BP Podcast 086 – House Hacking Your Way to 97 Units (While Holding a Full Time Job!) with Cory Binsfield

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Today on the BiggerPockets Podcast we sit down with Cory Binsfield, a multifamily rental property investor who comes from Duluth, MN.

If you ever feel like you don’t have enough time to invest in real estate, wait until you hear Cory’s story. He currently owns and manages 97 units himself while still working a full time job. Today he teaches us how he does it and also touches on a variety of topics related to getting started, house hacking, investing in a college town, and being a master of creative finance.

This show is packed full of valuable tips so make sure to grab a pen and paper for notes, and let’s get to it!

Listen to The Show on iTunes

Click here to listen on iTunes.

Listen to the Podcast Here

In This Show We Cover…

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  • Starting out with an investment that makes your wife cry
  • How to use a VA Loan
  • CreativeFinance vs. Conventional Finance
  • The ins and outs of investing in a college town
  • The SWAT team that descended on Cory’s property
  • Mistakes, mistakes and more mistakes!
  • Why partnering may NOT be a good option after all
  • How to personally manage over 97 units while working a full time job
  • How to build a solid team that can put out the fires while you chill on a beach in Mexico
  • Networking as a “lifestyle”
  • Owning a frat house
  • What to look for when buying a multifamily 
  • Why real estate is better than other retirement options
  • The most helpful technological aid in Cory’s business
  • And a whole lot more!

Links from the Show:

Books Mentioned in the Show:

Tweetable Topics:

“Networking is a lifestyle.” (Tweet This!)

“There’s not a single path to success in real estate.” (Tweet This!)

“You don’t want a “good” life, you want a “great” life.” (Tweet This!)

Connect with Cory:

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About Author

Brandon Turner (G+) is the BiggerPockets.com Senior Editor and Community Director. He is also an Active Real Estate Investor (Flips, Apartments, and Buy-and-Hold), Entrepreneur, World Traveler, Third-Person Speaker, and Husband. Come hang out with him on Twitter!

39 Comments

  1. Cory,
    Great show. I like Buy & Hold myself and still own the 2nd property that I bought. Enjoyed the blog post also, only difference is when I flip I’m paying 44% to my silent partner. All the more reason to never sell.
    David Krulac

    • 44% is brutal! It’s hard to get ahead when you lose that much money to our silent partner the IRS. Glad you enjoyed the show! That lady I mentioned on the show never sold and she was netting $2,000 a month passive on a $10,000 investment when I bought her four unit. Throw in social security and she was taking in $3,500 per month and working one or two hours a month on her rental.

  2. Hey Cory,
    Just read your “Don’t Kill the Goose” article and plan on listening to your podcast on the way home today. I too have a “good” job, but my wife and I are just starting out with the goal of amassing enough properties so that we can retire comfortably and before we hit 70! I have been adamant about flipping to generate equity so that we can then buy & hold as we go, but after reading your article, I’m thinking my wife may have been right (again!) She’s not exactly thrilled with the rehab/flipping route. I was just conditionally approved for up to 3 properties totaling $1m from a local lender and also received $100k home equity line from my current mortgage holder (who also happens to be my employer.) Sorry for the long post, but do you think we could achieve our goal of acquiring 3-4 properties/year without flipping?
    Thanks,
    Bill (&Tina) Morris

    • Cory Binsfield on

      Defintely!

      DO NOT IGNORE THE BOSS-Your wife ;) After you listen to the show, you will see what I mean.

      I flipped a few when I started to gain more capital but the flip should be a sweet deal AND you must have your target property ready to purchase.

      Too much cash piling up leads to trouble. That’s why I always had a better deal in mind if I did the flip.

      3-4 per year is pretty aggressive but doable. Just make sure you do not ramp up too fast ’cause ya don’t know what ya don’t know. In other words, you learn the business while doing and encounter things you never would have imagined as you own and operate a buy and hold portfolio.

      You’ve have the right start. Just make sure the properties cash flow and are the right fit-nice properties attract nice tenants. Sometimes its better to accept less cash flow if the property is easier to maintain and manage since you have a full time job.

      Now go buy a Goose!!!!

  3. Hi Cory , Josh and Brandon,

    Great Podcast! Again.. I can’t get enough of these. So I have a few questions for you Cory. Do you have your properties under a LLc?, and if so did you do this after financing?. Do you have any tips for how to hold these properties for your childrens future too. Also you stated that you have 11 conventional loans .. are the remaining 18 with seller financing? If so, could you give an example of how you do this ( 10% down, seller carries the rest at a certain percent for x amount of years etc…) and explain how you generally fund the full payment since the banks are not loaning any more funds to you as well as the down payments to the sellers.
    I too enjoy Warren Buffets shareholders letters. A tried and true education all there for the asking.
    Best of Luck to all of you.

