BiggerPockets Podcast 064: 50 Units in 5 Years while Working a Full Time Job with Josh Sterling

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Working a full time job while investing in real estate is not always easy – but as our guest today shows us: it’s totally possible. On today’s show we chat with Josh Sterling, a real estate investor who has built up a portfolio of fifty units (complete with rehabs and doing his own management) all while working a full time job.

Discover the tricks, tactics, and systems that Josh has used, as well as an inside look at his creative finance methods to acquire these properties.  This show is definitely one that people will want to come back to time and time again!

Read the Transcript

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Listen to The Show on iTunes

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Listen to the Podcast Here

In This Show, We Cover:BiggerPockets Podcast _ Real Estate Investing and Wealth Building 9.42.11 AM

  • Why doing things “the typical way” may not have been the right path
  • Investing when the bank says “no.”
  • How Josh used credit cards to buy his first few properties
  • Portfolio lenders: the best technique for finding one
  • Using a blanket loan to buy and sell real estate
  • Using the 2% rule to screen for great properties
  • How Josh managed his real estate business while having a full time job
  • How Josh finds deals 
  • Using Homepath Mortgages for 10% down investment loans
  • How Josh found his first apartment complex using Facebook!
  • Dealing with tenants while working a full time job
  • And so much more!

 Links from the Show

Tweetable Topics

“If you can stand out, do extra work – you are going to get incredible results.” (Tweet This!)

“Buy and Hold real estate is the best way to build wealth.” (Tweet This!)

“I’m much more of a ‘ready fire aim’ kind of guy.” (Tweet This!)

“Be proactive, not reactive, when looking for contractors.” (Tweet This!)

Books Mentioned in the Show

Connect with Josh!

About Author

Thanks for checking out the BiggerPockets Real Estate Investing & Wealth Building Podcast. Hosts Joshua Dorkin & Brandon Turner strive to bring top-notch educational content and interviews to our listeners -- without the non-stop pitch prevalent around the industry. With over 180,000 listeners per show, the BiggerPockets Podcast has become the biggest real estate podcast in the world. But don’t take our word for it. We’re the top-rated and reviewed real estate show on iTunes — check it out, read the reviews on iTunes, and get busy listening and learning!


  1. Great Podcast!
    Thanks for sharing this information which I will definitely use to streamline my Real Estate Investment properties. Josh, you mentioned that you spend about $330-360 annually on cash value insurance. Can you please let me know what insurance company you use? That is a great rate per house. My rates are $500-$700 per year for my cash value insurance ;(
    My properties are located in Alabama.

    Thanks again!!

    • Hi Marcia,
      We are currently using a company called Great Lakes Mutual. We insure for cash value of 60-65k per house. We used to use SWBC, but their rates increased by about 80% last year. As Brandon and I were discussing, it is very possible that could happen again here, but for now we will enjoy the reasonable prices.

      • Josh,

        Great podcast information. As a follow-up to this. Is your lender allowing you to only insure cash value on the houses versus replacement cost? Seems odd they would allow that as in my experience the lenders want certain minimums before lending to cover themselves.


  2. Darren Sager on

    Another great Podcast Josh, Brandon, and Josh! Incredible to hear what you’ve done in such a short period of time. Keep up the great work! Very inspirational.

  3. Great Show! My goal is to own numerous multifamily properties along with apartment complexes. Thanks to you, I would be wise to consider non-traditional financing such as the balloon & blanket loans. Thanks for sharing such valuable information.

  4. Great show, Josh! One of my top 3 favorites thus far. Alot of insightful information from someone who’s fairly new, but has done really well. Very motivational!

  5. Scott Bartlett on

    Great podcast! This is actually the first one I’ve ever listened to, and will certainly not be the the last!

    As a new investor with just one property (free and clear also!) I found myself dealing with a lot of the same issues you mentioned Josh. Banks didn’t want to touch me or the property (due to the condition of the property). However, I had the local credit union work with me and actually proposed the idea to me about using credit cards for the properties. I had also used a personal loan from a peer to peer lending network for funds.

