How to Buy Your First Multifamily Rental With Low Money (Rookie Reply)

Ahley:
Hey everyone, Ashley and Tony here. Happy Labor Day. To celebrate, we are going to share an episode of BiggerPockets Real Estate with you that we think you will love. We’ll be back on Wednesday with a brand new episode on how to maximize the income from your rental properties. But until then, we’ll let Henry Washington take it from here.

Henry Washington:
Hey everyone. I am Henry Washington here, co-host of the BiggerPockets Podcast. And today we’re bringing you an investor story with Joe Crocker from Houston, Texas, who just started investing but is already well on his way to replacing his income with real estate. Let’s bring him on. Mr. Joe Crocker, welcome to the show. Hey, thank you.

Joe:
Well, Mr. Joe,

Henry Washington:
Why don’t we start off and tell us a little bit about your background and what got you into real estate in

Joe:
The first place? Sure. So my background is long. I’m not a young man, but I’ll give you the highlights. I have a W-2 job that keeps me on the road a lot. Due to that, I had to relocate recently end of last year. Came down to the Houston, Texas area and started researching real estate. I started studying the Burr method particularly was kind of what I honed in on. And I work with my mom and my wife both help me out because I’m on the road a lot. And so mom came down, we went and looked at some property, said, “Hey, let’s do it.” And so we closed our first transaction in December of last year. Why don’t

Henry Washington:
You tell us what traveling a lot means to you because I think it’s important to your story.

Joe:
Okay. Yeah, it is. So traveling a lot for me means I’m on the road about 300 nights a year.

Henry Washington:
That’s wild.

Joe:
And I work six 12 hour days.

Henry Washington:
You work six twelves and you travel 300 days a year?

Joe:
Correct. Yeah.

Henry Washington:
There’s a lot of people that are listening that want to get into real estate and they think they don’t have the time to fit this into their schedule.

Joe:
Well, my mom helps me a lot, so you need a good mother.

Henry Washington:
Yes, yes. Everybody does it with some sort of help. That is very true. For

Joe:
Sure.

Henry Washington:
So you said you moved to Houston and you started researching real estate, but why? What made you look into real estate at all? Why was that even on your mind?

Joe:
It’s been on my mind prior to being in my current career. I worked in commercial construction. So I’ve been around real estate a lot throughout my life and have done well on personal properties. And so part of it also is with that lifestyle I just described, I’m getting older, I don’t want to do that forever. So I kind of a backup plan, I guess you would say, is trying to plan my exit. And so I had to come here for work and I saw some opportunities and decided to jump in with both feet, so to speak.

Henry Washington:
Did you have a goal getting started or did you just want to jump in?

Joe:
Well, yes to both of those things. I would look on Zillow and for about two months probably I would go every night and I would just go drive properties that I saw and just check out the areas, see what I liked and just kind of get familiar. And then I think it got to a point where we just went, “Hey, you know what? You got to pull the trigger.” And so we made offers on several properties and ended up with actually buying two at the same time. And so yeah, so we definitely jumped in with

Henry Washington:
Both feet. It’s one thing to say making offers, but it’s another thing to be making the right offers. So you have to know how to analyze the deals and what makes a good deal in the first place. So was all that new to you or were you studying and analyzing prior to just

Joe:
Making offers? Definitely studying and analyzing prior to making offers. I spent a couple months probably of actually driving every day and looking at things. I listened to your podcast and some other things, so it was familiar to me, but I really got serious about it. I would say I spent about two months of almost daily looking at properties, doing my own analysis, watching them, MLS properties, but you could see them. The ones I think are good deals, they all sell right away. Then that makes you go, okay, maybe that was a decent one. And so I spent about two months, I would say, before making offers.

Henry Washington:
Well, why don’t you tell us about that first one? How did you find it and what was the goal with it?

Joe:
The first one was on the MLS. It was a listing that had been up for a long time. One observation I made is that sometimes when things are listed for a long time, nobody looks at them anymore. The price goes down and the seller gets super motivated. So this was, I think, one of those situations. And what it was was an estate sale where the guy was mid-flip and passed away. So what was attractive to me about it is number one, it was two homes. It was a house and an ADU on the same property. So my goal was to hold it as a rental. So what attracted me to it is it was pretty easy. The cabinets were in, but there was no countertops, needed some trim work. The bathrooms were tiled but not grouted. As it turned out, I had to totally rip that all out.
But anyhow, it was a fairly light one. And so that was my thought on it was, hey, for the first one, I don’t want to go huge. I want to try and go as easy as I can. But anyways, we bought it for 134,000.

Henry Washington:
134,000. When did you buy this property?

Joe:
End of December of 25.

Henry Washington:
So this isn’t some five-year-old deal. You paid 130 some odd thousand dollars for a house in Houston, Texas.

Joe:
Yeah, and a guest house.

Henry Washington:
And a guest house, and you found it on the MLS. Correct.

Joe:
There’s

Henry Washington:
Probably tons of people in Houston right now talking about, “I can’t find a deal. There’s no deals to be found. There’s too many investors here. You can’t do anything here.” So it can be done is what you’re telling me.

Joe:
It definitely can be done. So we’ve done three this year. I bought two of them were MLS deals, and I have one that we’re closing next week that’s also an MLS deal. So they’re there. So

Henry Washington:
Tell us the rest of the numbers. You paid $134,000. How much work did it need, if any?

