BEND, Ore. (CNN/Money) – Pity the fool who tries to pull one over on Lan Phan. The 29-year-old high school teacher turned hip-hop agent, turned real estate investor is a force to be reckoned with.
"I tell people, 'Do not mistake my kindness for weakness,'" she said.
The daughter of Vietnamese refugees, she graduated near the top of her class at "one of the roughest high schools in Los Angeles" and went on to study psychology at Stanford. After a stint as a gang-prevention counselor in college, she ditched her plans for law school and got her master's in education from Harvard.
It was during her second year teaching in Oakland, Calif., that Lan, then 23, bought her first piece of real estate. By working summer school and living frugally, she managed to scrape together $10,000 for a down payment on a $170,000 two-bedroom condo in Oakland.
Six years later, that condo is one of many buildings in Lan's $1.9 million real estate portfolio. "I still live in the condo," she said. "I still have a roommate."
Teacher to trendsetter
"My big goal was to buy a house before I was 25," said Lan, explaining that although money was tight growing up – Lan's mom, a hairdresser, supported her three kids and ill husband – her parents made a priority of owning a house, and instilled that value in their children.
Three years into her teaching career, Lan quit to start her own business. "Funding for a program I'd created was cut," said Lan. "I was jaded, and I was tired of being broke."
Having gotten to know a thing or two about hip-hop as an event planner at Stanford, Lan co-founded The Hype Agency, a booking and marketing agency that specialized in urban music. The agency did well within its niche, attracting such clients as Capitol Records, DC Shoes and Gap.
Because the job required a good deal of travel to New York City, Lan decided to refinance her Oakland condo and buy a $65,000 one-bedroom co-op in Queens. "It was a lower rate, so my payments actually decreased," she said.
Despite her success as a "taste maker," Lan continued to live simply and save regularly. "Some of my friends collect expensive purses," she said. "I wanted to collect real estate."
In 2002, Lan cashed out $15,000 from her stock portfolio to buy a $200,000 four-unit rental building in San Bernardino County (near Los Angeles), where real estate was more affordable than in the Bay Area.
Thinking the building would not take up too much of her time, she hired a property manager and headed back to Oakland, a 10-hour drive from San Bernardino.
Then a full-time landlord
During a visit to San Bernardino in early 2003, Lan realized that her building manager had neglected his duties. "I fired the property manager and decided to stay for a week and deal with everything myself," she said.
While she was cleaning one of the apartments, Lan got a call from an artist she represented, who was upset about having to share a suite with someone in the same band.
"It was one of those moments," she said, referring to the contrast between the filthy apartment she was cleaning and the luxury hotel the person on the phone was complaining about.
Then and there, Lan decided to walk away from her company and take time off to focus on real estate. For the next year, she traveled between Oakland and Los Angeles nearly every week to look after her properties.
Working as a teacher and booking agent proved to be good training for owning rental property. "You have to be very firm," she said. "Otherwise you'll get taken advantage of."
During that time, Lan also made plans to buy a one-bedroom co-op in Brooklyn for $75,000, and bought her brother's share of a three-unit building in Hawthorne (an hour and a half west of San Bernardino), inherited when Lan's father passed away. Lan and her mother now share ownership of the building.
In early 2004, Lan signed a lease option for a six-unit building in San Bernardino. Under the agreement, Lan made a $20,000 non-refundable deposit, pays $2,000 a month in rent, and has the option to buy the building for $330,000 within the next two years.
All told, she collects between $10,000 and $12,000 in rent, depending on how many of her units are rented out. Her total expenses, meanwhile, range from $8,500 to $10,500.
Back to the daily grind
Rental property is, for many, the ticket out of the 9-to-5 job. Several months out of the office, though, Lan was ready to go back to work.
"The one thing with real estate is it's hard to be creative," she said. "I missed working on projects." In February she took a position as the vice president of marketing for The Cannery, an historic marketplace in San Francisco's Fisherman's Wharf.
Now that she's working, Lan pays one of her tenants to manage her buildings in San Bernardino. She still does her own bookkeeping and visits the Los Angeles area about once a month. (Lan's mother lives in one unit in the Hawthorne triplex and helps keep an eye on things. The units in New York are co-ops with superintendents.)
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Although Lan is considering using a 1031 exchange to sell her co-op in Queens and buy elsewhere, her immediate goal is to add to her cash reserves, currently $10,000, and build on her $60,000 stock portfolio, of which $22,000 in a 403(b) from her teaching days. "I know I need to diversify a bit," she said.
Something else on her list of things to do: Relax.
"For a while I was obsessed with becoming a millionaire before I turned 30," she said. Now that her birthday is just a couple months away, she's revised that goal.