    That same local credit union is now offering me a blanket loan (combining my free and clear property with a property I wish to purchase, and loan me 70% of the appraised value of both properties. Only downside is 10 year term loan.)

    As for suggestions for the podcast, perhaps a run down of topics that will be discussed by the guest speaker? It was such a great podcast, and I found it extremely informative just the way it is!

  6. Can’t believe Brandon Turner missed that tweetable comment that was awesome, ” vacancies are like emergencies” well said. Also Michigan has a law that keeps the water bill with the tenant I can find the mcl and or give you a copy of my lease that references it, might save you some time and money.

      • Brad & Michael,
        I believe there is a ‘water affidavit’ we can get the tenants to sign that would allow the city to hold the tenant responsible for the water, however I have been told that you have to renew that each year and pay a fee to have it processed.

  7. Hi Josh, Josh and Brandon,

    Another great podcast! Josh I was wondering for your rentals you stated that you now use Buildium , does this replace your accounting needs as well, or do you still need to use a ” quickbooks ” type of software ?

    Regarding getting blanket loans from your bank , is there a seasoning time that your bank re-evaluates your properties before doing this, or specific factors that they require?? new appraised value, percent of equity etc.. If I am understanding your strategy ,you own all of your rental outright before putting in blanket loans .

    And lastly, I agree with you in that properties being held is one of the best ways to gain sustainable wealth, with the combination of appreciation, mortgage paydown, and tax deductions . One problem that I run into, especially if we just purchased a property that needs fixing , is that we may actually show a loss in our taxes for that year.. so I am wondering if you have ever run into this and how the banks perceive this?

    Also this next question is for Brandon, I live in Washington and was wondering if you could pass on who you use for your ” cash value” insurance company. I have just updated my insurance and was surprised to find that I could not get “cash value” type insurance with my current company…. rhymes with “Ain’t charmed ” insurance.

    Thanks again for the wealth of knowledge Biggerpockets shares with all of us in the investing world.

    • Hi Elizabeth,
      I use buildium for everything. I believe it has all the financial tracking you need if you use it to its full potential. I still keep a couple of spreadsheets that I track separately to monitor some of the key financials in a format I am used to.

      You are correct that we own the properties outright before using the blanket loans. Basically we get 4-5 free and clear (usually from the last blanket loan’s proceeds) then we tie them up with another blanket loan and do it all over again. Seasoning has not been an issue, but they are requiring appraisals now, which has actually increased the amount of the loans they will do for us. They will loan 75% of appraised value.

      We have run into the issue where we were showing tax loses, actually it was happening almost every year up until the last as we were growing so rapidly. When you are growing at 25% or more per year there are a lot of expenses that get factored in beyond he capital improvements to the properties, also the income usually lags by 4-6 months as you are remodeling. Our lender understands this and doesn’t have a problem with it, but we have had other lenders turn us down because of this.

      Thanks for listening and the comments!


  8. Josh-

    Did you have to own the properties free and clear before the bank would consider the blanket loan? I’m in a similar position but have loans already on my properties. I’m sure each bank is different but wanted to see if you knew. I appreciated the credit card use starting out. Financing is always the biggest hurdle. Thanks.

    • Yes we owned the properties free and clear prior to getting the blanket loans. Financing was always the biggest hurdle for us also, which led us to the credit card balance transfers. It’s not the safest way to make things happen, but we didn’t have many options in the beginning. I think you will have a lot of trouble finding a bank that will loan on a property that already has a mortgage because they would have to be 2nd position. You may have better luck trying to refi your properties to make a couple free & clear.

  9. Regarding insurance – actual cash value (ACV) vs replacement cost. I have recently been switching over from ACV to replacement cost because, if I understand things correctly if you have a loss that is less than 100% you may only get a small percentage of the amount to cover the damage. For example, if you have a 50k policy that would require 150k to replace and you had a 50% loss you might only get around 1/3 of the actual loss amount (minus your deductible). So, if you had a 50% loss ($25k on your $50k property) the insurance company might only pay you 1/3 of that amount (around $8k) minus your deductible. If that is correct you might be taking a bigger risk than you think you are by only having an ACV policy. Any insurance agents out there that can confirm (or correct) my understanding???

