoint #1 – I’m now a CPA.
While studying for the CFA exam, I became very interested in real estate (can’t recall why) and was led to the book Rich Dad Poor Dad. I couldn’t get enough of it. I vividly remember my key mindset shift when I read this sentence from the book: “Why climb the corporate ladder when you can own the ladder?” It was at that moment I decided to start investing in real estate to create passive income, and suddenly, I wasn’t sure if I wanted to be a partner at an accounting firm.
Sometime in late 2012/early 2013, my then-fiancée (and now wife) Kim (who had heard me talking about real estate for several years at that point) heard an ad on the radio that went something like, “Learn how to make more money than you could ever dream up flipping real estate with no money down.” It just so happened the group running that ad was hosting an event in River North (Chicago) directly on my walk home from work, so Kim said we should go, and I agreed. About nine months later, we bought our first ‘flip property’ and our first rental property. We proceeded to keep flipping single-family homes and bought our first multi-family property (a 6-unit building in Logan Square). In the process, we were raising money from LPs, underwriting deals, drawing up operating agreements, etc.
Key Checkpoint #2 – We are now Real Estate OPERATORS.
Next, I faced an issue. At this point, I had left my job in the Big 4 and was working at a tech start-up, but real estate was still our side hustle. Unfortunately (or maybe fortunately), I was now spending nearly all of my nights and weekends doing real estate, including my own real estate accounting. In other words, accounting by day and night. At the time, I was reading the book E-Myth, which had a chapter that said something to the effect of, “focus on revenue-generating activities and outsource all administrative activities.” So, what was the first thing I outsourced? Accounting!
Unfortunately (or again, maybe fortunately), it was a bad outsourcing experience:
This was around 2016, and I would say this is the moment REA was (somewhat) conceived.