In Her Words: Luminita Ispas, Changing the World, One Four-Flat At A Time
In Her Words: Luminita Ispas, Changing the World, One Four-Flat At A Time
Single mom, realtor, investor, and educator believes financial literacy can change the world for the better. She's putting her money where her mouth is.
In early 2001 or 2002, I saw a statistic that in the United States, out of 100 people who are looking to retire at age 65, only 5% can afford to do so; 95% will never make enough money to cover their living expenses in retirement. That was crazy to me because in 2000, I had just come from Romania where we had a pension system. Here I was in the United States of America, the most successful country in the world and I thought, I need to have a million dollars in net worth, not because I want to be rich, but because I really want to be able to support myself and not have to depend on my kids or the government to support me. That was one of my driving forces behind my career in real estate and real estate investing.
From the time my kids were six months old and three years old, I was a single mom. My mom moved from Romania to help me raise the kids so I could work 60 to 80 hours per week. For ten years I would leave home in the morning when my kids were sleeping and come back in the evening when they were sleeping. I was only seeing them on Saturday and Sunday and even then, they were often in my car with me while I was doing open houses and buyer showings.
In 2008 before the market crashed, I had permits to build two houses and build an addition to my home. I had mortgages that were over $10,000 per month and I had very little income coming in. In 2010, I ended up losing my portfolio and battling depression, which was pretty bad because I was teaching people about buying land and making investments and I didn’t know how to hold on to my own properties. I had sacrificed 10 years of my life and my kids’ lives, and I lost everything. I said to myself, “What did I do wrong? How did I and so many other people in this country make a mistake?”
In 2011 I was named in the top 1% of realtors in the city of Chicago, which meant I sold more properties than 99% of realtors. I was selling about 100 properties to individual people like you and me. To sell to 100 individuals, you need to talk to probably thousands of people in a year. I was doing short sales, foreclosures — all kinds of situations on the selling side. On the buying side, I had investors who never lost their portfolio in 2008 and were making money. I got to ask questions of both the successful and unsuccessful investors.
I learned a lot of secrets of investing in real estate. For example, the people who were successful bought differently from the rest. They bought for cash flow. They bought buildings with multiple units primarily and they had fixed interest rates. Those who were unsuccessful took ARM loans and they got in trouble when the interest rates went up. They didn't have escrow for their taxes or they did “no document” loans and often shouldn't have qualified for those loans. They didn't have cash flow, or the properties were in bad shape and the owners didn’t have the funds to fix them up.
After that experience, I changed my goal from becoming a millionaire to becoming financially free. I break financial freedom into three levels with financial security being the first. The number one objective became positive cash flow. By buying real estate for cash flow, I would also become a millionaire in the process when the properties were paid off. I decided I wasn’t going to buy a house again until the cash flow from my real estate investments would pay for it and my other expenses. I decided to buy a four-flat and live for free or with a little from my pocket, which is now called house hacking. (Of course, I thought I invented it.) I found out that I could buy a 2 to 4 unit building with a minimum three and a half percent down payment, and the bank would give me money to fix it up. In early 2013, I bought a four-flat and moved into the basement apartment. I took a renovation loan, fixed the building’s issues, and got to live for free because the other three units were covering 100% of the expenses. I knew we’d never lose our home again because I had a 30-year-fixed mortgage, and the payment would be covered. No matter what happens, my kids are going to have a home. Once your living expenses are covered, now you're not afraid of losing your job or leaving a job that is not fulfilling for you. You're not afraid to leave a bad relationship. You are not afraid of living life anymore. You have financial security.
Financial independence is the next level, which is being financially comfortable. You have a great life. You're covering your basic living expenses, plus you can go out to eat once in a while. You can go to a movie. You can buy a nicer car. You can go on a vacation. You can contribute to your 401k and your IRAs. That's independence.
