May 13, 2024
“The key for my wife and me right now is making sure that the kids are always in focus. We always remind ourselves what our real priorities are in life.”
A Volkswagen Executive’s Passive Income Journey
Ethan Nowak and wife Steffani are raising three girls (all under five years old), while managing demanding, often jet-setting, careers. As a Quality Validation Testing leader at Volkswagen, Ethan frequently travels abroad; Steffani holds down the fort in Michigan, working as a purchaser. “I work with all the pre-series cars, testing those,” explains Ethan. “It’s been a good ride over the past 13 years; I’ve had the opportunity to go to Germany, live abroad for a couple of years, and come back.”
Ethan attributes part of his success to his bilingual skills, courtesy of his grandparents. “They immigrated from Austria, so I grew up speaking German at home, and I’ve used it as my career has gone along, through school, and then into the automotive industry. That’s been my superpower with Volkswagen, as I’m not an engineer, but I went to business school. It’s been a nice balance on the management side with Volkswagen, communicating back to the mothership while also steering operations here.”
Juggling multiple time zones, and diaper duty, Ethan has happily created a passive income stream with real estate. “I’m excited to be a part of the Ashcroft journey and see how the fund does,” he says.
“It’s been nice in terms of the passive income and cash flow, as well as participating in the upside as an LP. I think there are a lot of benefits that come with real estate investing, and syndication specifically, for people who just want to be limited partners to grow their wealth––especially for people like me whose priority is family time.”
“Juggling all the challenges between work and personal life and the investing side of things, finding good operators was really important for us––people we can trust, so we can sleep well at night knowing that they’re doing the right things, executing the business plan, being custodians of the money that we’re investing and growing that.”
Drawing on a Lifetime of Experience for Real Estate Success
Though actively managing property isn’t fit for Ethan’s family lifestyle, he intimately knows what it takes to do the job well, and that helps him spot educated partners. “My parents had always owned apartment complexes, so real estate is in my DNA, and I’ve always thought there’s something to this real estate investing. On Saturdays, my brother and I would be working at these apartment complexes, doing odd jobs, whether it was weeding or landscaping or helping my dad renovate a unit. It was a very hands-on, mom-and-pop-style ownership structure,” Ethan reminisces.
It wasn’t too long before Ethan started his own portfolio. “Over the years, I did a lot of research. I used to listen to The Best Ever real estate podcast early in our real estate journey, and I read about the things that were going on with Ashcroft. At the time we weren’t accredited investors, so they’ve always been on my bucket list of teams to partner with as an LP,” Ethan says.
“We ended up buying a four-unit property in Michigan and set it up with a management team. Then we exited the property after two years, getting good tenants in and renovating the units. We did really well on that,” recalls Ethan, “and as the family started to grow, free time became more of a necessity.”
That’s when Ethan circled back to syndication as a key investment strategy. “As we started to grow our net worth, accreditation became an option in the last couple of years. We exited a deal as Ashcroft had their fund opening. So, that’s kind of where the switch flipped.” Ethan goes on to summarize his current holdings:
“Syndication seemed like a good fit for us. We started in 2019 with two investments, and that has snowballed over the years. Now we’re in six or seven real estate syndications with different groups.”
Building Financial Freedom by Investing in Tomorrow
With an eye toward early retirement and funding education for three kids, the young couple plans to continue kicking their investments into higher gear for the foreseeable future. “When it comes to real estate, we’re just saving and reinvesting,” says Ethan.
“All of our cash flow from our W2 jobs covers our day-to-day expenses. Everything on the investment side will grow bigger and bigger so that we can ultimately retire earlier and use some of that cash flow to enjoy our lives. Time freedom is a big topic right now, and having time freedom is one of the biggest things that you learn is pretty important.”
Pondering the notion of extra time and funds, Ethan muses, “we definitely would like to open up the door to more travel and potentially purchasing a home in another state.” In the meantime, there’s no shortage of places to put extra cash a little closer to home. “We have a ton of home renovation planned right now, and my wife is really interested in a Suburban for the kids,” says the consummate family man.
Staying Confident Amid Market Fluctuations
According to Ethan, his strategy is on track to help him meet his financial goals on his desired timeline. And despite the recent market turn, Ethan is confident that with the right partners and investments, there’s no cause for alarm.
“Juggling all the challenges between work and personal life and the investing side of things, finding good operators was really important for us––people we can trust, so we can sleep well at night knowing that they’re doing the right things, executing the business plan, being custodians of the money that we’re investing and growing that.”
“I think in the last two years, a lot of operators––especially ones that started coming into the business more recently––have had a really tough time putting the variable rate debt on their properties, and a lot of operators have struggled with the rising interest rates. I think buying properties in the last year and maybe until the end of the year, until the rates really do start going down, is a great time to get into properties,” remarks Ethan.
“If you have a good business plan with some good debt in place and you can manage the expense side, as interest rates drop, I think that cap rates will start to go up and those properties will do well for the next three years. That’s my personal outlook on things.”
However, Ethan reiterates that there are real challenges to consider, and a healthy amount of risk tolerance is needed when entering a deal. “It does bring a certain level of heartburn with some of the operators that we invested with. I’m not going to sugarcoat it…on the personal side of things at home, we’re fairly risk averse; but with investing, we’re open to a higher level of risk because we are still young as a family, and we have a longer time horizon to work with.”
Advocating for Real Estate Passive Income Opportunities
Overall, Ethan’s experience with real estate syndication has made him an investment evangelist, and he is passionate about spreading the word and the wealth. “I’m a huge, huge fan of real estate syndications and I try to sell it to a lot of people,” says Ethan with a laugh.
“I’ve been able to bring the opportunity to a large number of family members, friends, and work colleagues, many of whom have decided to invest. It’s been fun to see them grow through this journey. That’s something that I find personally gratifying––to help others find the same success with syndication as I have.”
Ethan is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.