    • Thanks Elizabeth!

      For LLC and estate planning Q’s, I’m not a lawyer so make sure you consult one before acting on anything I say.

      I added the LLC after buying a few properties. With multi family, I think you must have a LLC. I guess it depends on the commercial lender.

      For the kids, ya just need a good lawyer.

      Don’t get too caught up in the future. The best advice I could give you is to buy a nice property in a nice neighborhood and see how it works. After you have proof of concept, 10X the concept and you can worry about LLC’s, estate planning, once you get over a million net worth.

      That doesn’t mean you don’t need a will-especially if you have kids!!!!!

      Most of my loans are with commercial banks. Typical loan is 20 year, 5 year renewal, etc. These are very common with business bankers that know real estate.

      Check out that BP Podcast with Jimmy? I forgot his name. He gives the ins and outs of commercial lending since he works in that field.

      Here’s my last deal:
      10% down (from savings and cash flow from portfolio).
      Seller carried a 10 year note for 20% of the purchase
      Bank financed 70% of the purchase.

      If you are new, some banks won’t do this type of deal since they don’t like the fact you only don’t have more than 10% “skin in the game.”

      I built relationships with business bankers and they know how I operate.

      It just takes time and lots of networking.

      Warren Buffet is the bomb! I’ve read so many books on value investing for stocks and the same principals apply for real estate-buy with a margin of safety and you should do fine.

  4. I am speaking of the accounting aspect when I refer to books? I have heard Jimmys podcast. Great stuff ! Currently I am in the process of getting my ducks in a row to see what banks can offer me. Do you have a benchmark ratio that you use to make offers? For example some investors use the 1% rule.
    Thanks again.

    • Cory Binsfield on

      I do some of my books. That’s where the property management software helps. It’s almost automated. I have a part time book keeper and a CPA who combs through year end, trial balances, etc.

      I’m not a fan of benchmarks since every market is different. I’ve always used net operating income and roi based upon total cost to close.

      My gut is the best ratio. I ask myself,

      Is it worth the hassle?

      What’s the downside risk?

      How much equity can I get as soon as I close?

      For quickie calculations, I shoot for 1% or higher rent ratios on 1-4 units.

      For multi, I want a minimum cap rate of 10% or higher at purchase.

      Hope this helps!

  5. Cory,

    Thanks for the Great! podcast, I live in brooklyn park and can’t wait to get involved in real estate investing. I like the buy and hold strategy me and my wife were thinking of doing flips but may change our strategy completely….

    • Cory Binsfield on

      Hello Minnesota! Glad you liked the show. Check out the Minnesota multi-housing association. It’s a great resource to learn the trade and network.

  6. Sweet show Cory! I always enjoy the ones that have the awesome buy & hold investors that have been around the block :) Thanks so much for taking the time to share with us all. Stories like yours keep me motivated to reach my goals with my portfolio and beyond.

  7. Great podcast Cory! I had to let you know I loved the story about finding properties while mowing the lawns. This is exactly how I found my first rental property. When I first started with bigger pockets someone (possibly Brandon) said to tell everyone you talk to your real estate plans. Well that’s what I did and ended up finding out about a house that was going to be sold eventually.

    Thanks for the awesome advice and I will definitely be listening to this episode again.

    • Cory Binsfield on

      Ken, I must have missed your comment. Glad to hear ya found a property mowing. I told my better half I should write a book called mowing to a million and she laughed. Keep networking and mowing to your first million!

  8. WInston Risser on

    Cory,
    I had to take the time and comment this podcast. Your very knowledgeable but I kept laughing at your funny style .
    Buy and hold is my strategy. I have heard it before but i really got it today when you were talking about adding value to properties 5 units and more. So thanks for your time i enjoyed the podcast.

  9. Hi Cory,

    Great show! You mentioned you took money out of your 401K with a first time homebuyer exemption — how does that work and what type of financial advisor would one talk to about this? I’m pretty sure my stock broker has no idea…

    Thanks,
    John

    • cory binsfield on

      Great show! You mentioned you took money out of your 401K with a first time homebuyer exemption — how does that work and what type of financial advisor would one talk to about this? I’m pretty sure my stock broker has no idea…

      Thanks,
      John

      John, I can’t offer financial advice. Just to clarify, I used an IRA and not a 401k. The 401k is different and I would talk to the HR Department or the 401k administrator for questions or a CPA if you are unsure about the advice you are getting from your stock broker.