The highest level is financial freedom. That's living the life of your dreams. So for me for example, in 2011, I remember saying the life of my dreams would be to have a vacation every quarter — maybe not for two weeks, but to be able to get out of town for a bit. I thought if I had 10 grand a month, I would be living like a queen. Financial freedom means different things to different people, and the numbers adjust based on your own goals and growth, as well as inflation.
I created my seminar with this formula and have been teaching it for free since 2010 or 2011. When I started, a lot of people were not taking action. In my mind, I was thinking, “How could you not take action?” I realized the problem was fear. It was the feelings and the mindset. So I started adding Skills Of The Millionaires, which is the mindset piece. Because if somebody doesn't have the right mindset, they won’t be able to act. Now my seminar is 75% mindset and 25% financial education and people are pulling the trigger. They are actually buying real estate. They are taking action.
In 2017 people who came again and again to the seminars started asking for a series of seminars that would teach my formulas step-by-step, from strategizing what to buy to build their own portfolio; how to finance the purchases; how to rehab; how to increase rent and property value; how to find great tenants; and how to manage the property and sidestep any landmines in the process. I said I could provide that, but this would be a paid program for two reasons. First, if it's not paid, you won’t see the value you're not going to show up. Second, I’d have to invest a lot of my time to create the program and teach it live, interacting with the group daily and reviewing students’ homework. Right now, the program is about 5 months long. Everybody gets homework and an accountability partner. It’s intensive because I want results. I'm not doing this just to give you education. Education without action means nothing. If you don’t implement it, you forget whatever you think you know.
Since I started doing this, I’ve wanted to do it full time because I totally enjoy it. So, effective July 1, I’m not selling real estate anymore. I strategize with the clients and my team sells. I can influence the financial outcome of a lot more people with my seminars and courses. I made several students millionaires over the years by teaching them the formula.
I really truly think that my best contribution to the world would be to find a way to get financial education in schools. You’d be amazed at how many successful people there are in my classes who cannot put a budget together. We really need to do a better job of financial education from a young age. A third of all the wars in the world are about money. Money is at the root of 70% of divorces. Most crime is over money. So, in my personal opinion, financial education can literally change the world. That’s what I believe. I applied for a TEDx talk in Chicago with that title.
What advice would you give your 25 year old self?
Work on your mindset. Believe in yourself more. There were opportunities I didn’t take early on because I thought my English was not good enough. I thought because I am an immigrant, people wouldn’t understand my language. I was invited to speak in all kinds of places. I spoke at the National Association of Realtors in 2019 representing the Century 21 franchise and for nonprofits and business organizations. But there were other opportunities, where I was too afraid. I didn't have the confidence. It took me a little bit to learn that. People didn't care how I pronounced the words. The information was important. Now I forget I have an accent. I’m in a completely different place now.
Belle Curve Stories is about women navigating life with grit, grace, and growth. What do those words mean to you?
Grit is not giving up. You keep going no matter what. I mean, I'm not going to go back, right? A door closes and you figure something out.
Grace? You have to forgive yourself first to keep moving forward. We tend to beat ourselves up. We're kinder to other people than we are to ourselves. Learn to be kind and patient to yourself and others. Give yourself grace first.
For growth, always be curious. Always be like a little kid. Always learn. I think we are the happiest and we feel the most successful when we are on our way somewhere. I really think growth is what we are here for. We have a brain for a reason. I think human beings are supposed to continue using their brain. And stay curious. Give back. Help other people. Teach. I think teaching is the biggest opportunity we have to share the knowledge we've accumulated for the last 50 (or however many years) we've lived.
As told to and edited by Teresa Bellock and Sandra Ditore.
Luminita Ispas, 49, real estate investor, broker, and national speaker, has been recognized by the Chicago Association of Realtors for being among the top 1% of Chicago Brokers based on the number of sales in the city. Since 2011, she has been teaching seminars on real estate investing to students ranging from beginners to Fortune 500 executives. Lumi immigrated to the United States from Romania and now lives in the Chicago area with her two children.
