How A Cincinnati Pharmacist Built 43 Units Off Market | Dylan Koch | Part 1

Dylan Koch spent six years training to be a pharmacist - and about four years figuring out how to stop being one.

In this episode, Dylan walks through the decision that's harder than people admit: leaving a stable, high-earning W2 for something with no guarantees. Not as a leap of faith, but as a calculated bet with a defined floor.

We cover:

The financial-calculator moment that reframed his entire 401k plan Why "buy and hold to $4,000/month passive income" was the original goal - and why it wasn't enough How a 13-unit portfolio got built with a partner, and how that partnership eventually split The $25,000 lease option that collapsed under local zoning - and what it taught him about due diligence The exact worst-case-scenario exercise that turned "I should quit" into "I can afford to try" Why he gave himself three months, not an open-ended runway

This isn't a story about courage. It's a story about a guy who ran the numbers, found the downside survivable, and acted on it.

Part 1 of 5. Part 2 covers how Dylan built the lead-generation systems - direct mail, PPC, PPL, cold calling - behind 40-50 wholesale and flip deals a year.

Chief Milestones is a video podcast featuring honest conversations with founders, parents, and investors about building real businesses, staying healthy, and raising families.

New episodes release Tuesdays and Fridays.

Youtube: https://www.youtube.com/@ChiefMilestones

Instagram: https://www.instagram.com/chiefmilestones/

Spotify: https://open.spotify.com/show/7HLDAe7SP3GnJSTOgAQqLy?si=6e9ac82be46f413c

Apple Podcasts: https://podcasts.apple.com/us/podcast/chief-milestones/id1861185226

Transcript

From Pharmacy To Real Estate

Dylan Koch 0:00

I was kind of raised on the whole um go to school, get good grades, get a nice professional job, moved down to Cincinnati in 2011 to pursue a degree in pharmacy. So I actually did that. Um did pharmacy for a couple years, graduated in 2017. It was literally a world I'd never been introduced to before. And I was almost like kind of angry. It's like, why has no one ever told me about this? You could type in the money into the financial compound calculators. I was like, yeah, I could be 65 and have five million bucks, but I'm 65. You know, I wanted that a little earlier in life, and it was affecting my happiness, right? I didn't like going into work every day. I would rather be doing the investing stuff that brought me more energy. And I would talk to my wife and I said, hey, like, give me three months. My worst case scenario, go back to that 10 pairs thing, is I go back to work. Went from zero units in 2021 when I left that job. I think we are 43 now. Yeah, so my name's Dylan Cook. Um, I have been investing in real estate technically since the June of 2018. Um, but before that, um I basically grew up in a small town outside of Lima, Ohio. Um I moved down to Cincinnati in 2011 to pursue a degree in pharmacy. So I actually did that. Um did pharmacy for a couple years, graduated in 2017, um, and then I you know did that for a couple years, managed a couple Kroakers, um, ultimately decided, um that, and I'm sure we'll dive more into this, that you know, I enjoyed investing in real estate more than my uh my career. So I left that full-time in October of 2021, and I've been a full-time real estate investor, flipper, wholesaler, uh, agent the whole nine yards, basically everything on his son since then.

Reshma Vadlamudi 1:54

Okay. So why did you want to get into pharmacy?