      Another option is an FHA loan if you are a first time home buyer or if you have owned a home in the past and are looking for a new personal residence. That would be a better option since you can get into a residence for a small amount down.

  10. Cory,
    Great story! I have few questions:
    1. I am in Austin, Texas where the rental properties in MLS fetching really high prices and multiple offers. What do you suggest to find good deals in a reasonable amount of time?
    2. How do you calculate whether a multi is a good deal? What formulas and numbers do you use? Do you use the Appraisal value? Do you go through the inspection report and then get estimates on the fixes?
    3. Since properties built before 1978 has some issues (lead paint, old wiring, old plumbing etc.), do you try to stay away from them or do u treat them differently from newer than 1978 units?
    4. I only buy single storied duplexes due to upper units can cause various issues to the lower units. How do you deal with the 2nd floor issues like plumbing/water, noise etc.? Do you recommend not to stay away from 2 story multi?
    5. Do you take section 8? I always stayed away from them. What is your take on them?
    6. How much upgrade/repair you will do to “increase” the value of the rentals taking into consideration of tax benefits?
    7. Would you buy a SFR if you think you can add a guest house and rent it out later or one that already has one?
    8. Do you credit unions to get loans? My Bank says they can’t give more than 4 loans to an individual.
    9. How much do you pay to your handyman ($/hr or monthly etc.) type of guys maintaining your properties?
    10. What was your most profitable deal and how did you find it and closed it?

    Thanks in advance.

    • cory binsfield on

      Cory,
      Great story! I have few questions:

      Austin, you call this a few questions???????

      1. I am in Austin, Texas where the rental properties in MLS fetching really high prices and multiple offers. What do you suggest to find good deals in a reasonable amount of time?

      A: I like to zig when others are zagging. Look for deals that are not on the market. I like landlords in distress. Drive around, knock on doors, find other investors that want to get out of the rental business. MLS creates a lot of competition. It’s great for sellers!

      2. How do you calculate whether a multi is a good deal? What formulas and numbers do you use? Do you use the Appraisal value? Do you go through the inspection report and then get estimates on the fixes?

      A: Milt Tanzer has a great book on this called Real Estate Investments and How to Make Them. A great deal is more art than science. I hate to say this, but you know a great deal when you see it. Ideally, a great deal is a cash cow that attracts great tenants. There are so many factors! A great deal is one that works great for you.

      3. Since properties built before 1978 has some issues (lead paint, old wiring, old plumbing etc.), do you try to stay away from them or do u treat them differently from newer than 1978 units?

      A: Up in my town it’s impossible to find a deal built after 1978. I buy old buildings and make them nice. You just have to put up with lots of capital improvements in the beginning to get them where you want them to be. Plus. most people are afraid of them. I would rather have an old building in a great location then a new building in a poor location. It’s all about attracting the right tenants.

      4. I only buy single storied duplexes due to upper units can cause various issues to the lower units. How do you deal with the 2nd floor issues like plumbing/water, noise etc.? Do you recommend not to stay away from 2 story multi?

      A: I buy both. Haven’t had a problem with up and down duplexes. They are just like apartment buildings-units stacked on top of each other. Side by side is better though.

      5. Do you take section 8? I always stayed away from them. What is your take on them?

      A: I have chosen not to participate in Section 8. I value my time and find it creates a major time suck with paperwork, inspections and other issues.

      6. How much upgrade/repair you will do to “increase” the value of the rentals taking into consideration of tax benefits?

      A: I don’t let the tax benefits guide my decisions when it comes to upgrades. I let the cash flow decide. Never over improve the property. Clean, safe with unique finishing touches is my strategy-ie, glass tile backsplashes give a kitchen a wow factor. It’s a cheap upgrade.

      7. Would you buy a SFR if you think you can add a guest house and rent it out later or one that already has one?

      A: I would buy one with the 2nd unit in place versus dealing with zoning, architects and engineers to add the unit. I rented one while in college and the owner had a nice set up. I have fond memories of that place! It was in a Almond Orchard and the owner had a large house nearby.

      8. Do you credit unions to get loans? My Bank says they can’t give more than 4 loans to an individual.

      A: Banks are like cell phones. They are all different and have different features. Yet, they all serve one purpose-to make a phone call. Shop till you drop when it comes to lenders. Check out the Show 6 with Arthur Garcia-great show on bankers.

      9. How much do you pay to your handyman ($/hr or monthly etc.) type of guys maintaining your properties?

      A; From $10.00 to $40 per hour. Depends on their skill level and how fast they can work. I have a guy I pay $30.00 per hour and he flys!