  10. Thanks for sharing your success story!

    Can you tell us the rates you are paying on the blanket loans?

    What about the cap rate on your single family holdings?


  11. Josh S you mentioned another podcast here in your interview about 2/3 towards the end here.

    Can you tell me what the name of if is? I couldn’t exactly make out what you said.

    Great show as always, very easy to listen to..

  12. Josh, I’m curious to know what how you managed to pull off buying those homes, with so many “desirables?” You got them in In good enough neighborhoods to attract white collar workers, paying prices no more than about 50 x the monthly rent, and within 1.5 – 2 miles from where you live, which makes managing so much easier. And you were able to find them while working at a full time job. That’s nothing short of remarkable.

    • Hi Edwin,
      We liked the area and we realized that the price to rent ratios were excellent, so we figured that this was either a huge opportunity that most people weren’t seeing, or we were making a huge mistake. We just started buying them one at a time, as quick as we could get the money together, and next thing you know we had a nice portfolio of rental properties.

  13. Cory Binsfield on

    Josh, great interview. I can’t believe how cheap the rentals are in your market. You have definitely seized an opportunity that most people overlook.

    Here’s an insurance tip for you and Brandon. I used to run into the same problems that you have after I acquired 10 duplexes. Policies were getting cancelled, rates would jump after a hail claim, etc. I eventually called the largest insurance broker in my town and he was able to find me a commercial portfolio policy that covers everything. You might want to see if this is possible.

    Now my insurance is a breeze since one policy covers everything. I also insure at replacement cost since I’ve seen the crap insurance companies can pull when they tell you the actual cash value for your claim is only $3,000 versus $12,000 for the best bid from a reputable contractor.

    • Cory,
      Thanks for the insurance tips, I will have to check into that. I used to be on a commercial list policy, but they raised the rates 80% out of nowhere (I never made a claim) so I had to switch.

      Unfortunately the prices are going up pretty steadily in my market lately, so it’s not as easy to find good deals anymore.

      • Mike Dymski

        Not sure if replies to old posts get picked up but I will give it a shot. Cory and Josh, are you both on commercial policies and, if so, are they individual policies or one policy? It sounds like Cory has one and Josh is individual. My agent has me on rental/landlord policies (residential) rather than a commercial policy and I have a potential agent telling me I need to be on a commercial policy to get my personal name off the insurance policies for liability/corporate veil purposes. These properties (2 duplexes and a home) are currently in my personal name but I am moving them to an LLC. My existing agent said they would keep me in the same policies but just add the LLC to the policy name…that does not sound right.

        I also have a 25 unit apartment in an LLC with a commercial policy.

        Josh, that R/V ratio is awesome. This podcast was excellent as well.

  14. I am excited about the bigger pockets podcast and I learn a lot. I really thank you for all you doon biggerpockets. I am trying to get started so I listen to your show as often as I can.

  15. Great session and I learned a lot. Thank you. How do you go about obtaining a blanket loan? Are lenders actually doing so? I’ve called several banks and they all said they can do cash out refi only but are still weary of investors. Any recommendations on lenders? Thanks!

    • Hi Sam,
      When we first started out I called about 50 banks that I thought were portfolio lenders, almost all of them shot me down. I was lucky enough to find one that we still work with today, but I also know of 2 others who will do the same type of loans.

      Just start calling the small banks and credit unions, ask to speak with the commercial lending department, and tell them you are looking for a bank that is a portfolio lender that can do cash out refi loans on investment properties.

  16. Thanks for the great podcast everyone!

    Josh S., I hear that you were able to purchase your multifamily property on a land contract, but I’m curious to find out where you got your funds for the exterior work and rehab for the units? Personal funds, or did you find a bank willing to loan for rehab work?

    Fellow airline pilot here in the Cleveland area based out of Hopkins, and have probably spoken with you over there at DTW. Keep up the good work!