Dylan Koch 1:58

Yeah, good question. Um, I was kind of raised on the whole um go to school, get good grades, get a nice professional job. Um, kind of the the standard American dream that a lot of people are probably raised on. Uh followed the Dave Ramsey plan for a while. Um and really I just wanted a career probably in the in the medical field. Um my cousin-in-law at the time was like 10 years older than me. He was a pharmacist. I looked into it, they made a great starting salary. I didn't have to go to school for 15 years, like you have to do to be an MD. Um, so I had a six-year program to get your doctorate. And uh, I mean that was really the basis of it. I did the job shouting stuff, and you know, I excuse me. Um you in in pharmacy you can work hospital, you can look you can work retail. There's a lot of industry, there's a lot of different avenues that you can you can go. But as I was in school, I interned in the in the Kroger uh world, which is very popular around here. And honestly, uh, you know, at the beginning, I liked my job, I liked where it was going. The industry was changing a lot um during my tenure there, and it eventually was getting worse and worse. And um I guess transitioning to the you know far real estate over pharmacy side was um we always grew up money was important, but not really like investing was important. It was live on a budget, live below your means, uh, put money away in a 401k. Um, very much the Dave Ramsey thing that is bad. And I read uh actually, this is a good aside. Um, when I first graduated, you are what's considered a floater pharmacist. So you go or you I could drive all around 100 miles north, 100 miles south, like kind of wherever they needed. You didn't have a home store. But at this time I was just devouring self-help books, you know, um

The Book That Changed Everything

Dylan Koch 3:45

everything money-related, investing related. And one of the first books I read was Rich and Portad. And I know that's a turning point for a lot of people, but that was the first time I like I just immediately started rereading or re-listening to that book because it was literally a world I had never been introduced to before. And I was almost like kind of angry. It's like, why has no one ever told me about this? Like, this is a whole different world. Um, and and that's when this, and I my personality is is like if I lash onto something, I tend to go pretty far deep down the rabbit hole. And um, I bought a how you know my first house back probably less than a year later.

Reshma Vadlamudi 4:23

So yeah, okay. So you had all the time that's where you started reading into the books, and that's where all the stemmed from.

Dylan Koch 4:33

Yeah, um, really, uh I mean the impetus was I'm gonna make decent money as a pharmacist, I should know what to do with it. Um, I went to Berkshire Hathaway uh in 2018. I started down the value investing, like stock market side, really just trying to figure out what best fit, which had the best ROI, especially for someone who's young, who's 20 years old. You could type in the money into the financial compound calculators. I was like, Yeah, I could be 65 and have five million bucks, but I'm 65. You know, I wanted that a little earlier in life, and uh ultimately through all the readings, all the bigger pockets, everything else, I decided on real estate was the best path to go forward.

Reshma Vadlamudi 5:09

Yeah, yeah. So makes sense.

Dylan Koch 5:11

Yeah.

Reshma Vadlamudi 5:13

Okay, so was it like yes, uh, you read the books, and then how did you like did you have did you plan this out? Like, okay, now I understand this is what real estate, okay, this is what I want to do next. So do I just keep doing whatever I'm doing in a pharmacy and then investing money into real estate? And then at what point did you say I'm going all in?

Dylan Koch 5:38

Yeah, um, I was very much on the and this is always evolving, it's still evolving today, but like um at the time I I was young, I didn't have any expenses other than my student loans and my rent, which I was splitting with like five other people, so like $400 a month. So at the time I was like, if I can get passive income of four grand a month, I'll be able to feel like I'm top of the world, right? Um, and so the the impetus was buy buy and holds and get to four or five thousand dollars a month in passive income, which I think a lot of people get to. And I would do that as a pharmacist because I had a good W2. I was very lendable, I was gonna keep house hacking, uh, my debt income was good, my credit was good. Um, but it's and uh you know, we I had a partner at the time too, who I I graduated with, and we were very much aligned on

House Hacking Into Early Rentals

Dylan Koch 6:30

what the plan was. And so just as an example, I bought that first house hack in Oakley here in uh uh the Cincinnati neighborhood, 272,000 in June of 2018. I thought I was overpaying right at the time, right? And that's probably 450 today. Um and I rented out the one side for $1,500 a month, and I basically had no living expenses at that point. But a couple months later, I think in August or September, we bought a duplex in in Norway. These were straight off MLS too. Um uh Todd and I, we and it was like a 9K down payment for 25% down. So at that point in time, we could save up the money from our WTs because of our low income expenses, and we could put the 25% down, not knowing what the Burr method even was, you know, at the time. And we bought another one in January of that next year. We bought another one after that. And these are all just standard 25% down rentals. Um, but eventually we realized it's gonna take a long time, you know, to get to where we wanted to go. Prices kept going up. And eventually, deals on the MLS we could not get to pencil. And these are single families, small multis mostly. We're looking, I think, bigger at the time. And so that's when we eventually started to do direct-to-seller marketing um to get our own deals. Um, and eventually that partnership split up a couple about a year or two later. Um, I'm sure we can dive into that too. But um I I guess I'm rambling at this point. I think I lost track of the question.

