Meet the Investors: From 1 to 37 Rental Units in Under 2 Years

Meet the Investors: From 1 to 37 Rental Units in Under 2 Years

6 min read
Alexander Felice

Alexander Felice is a U.S. Army veteran who works as a financial analyst and underwriter for an SBA lender.

Experience

Alex has spent his career in sales and the finance industry and now invests in rental real estate along with working in the underwriting department at a bank in Las Vegas.

He is an expert in long-distance, single family rental real estate, debt and leverage strategy, and financial analysis. He spends most of his free time teaching investors through writing and coaching to ensure their best possibility of success.

Alex has been buying real estate for nearly three years and currently owns eight single family houses. He also helped fellow investors directly purchase over 20 properties in 2018.

Alex’s writing can be found at BrokeIsAChoice.com, and more of his story can be heard on the BiggerPockets Podcast episode 301.

Education

Alex received a bachelor’s in Finance from the University of North Carolina.

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Today, I’m going to introduce you to a rental property investor who’s been buying small portfolios because, well, one at a time just ain’t good enough, is it?

Josh and I met at BPCon, which you absolutely must go to. And no, they don’t pay me to say that. (Although if they did pay me to say that, I would absolutely take the money.)

After the conference, we stayed friends. He actually invited me to speak at one of his REIA meetings in Raleigh. And over time, we talked more and more about his deals. I became really interested—he’s got a great story.

I’m really excited to share with you my friend, Josh Rathbun. So, let’s meet him.

Meet the Investor: Josh Rathbun

Hey! My name is Josh. I’m going to tell you my story of how I got started in real estate (both my wife and me). We worked full-time jobs and have two kids, but we were able to get from zero doors to a portfolio of 37 doors in less than a year and a half.

So, I started off hating my job just like everybody else. I was in IT, staring at a computer screen all day long, going, “What am I going to do to change my life?”

I tried so many different things, trying to understand how to move through life and make money doing it while supplying for my family. Just like you, I started from nothing. I started with $35,000 in debt trying to find out how I was going to change my life. I stumbled across BiggerPockets just randomly typing in Google, just like everyone else does, “ways to make money.”

I started listening to the podcast—there were over 320 at that time. Episode 301 with Alex was amazing. We started going through the process of learning, understanding, and reaching out. I want to share with you that journey, just like so many of you are on, and show you that it can happen, that you can make a change in your life. And it starts with you.

smiling dark haired girl listening to white headphones and smiling sitting outside in urban setting

The Properties

When I got started, I had to fully understand what I was getting into, just like all of you. When you walk into your first deal, you’re trying to figure it all out—what am I supposed to do, how am I supposed to do this, and what are the materials that I’m going to be using? I started out just like that.

Looking back on one of my early deals, the place was completely destroyed. It smelled, there were all sorts of bugs and rodents and anything you could possibly imagine. My mentor was like, “Yeah, smells like money. This is how you do it.”

Step by step, I was looking at the floors. I was looking at the walls. I was looking at the cabinets. I would look in the bedrooms. I was looking at the fixtures and the lighting and everything that you could possibly imagine. It was overwhelming. 

Many of you who go into a property for your first time are probably completely overwhelmed, too. That is okay. It is perfectly normal. You don’t have to freak out.

Help From a Mentor

Early on at a meetup, I knew I had to find a mentor, because that’s what everyone talks about. Find a mentor, find a mentor. So, that is exactly what I did. I went to everyone that I could see, shook their hands, and said, “Hey, my name is Josh.”

I found one person who had over 100 doors. In order for me to provide value to him, I knew I had to go call a ton of contractors. So I cold-called. I finally found one after talking about an hour with that person.

We sat down in one of my units and I said, “What can you come up with as far as a project plan, a materials list, and a labor cost?” All of those things that are incredibly important to finding out how to rehab and remodel your units.

So, after I got this list, I took it to my mentor and I said, “Here’s how I can provide value to you. Here is an estimate of labor. Here is an estimate. Here’s a cost estimate. Here’s how you can go further with me providing that kind of service.”

And I found the contractor. I offered the connection to the mentor, and now we both use him. 