    • Hi Vic,
      We used the proceeds from one of our blanket loans to fund the down payment and some of the initial rehab on the apartment building.
      Sorry for all the shots at the airline industry. lol. It just didn’t go too well for me.

    • Hi Brad,
      Our lender is very local, I believe most portfolio lenders are. Your best bet is to start calling around to the small local banks & credit unions, you’d be surprised how many are right under your nose.

  17. Hey Josh, great show. Best quote “vacancies are an emergency!!”

    Curious on the apartment building you bought. Was that a C property in a B neighborhood that you repositioned into a B property via the rehab and better management? Thanks!

        • josh scored an incredible deal. his persistence and networking helped him tremendously. unless this is in a D/E areas, it really isn’t that important since these type of opportunities come once in 60 years. that’s what i mean by “does it matter?” if you see a deal, take it and do not let it go. if you dont know if it’s a deal, ask and you will find out.

        • Actually George, my question had nothing to do with the deal he scored but rather the process of re-positioning, a subject I am quite interested in right now. Asset class dictates how you would proceed on certain issues and what expectations you would have after purchasing. For instance, in the podcast, Josh talked about putting $8-10K in rehab per unit; he discussed being able to raise the rents $100/door after doing that; he stated he had a 92% occupancy rate; he mentioned this building is much more labor intensive than his SFH’s.

          The decisions and execution of all of these things are directly attributable to the asset class. I’m assuming he’s in a B area and now probably has a B property, but wanted to confirm with him. Sorry if you find my question silly, but frankly, your behavior right now is exceedingly confrontational, completely unnecessary, and in all my time on BP, I have never encountered anyone as rude as you. Please mind your own business and let the person I directed the question to answer.

    • Hi Sharon,
      Thanks for listening, I’m glad you liked the show!!
      The apartment building was probably a C- when we purchased it. I would say its a C+ now. Probably a B area. There are a couple subdivisions of 250k plus houses (which is pretty expensive for the area) within 1/2 mile of the building, I found that to be encouraging.

      • Thanks for the answer, Josh. Yes, I would find that encouraging too. I figured it must be a nice area if you were putting that kind of money into rehab and you had strong occupancy. Good luck and really appreciate all the info!

    • Hi Matt,
      Glad you liked the show. My strategy is:
      A) Refinance
      B) The Credit union will likely extend the term they say
      C) Payoff with cashflow, just need to plan 2+ years in advance
      D) Sell a couple properties

  18. I, too, felt George’s indignation at Sharon’s question to be surprising. As she stated in her question, she was “curious,” and I find nothing at all wrong with being curious. This world would be better if more people showed curiousity. All progress and improvement begins with the curiousity to understand a situation, and then applying knowledge to solve a problem. Even if the deal Josh got was unusually good, I don’t think Sharon ever suggested that if it was in the “wrong area” perhaps he should have avoided it. Personally, I love to understand how other investor’s think; maybe I can learn something. I do agree with George’s thinking to not dawdle when you come across a good opportunity. Real Estate investing is not easy, so you really do need to learn to recognize opportuities and act on them quickly

    • it really came out too harsh. i wanted to erase the comment, but she had replied by that time and it was too late. what i meant was “people tent to focus on the small details that will not help them at all. maybe they are using that as s stalling tactic not to ever take the next step. maybe they want to cross all i’s and dot the t’s (in reverse). who knows. i like Matt Bunter’s question about the strategy and goals. or questions about specific details, like, “how did you negotiate or how long did you take to do your due diligence. or josh, how much do you put down, or what specific credit cards do you use for those houses”. but that’s just me and i should have just kept quiet. i tend to say what i think sometimes and that gets me in trouble.

      sorry if i offended you, sharon.

      • Thank you Edwin for the kind words and excellent observations.

        George P, this should be a lesson to you not to assume you know the motivation behind a person’s question. There’s no such thing as a stupid question on BP, in my opinion, and since we are all unique individuals, no one can possibly ask a question in a way that may please everyone. Having said that, I do appreciate your apology, and it is accepted. Cheers!