Reshma Vadlamudi 7:54

But um you were you're telling me how you got started with Oakley, like that's the first.

Dylan Koch 7:59

Yeah, that and the the first thing was um understanding the numbers, you know, running all the spreadsheets, making sure that things make sense. And I just wanted like they pitched on bigger pockets at the time, like a $200 per door cash flow after you know your P ITI plus your your phantom expenses.

Reshma Vadlamudi 8:13

Yes.

Dylan Koch 8:13

Um, and we were self-managing, you know, we were young, we didn't care. Um and so I I think the biggest thing uh that I've learned you know through this, through a lot of successful people, is there needs to be um you can't have that analysis paralysis. There needs to be a thin barrier between um information received and then action taken. And I think that's where a lot of people, especially who come from the professional realm, engineers, medical people, because they are kind of perfectionists at heart, they need to see like the the numbers need a number, you know. They and if it's not exactly going to plan, they kind of freak out and they don't they don't do the deal. But in the entrepreneurship world, it's almost the opposite. You kind of go fast and break things, and to and then things are probably going to be okay. And the ultimate decision here was um at the time, uh Tim Ferris, uh, he's kind of fallen off, I think lately, but he has a good um worst case scenario exercise. Like, what happens if you lose the house? What happens if you lose your job? You know, all this kind of stuff. And I mean, worst case was I got another job or I moved in the house where we just bought, and we didn't have kids yet, wasn't married yet, so it was kind of like a no-risk thing, and that kind of gave me the courage to to keep going at the time.

Reshma Vadlamudi 9:24

Yeah, yeah, okay. So you got that first duplex, and then the second duplex in um first one was in Oakley, then you got it in another one in Norwood, and then another one in Westwood. Uh and then one in Westwood. So you saw how the appreciation works, how the cash flow works, and you're hooked onto it. Yeah. Okay. So at then, like, you liked it, and then you had a partner who you were working with together. Yeah. And then at what point did you like say, Yes, I'm I'm comfortable enough? Did you even say I'm comfortable enough, I can go all in, uh leave my W-2?

Partnerships And A Costly Detour

Dylan Koch 10:03

Yeah, so in between the partnership ending and leaving the W-2, there was a couple phases in there. Um, the partner and I, and we, you know, I'm not gonna get into this, we had another third partner there for a little bit, but anyway, we got up to like 13 units between us two. Um, and these were a combination of direct-to-seller marketing, referrals, all this kind of stuff.

Reshma Vadlamudi 10:22

You were the first two in there too, like the one you got in the room. Correct.

Dylan Koch 10:25

Yeah, so the only one not, because that was my primary residence, but the rest were you know up to that. Um and we kept growing, everything was kind of uh going great. We came up, we got the strainy object syndrome a little bit. We went to the best ever conference in 2018 or 2019 out in Denver, and there was a gentleman there um who's since passed away, Gene Carino, who did residential assisted living. Um, for anyone who's local, um, Mimi's house, they're the ones that do that now. Um, but it was kind of the combination of business, healthcare, and real estate. So we like were like, this is great, this is perfect for us. Um, so we kind of stopped buying rentals and pursued this path. We developed the business plans, we talked to banks. We even got to the point where we lost 25 grand on a lease option because we were gonna buy this place in Montgomery. Uh but Montgomery's geologician said you can't do this here. Um, so we tried to find another place, we were gonna build one, we had the architecture drawings again. A lot of money and time poured into this. We started to raise the money. We were gonna do like the syndication style, we're in the GPs. I think we're trying to raise like five or six million bucks, and COVID hit. And so COVID during the time of trying to start a residential assisted living facility was kind of dead in the water. Um, and so that plan kind of stopped, and we're kind of sitting around like, well, what do we do now? Do we go back to the you know, buying two to four families? And um at the time, my my partner got a interest in more commercial real estate, self-storage, um, uh strip malls, you know, that kind of stuff. And I am now married. Um, and I I didn't have the same our vision just kind of uh started not colliding, but they they're going separate paths, right? And so at that point, we sold all everything we had together, so sent on a pile of cash. Um, I went back, I was I'd left Kroger to do a mail order uh position, so that way I wasn't working 60 hours a week, I was working 40 hours a week.