Adding On

That first portfolio started off with a duplex. Then I added another duplex and a single-family home, which was part of my second package. I used the same rehab process, except one is a three-bedroom/one-bath and one is a three-bedroom/two-bath. I have a triplex, the duplex right next to that, and then just across the road, there’s another duplex and a single-family home. 

Then I got a five-unit. It was my first five-unit commercial building, and I’ve got to tell you, it was scary. I used the same rehab process, though, so I knew exactly what I was going to do on the inside. I just didn’t know what I was going to do on the outside.

It had no gutters. It didn’t have a paint job. It had really terrible windows  Up near the building, it was complete mud. There were no gutters. The roof was falling apart and all that water was spilling off and just completely destroying the area.

Related: The Simple 6-Step Process for Estimating Rehab Costs

The other two-bedroom/one-bath apartment building is very similar, if not exactly the same layout, to that triplex. So why not do the same thing over and over and over again and create a process around it? 

In the kitchen, we did the exact same countertops, exact same cabinets, exact same flooring. Why change a good thing? The paint is exactly the same as well. And then if you go into the bathroom, there’s the flooring and you have the same toilet and you have the same layouts.

People really appreciate the quality of the build, but you don’t have to spend a fortune to do it.

duplex with green siding

Funding Through Networking

Alright, BiggerPockets. I know what you’re all thinking: How in the world do you fund these deals? I can tell you how I funded them.

I use private money, and I use bank money. I wasn’t made of money. I didn’t just go into my bank account, pull out $100,000, and say, “Here we go. Let’s go start funding.”

No, I went to my inner circle that I knew had private money—that happened to be my father-in-law. And I said, “Hey, I know you have 401(k) money to use. Let me use that money to fund this opportunity. You’ll make money, and I’ll make money.”

So, that’s what I did with these projects. All those things in the triplex and the duplexes and that five-unit, I used bank money and private money.

You can use many different methods to fund deals, just like you read on BiggerPockets and just like you hear from people like Alex Felice. Alex also uses people’s money and his own money and bank money to find and fund these projects in order to create the wealth that he’s looking for. And that I’m looking for and that my father-in-law is looking for.

It’s the whole reason why we got into BiggerPockets—it’s so that we can create wealth, so that we can fund our “why.”

This is why we do it. We’re all in this together. And that’s what BiggerPockets is about.

Related: How I Find Private Money Lenders to 100% Fund My Deals (& How You Can, Too)

I would not be where I’m at right now without BiggerPockets, without the information that’s there. These deals that you see, that I’m building my portfolio with and funding with, are all created through knowledge. It’s created through action.

There are many struggles I had to go through in order to figure all this out. There were times where I thought the deal was definitely going to fall through. I didn’t know how to do a rehab. Sure, I had construction experience, but I’d never actually done it for myself.

When you actually take that jump, where you’re doing it for yourself? Yeah, it seems scary. And that fear is always going to be there. But sometimes that fear guides you. It gives you the bumpers that you need in life in order to make sure that you’re on the right path.

As I was going through the rehabs, there were times where the subfloor was so bad I didn’t know what I was going to do. But you find a way through that. You push, you have the grit in order to get through it and go on to your next deal.

Just because you fail doesn’t mean it’s the end of your project—it’s the beginning. Success is made of multiple failures strung together. And before you know it, you’re on your way. As long as you’re learning from those failures, you didn’t actually fail.

There were many times I stumbled along, just like all of you. You need to put yourself out there in front of people and provide opportunity, provide value, and give where you can give. You may not always see the return right away, but you need to be always in the state of giving.

Your network is your biggest and most critical factor in all of the things that you’re going to be doing because you never know who you’re going to talk to, who you’re going to meet, that you can either help or who can help you. Because that deal that you find could always come from that person that you just talked to.

It’s not about using them. It’s about creating a lifelong relationship with those people. So in order to accomplish those goals, put yourself out there, be ready to fail, be ready to succeed. You’ll never know what you missed unless you go and try. Now go try.

How has your network helped you in your investing journey? 

Let us know in the comments.