      10. What was your most profitable deal and how did you find it and closed it?

      A: Most profitable was about $6,000 down for a 8-Plex. I traded two homes as the down payment and the seller was going to carry the balance as a contract for deed. He needed money one day and asked If I could pay him off sooner via a bank loan. He told me if I paid him off in 60 days, he would discount the note by $30,000 or so-I forgot. I ran to the bank and begged and they did the deal. It’s one of my best properties in my portfolio.

      Whew…..time to get back to work.

    • Austin, I forgot to mention this. You should check out lifestyles unlimited real estate mentor group. I’m a national member and they are a great resource. If I lived in TX, I would lean on them. Disclosure: I don’t get paid to recommend them and they are not a get rich quick bogus mentor group.

      • Cory,

        Just heard the show, killer stuff.

        I’m currently using rent manager and I really like it, just wondering what made you switch?

        Thanks buddy,

        Rob

  11. Jesse Anderson on

    Hey Cory,

    When you were talking about purchasing mf properties at around the 28:00 mark. You said the seller carry’s 20 the bank finances 70 and you come up with the other 10 through cashflow.

    From what I understood from that you use the future cashflow from the property to secure the 10% or am I off base?
    If I do understand that correctly, how do you go about that when talking to your bank?

    • Ya, I think I rattled that off too quick. I bring the 10% down to closing and have to pay closing costs. This comes from the cash flow from my portfolio, not the target property.

      Some of that comes back quickly at the closing when I receive the deposits from the property and I don’t have to make a mortgage payment in the first 30 days-I tell the bank to structure the first payment 30 to 45 days after closing.

  12. Ben Leybovich

    I DON’T FREAKING TALK LIKE THAT!!!!!!

    My God Josh – I don’t sound like an Indian guy. Nothing wrong with Indian guys, but I DON”T SOUND LIKE THAT !!!

    Great show, guys. Cory – happy birthday! 50?! You’ve seen some stuff… My girlfriend that’s Brandon) still has some of his mother’s milk on his face – we have to forgive him…

    Yes – it is crucially important that your significant other is good with the plan. REI doesn’t not work any other way – too hard! I don’t think I’ve heard anyone reference this previously. And you did in passing – most people will likely miss it. And yet, I think this statement was a gold nugget!

    Thanks for referencing me and my course – I appreciate it, Cory! Good to know people of your magnitude think CFFU is good stuff…

    • Cory Binsfield on

      Ben, great humor!!!!!! Thanks for the post and pointing out that your partner (spouse or partner) must be on board. That was a huge and expensive lesson for me. It took me a year to recover from that mistake.

  13. Cory,
    I’m just starting to build my brand via a YouTube channel and I want to use that as a tool to connect with apartment owners of large apartment complexes. Any advice on how to approach people about being a mentor to me? Have you mentored anyone, and if so, how did they approach you?

    Thank you so much for your time, create yourself a great day! ^_^
    Cyi

    • The most successful investors are extremely busy. I would try to add some form of value first, then seek the mentorship. If the mentor likes what you offer, they may help ya out or offer some wise tips.

  14. You guys are Hilarious! So fun and informative.
    Cory, you mentioned briefly you would no longer invest in 4plex due to sales comp. What does that mean? Also what type of investment would you recommend to someone brand new just starting out in today’s market. I am no longer interested in single family.
    Thanks! Great show-

    • Lutonya, I still like small multi family and would recommend you start there. I prefer 5 units or higher since the appraisal is based on the profits of the property (net operating income). Sales comps and replacement cost play a part on the appraisal as well. However, all the weight is placed on the profits of the property.

      A fourplex is valued like a house or duplex or triplex. Thus, sales comps are the metric and it’s hard to move this number since you are at the mercy of the market.

      My goal is to find properties where I can move the value. This forces me into muti-family of 5 units or higher.

      Glad we made ya laugh!

  15. Awww
    Cory,
    Thank you so much! Although most of that went a little over my head, Lol. This is great information to further my study.
    I really appreciate your time.
    Blessings,

  16. Thanks for the informative and entertaining podcast, Cory!

    You mentioned part of finding new rental properties is to go to the city and look at the records. To me, that’s foreign and I have no idea what I’d be looking at. Could you explain what you mean by this?

    Thank you very much!

    • Cory Binsfield on

      I meant going to the city tax assesors office or mortgage registration office and finding information on property owners. It’s all public record.

  17. Excellent podcast. learned a lot and will use for my business. I have 2 rentals in fridley area. I am currently marketing deals for buy and hold in twin cities area.
    You mentioned lifestyles unlimited, yes I got my start with them and learned a lot when i lived in houston, no I am not affiliated with them. You said, you read warren buffet books what would you recommend.

    Thank you for the great podcast and for taking the time to contribute biggerpockets family.

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