Reshma Vadlamudi 12:24

Um and so let me ask you one more question. So when you were figuring out the partnership and everything, so and also you said like you took up this huge project. So did you already buy that? Like, did you were you under contract or what what happened with that? I'm interested because it's a commercial property and we are in that space now. And yeah, yeah, I want to know.

Dylan Koch 12:52

So the the first one was basically a plot of land that a custom home builder was going to build a custom home on. Um but we reached out to him and was like, this is perfect because we can build this um ranch style house that has, you know, 15 bedrooms, 15 baths. That's kind of what that model is. And we didn't want to lose the house, so we put a lease option on it that we basically had three months to figure out if we could do this or not, or lose our 25,000. And basically we fought with Montgomery um with lawyers and stuff, and like they basically said, like, no, you can't do it. So we we had to back out of the deal, and we unfortunately lost that. The next one was um, it was actually in the Butler County area off of Cox Road, and it was a planned development, and we didn't ever officially have that parcel under contract, but we were basically doing the due diligence steps ahead of time where we we hired the architecture uh architect, and he had the the phase drawn up on the whole maps, like the mechanicals, like engineering, um the surveys that we have to do, soil testing. Um, and I'd say I'm trying to put a better timeline on it, but it was like two or three months before that February 2020 when COVID really started hitting. So we hadn't really raised all the money yet. So I guess in hindsight, we were kind of lucky where it was early enough where we weren't fully committed quite yet. We weren't we hadn't broke ground, I guess. Um, wherever that would happen in the middle of the project, I could have gone south really quick. So I long story short, I guess timing is the biggest answer to that. And we didn't know how long it was going, a lot of uncertainty at the time. We didn't know how long that was gonna happen, what was gonna happen next. Um, and obviously it has been a successful business model. Um, and then I but I since kind of given up on that idea and gone on my own distance, which is the wholesaling and and yes, buying more properties.

Reshma Vadlamudi 14:47

So yeah, got it. So now back to our like, so yes, you were doing these back-to-back deals, and then uh at what point did you know that you want to leave the W2?

Leaving The W2 With Guardrails

Dylan Koch 14:58

Yeah, so I think I was so this would have been 2021, so it was uh four years ago. I've been 28. I was married, my wife's also a pharmacist at the time. We didn't have any kids. We have a seven-month-old at home now. Um, we had a uh a house, um, and basically we had we had X amount of number and savings, which is like six months of our living expenses. I told my wife, and it was affecting my happiness, right? I didn't like going into work every day. I would rather be doing the investing stuff that brought me more energy. And I would talk to my wife and I said, Hey, like give me three months, and you know, if we have plenty of time. Worst case, my worst case scenario, go back to that Tim Paris thing, is I go back to work, right? And so it was more of let's see if I can make this happen. And um, I quit October of 2021, spent $30,000 and didn't do my first deal until about March. Um, and we blew through a lot of that. And so I you know, I was freaking out a lot at the at the beginning of that journey. But so my downside was low, my upside was high. And at least uh tell myself I would never have that what if feeling. If I kept being a pharmacist, I'd always have in the back of my mind like what if I would have left, right? And my peer group at the time, one of them had also left pharmacy to do this. I was like, well, if he can do it, I can do it. And that was another part. So you're my peer group and just uh having a supportive wife, uh having a supportive spouse and just kind of going for it. And I did end up joining a uh quote unquote off-market mastermind that helps shorten the learning curve, you know, for that type of operation. So it wasn't just YouTube university trying to figure out my own. There was it was a planned kind of action.