  19. Josh S, man you are my hero. REALLY MAN! I am gonna listen again (several times; so inspirational!) but for now I’d like to ask…

    I was trying to keep up but I’m not clear on how you did the blanket loans. Sounds like you are borrowing after the fact, yeah? …Get a handful of properties (ie four SF) clear, then the banker loans you 160 (ex) on those, then you take the 160 and go buy three or four more using that cash? ….then repeat the process? Do I have it right?

    Thanks again for such an inspirational story.

    • Hi Tumlin,
      wow! I’ve never been a hero before!! lol. You have it right on the blanket loans. The hardest part is getting the first couple free & clear, which we mostly used credit cards for. I have found that you don’t always get 100% of your cash back with the blanket loans, but we put all the cash flow from the rentals, plus a good amount of our w-2 income back into the business, which more than makes up for it. It’s really not very difficult, just live well below your means and find a lender that will do the financing you need and the portfolio pretty much builds itself.

  20. Josh Sterling,
    Great podcast, very informative. I aspire to be where you are one day. I currently own 6 paid-for SFR’s in Ferndale, (just a little to north of where you are right?) and am looking to take things to the next level. I don’t have the infrastructure in place to handle an apartment complex so am looking to stick with single family homes. I think I’ve found a portfolio lender willing to play ball. They have proposed a blanket LOC (homes are probably worth 450K-500K), using that for downpayments, and then mortgaging each new house individually. If I hear you right though, I should use that LOC to purchase as many as possible out-right, and then do another umbrella loan on those? Is their an advantage one way or another? Are you concerned about the bank calling that LOC? Is that being paranoid? Thanks for any help you can offer! And congrats on those 50 units. Thats nothing short of amazing.

    • Hi Jeff,
      Thanks for listening to the show. With 6 free and clear units you are past the toughest part. There are multiple lenders that will do blanket loans for you in the area. I would stick to the term loans (mine are 20 year amortization) as opposed to the LOC which is usually interest only and usually needs to be renewed yearly. You will probably have to settle for a 5 yr balloon, but at least you have 5 years instead of worrying about renewing each year. I have spoken with my lender about the balloon payments multiple times, here is my strategy (copied from reply above:

      A) Refinance
      B) The Credit union will likely extend the term they say
      C) Payoff with cashflow, just need to plan 2+ years in advance
      D) Sell a couple properties

      I like the idea of taking the proceeds of the blanket loan and using them for the down payments for as many mortgages as possible. 500k equity at 75% LTV should get you about 375K. That should get you 15 or so more properties @ 25k down each. The downside is that once you run out of funds there you are tapped out. If you use the method of purchasing properties outright, you should be able to get at least 5 purchased and rehabbed for the 375k, then take those 5 back to your lender and repeat the process (seasoning may be an issue). Example: If you buy at 40k, put 20k in the remodel, the appraisal might come in at 85k x 75%LTV = $63,750 back per house. Over 100% recycled capital.
      If seasoning is an issue, they may only want to lend you 75% of the purchase price plus rehab costs. Therefore in the example above you get 60k x 75% = $45,000 back per house. Still not too bad.
      Lastly, in my opinion, the SFRs are much easier than apartments, I would’t worry too much about getting into small apartment buildings unless you can find a great value add play.

  21. Mario Mormile


    Wonderful podcast! That relationship with your banker… It totally reinforces the importance of relationships in this business. In business in general, we can get caught up in our own lives and not take the time to develop wholesome relationships with other people. I know I am guilty of this. Being sincere goes a very long way on more than one level. Thank you

  22. john clark

    @Josh Sterling,

    great podcast.

    I’m going back and listening to all of the older podcast and they all have great ideas. But you touched on many items that I’m currently going through. I have been a landlord for 5 years now and 10 SFH in my portfolio. The issue I’m having now is getting financing and the cost of insurance. From the podcast, I gather that you using a Credit Union for your Portfolio loans. That’s good info as I have been approaching traditional banks.

    Do you still use Great Lakes for your insurance? I friend of mine recently had issues with them and is looking to switch.

    thanks again for a great podcast.

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