Reshma Vadlamudi 16:40

Yeah, okay. So you had uh that that's exactly what I was able to ask. So you had a plan, like, okay, I like give me these three months and then I'll make it work. And then you went out and put some, you invested some money to cut down on that time off your own learnings, and then okay.

Dylan Koch 16:58

Yeah, exactly. It was 10 grand probably for that course at the time. Um, but we were in a financial situation that it wasn't like it was our life savings. Like we weren't putting ourselves in jeopardy with something like that, you know. So um I guess if people are listening, right, and they're and they they don't have a lot of money, like I think you know, if they have $10,000 to invest or something like that. Um I I would put one of two ways with that is either maybe buy a house hack, right? So you can lower your living expenses low, owner occupied down, um, or invest with someone in an LP side who knows what they're doing with Richard. I really don't think it is realistic um to do the Burr method or a flip if that's if that is the money that you have in your tier name right now. Yeah.

Reshma Vadlamudi 17:45

So okay. So now, how long have you been full-time in real estate?

Dylan Koch 17:54

About three and a half years. Yeah, yeah. So 2022, um, I didn't do that first deal until uh March or April, and so there's the rest of that year. So 2023 and 2024 are like my first like full-time, you know, for full years doing it, then up until obviously now.

Reshma Vadlamudi 18:11

Okay, so what what do you do now, like majorly?

Direct Mail, PPC, PPL Explained

Dylan Koch 18:15

Yeah, so strategy are tying back to the none of the deals made sense on MLS, and I wanted more rentals. Like that was that was the thing I was going for at the time. I started to do direct-to-sell the marketing, mostly direct mail at the beginning. Now we do PPC, PPL, cold calling, direct mail, bandit, you know, we kind of do everything now.

Reshma Vadlamudi 18:33

Can you expand on what exactly PPC, PPL, all that?

Dylan Koch 18:37

Yeah, so PPL is paper lead, is what it stands for. And that's basically you hire hire a third party that is supposed to be like if you type in need to sell my home Cincinnati or need to sell my home fast, they're supposed to be basically the top of that Google search. And um, they fill out a form, you are essentially buying that lead that kicks to you, you reach out to the seller, you take the deal from there. Um PPC, pay-per-click, very similar strategy. It's more SEO-based, which is that uh search engine optimization. Um, so that way, you know, my website or my brand, if they search for real estate companies around the area, you're near the top of the list. And they basically, it's it's more inbound marketing versus outbound marketing. Um, and so outbound is the cold calling, the direct mail, you're reaching out to these potential sellers. Inbound is their kind of reaching into you. Inbound is usually better because outbound is more like a shotgun approach, volume approach. Um, but I will tell you that direct mail has always been and I think will continue to be our best source of lead generation. Uh, but going back to your questions, like I was trying to buy places to buy because things on MLS, like I couldn't get to work, I couldn't get to pencil. And I learned as as these leads are coming in, I don't want all of them. Some of them are in areas I don't want to buy in, other than are just like there's too big of a project, I don't have the resources to take five down at one time. And there's a way to monetize some of those leads, either basically through assigning those contracts through wholesaling. And that's kind of what started the business. In the first year, I think we did like 13 deals last year. We did about 40 this year, or 2023, we did about 40. Last year we did about 45. This year I'm hoping to do about 50 plus. Um, and that's not including the ones who the like the properties I've taken after myself. So went from zero units in in 2021 when I left that job. I think we are 43 now. Um, and that all of them have been from directors seller outreach.

Reshma Vadlamudi 20:31

Okay. Okay. And you said inbound is much better than outbound, is it because the sellers are motivated?

Dylan Koch 20:38

More motivated, yeah. And you know, I get it that cold calling is like I don't like to get spam calls either on my phone, right? Um, or like the pieces of junk mail that you just throw away. I get it. Um SMS, which is text messaging, was a big thing for a while that's kind of gone away from industry regulations. Um, but yeah, the people who reach out to you are more likely to are more engaged to sell, obviously, than people who just you cold outreach to them.

Reshma Vadlamudi 21:03

So, what about the time-wise?

Dylan Koch 21:05

So is it like so is it on a daily basis you'll be getting so many inbound calls that's we're gonna get average five to six leads a day right now. Um, so and again, you know, it's one to two from cold calling, some of the, you know, uh every few days for the PPL. Thing that I like about the inbound channels is you can you can kind of control just with how much money you're willing to spend on how much lead that you get in. So right now I think we're spending about $3,500 a month on on PPL, um, which was great and recently has been great. And your who you provide with matters. Um, a lot of them I think we're doing some shady stuff if I'm being honest, where they would do like a cold call, get them to sit give their information and then just sell that lead to you, which is not an actual lead. So yeah, it's yeah, so it's who you reputation, like most things, you know, matter in this business.

Reshma Vadlamudi 21:58

So yeah, yeah. Okay.

When To Wholesale Versus Flip

Reshma Vadlamudi 22:00

So you get all these leads, and then do you wholesale most of them, or what do you do next?

Dylan Koch 22:07

Or yeah, so it's really a mix. Um, 2024, out of those, we probably did, I think we did 11 flips out of those like four-ish deals. Um, the rest were assignments. Um, and just because assignments have a quicker cash conversion cycle, I get you know, I spend the money on the marketing, I get that money back a lot quicker. And our return on ad spend is like six to seven X on a lot of that stuff. So it just makes more sense for that velocity of money to turn over quicker. Flips usually have a higher profit margin, but more things can also go wrong during a flip. Um, and I that's just the way I've kind of built my business. I'm my highest and best use is finding more deals, not also trying to general contract a flip that's going on in a part of town. They're quick cosmetic flips, paint carpet fixtures, like that's a little easier. I'd probably take that on, but where you're getting you're you're replacing the mechanicals, you're you're changing the layouts, you're getting the you know, the architecture drawings. I'm probably not doing a lot of those right now. So yeah, so primarily a 70%, probably about 70% wholesale right now.

Reshma Vadlamudi 23:07

Okay. So how do you determine like is that your personal goals or this becomes a flip and this becomes a wholesale deal?

Dylan Koch 23:16

Yeah, no, I mean this is a it's it's always a deal-by-deal basis. And it also depends uh uh where you're at in your business basis, right? Like so if I have two flips going on and you know, the the cash in the account's a little bit lower because you have these money out of those those flips, I'm more likely to wholesale that next one that comes in because I want the money back in the account. Whereas if you're flush with cash, you're like, okay, I'm willing to take the you know um the opportunity to flip this one. Time of year matters, right? Like seasonally right now, it's a better time to flip than not. Like we tried to do something this past November when hit the market, it was crickets, and it sold for a lot less than I thought it was going to. I think large dollars should be because the time of the season it was. Um or the part of town, what school district it's in. Like if something that's in east side of town, good school district, more likely, easy to sell. I'm more likely to take that down, either whole tail it or flip it than something that you know is is not in that area. So um, and uh to this point, I I think we're gonna touch on this too. Is I think I've done a good job of you know meeting people like yourself or like going to these meetups, especially at the beginning, before we had our daughter at home. It's like I was at almost every meetup that I could meeting people in the space, and now you know, because of that reputation or whatever, the social capital that goes with that. I've I have these repeat buyers that you see these wholesaling stuff and they mass market all these deals, and everyone's like, oh, investor left, you're like, these things don't work. Like, what the hell is this? And I I don't do a lot of that. A lot of times I'll get the other contract and I'll text five to ten people that I know and be like, hey, got something for you in this area. I know you like it. Let's walk it, let's do the deal. And it's all just cleaner that way, too. So yeah.