Joe:
Total budget was about 44,000 and I actually came in a little bit under that. So I think we spent about 40.

Henry Washington:
So you’re all in at 175 and I’m assuming this was a rental because you said you honed in on the Burr strategy. So were you able to refinance this one already?

Joe:
We did. So we refinanced it right at 90 days. I did the refi. 161,200 is what our new loan was. So that was a successful Burr. It’s rented for 2,350 between the two units.

Henry Washington:
Not a perfect Burr, but that’s okay. I don’t think you need to pull off a perfect Burr. It looks like you pulled out about $13,000 and you were able to rent this for $2,300 on a loan of $161,000. That sounds like a pretty decent cash flowing deal that you found on the MLS basically in 2026. So I don’t want to hear anybody saying you can’t do this or you can’t do it in cities that are very investor heavy. Houston’s one of the most investor heavy markets in the country. It is. And you walked in the door, found something sitting on the MLS. I love everything about this. I love how you found it. I love how you took it down. I love that you did everything people say you can’t do right now in 2026 all in one deal. Perfect. But you also said you bought two at the same time.
So I’m very curious what the second deal in this two deal package looked like.

Joe:
Well, get ready for this one. So I said I bought two, but they both had two separate units. The

Henry Washington:
Second one had an ADU too?

Joe:
It had two full homes. Oh

Henry Washington:
Wow.

Joe:
Yeah. So I bid off a lot, let’s put it that way. But that one was an MLS deal too. And I’ll tell you that the way that I found that one, and I’ll go through the numbers with you, but that one was one that was tenant occupied, so it was impossible to see. There was no sign in front. It showed terribly. I couldn’t even hardly get ahold of the realtor. And then the square footage was wrong on the MLS. And the big thing on that one is the tax assessment. I paid 295 for it and it was tax assessed at 780.

Henry Washington:
So

Joe:
The taxes in Texas are huge. So the taxes were 13,000 a year.

Henry Washington:
Geez.

Joe:
Yeah, it was crazy. So especially for an investor that’s buying rental properties, that kills your cash flow.

Henry Washington:
See, everybody’s like, “Come to Texas. There’s no state tax,” but the property tax is crazy. But

Joe:
Here’s the opportunity there. Since then, I appealed those taxes and I got them lowered to 5,000.

Henry Washington:
Whoa.

Joe:
Yeah. That was a big cash flow pickup.

Henry Washington:
Before we get there, I got to know the numbers on this deal.

Joe:
So

Henry Washington:
Tell me about it.

Joe:
There’s two homes. So the front home is about 1,500 square feet. It’s a three bedroom, two bath. And then the rear home at the time was a two bedroom, one bath. The front home was vacant, the rear home was occupied, and I paid 295 for the whole package. And the rear house at the time was occupied. He was paying 1,200 a month for the rear house, and the front house had been rented for 2,000 for quite a while. And so I was kind of looking like 1%-ish and it seemed to work. So we ended up converting the garage in the rear house, so that’s now a three bedroom.

Henry Washington:
Nice. And

Joe:
Then we redid the front house completely. It’s two blocks from the beach, so we’re going to end up doing it as an Airbnb and doing the short-term rental. You

Henry Washington:
Said two blocks from the beach, so I assume this is Galveston. Yeah,

Joe:
Down in Galveston. Yep.

Henry Washington:
Man, that sounds like a screaming deal. What kind of condition were these properties in? I mean, people were living in one of them, so I assume that it was okay condition.

Joe:
Well, so it was decent condition. I mean, we ended up spending, partly because we’re doing a short-term rental, we ended up spending about a hundred fixing it up. We ended up just doing a DSCR loan out of the gate. We just put 20% down and got no prepay and just paid cash for all the improvements. So we’re in it right now, probably about 395, rough number, and it should be worth somewhere between six and seven.

Henry Washington:
Whoa. So you got somewhere between 100 and $200,000 of equity

Joe:
On a

Henry Washington:
Deal you found on the MLS in 2026. That’s incredible, man. Congratulations. Congratulations. And so one of them’s a short-term rental, you’re keeping the back unit as a long-term rental?

Joe:
So I think our plan right now is to short-term rent both of them. I’ll tell you, my analysis you asked about that is I wanted to have multiple exits. So number one, could I sell it if things didn’t go my way, can I sell it? Yeah. Two is, can I long-term rent it? Because the short-term, I mean, you said it were down here in Galveston, 4,500 short-term rental permits. It’s pretty competitive. So my plan was I’ll try to short-term rent it. If that doesn’t work, then I’ll just put in long-term tenants. And if that doesn’t work, I’ll sell it. That

Henry Washington:
Is a huge tip for anybody that’s listening, especially if you’re going to do short-term rentals. I don’t mind short-term rentals. I have, I think, four short-term rentals, but every single one of my short-term rentals, with the exception of one that I sold recently, could be a long-term rental. And the one that could not be a long-term rental, I had so much equity in it, I could sell it because short-term rentals aren’t like it was before where you could throw furniture in anything, stick it on the market, somebody was going to rent it, it was going to make money. It’s not like that now. Most of the people who don’t know how to operate short-term rentals have exited the market or are actively exiting the market. So who does that leave in the short-term rental space? Professional operators, people who are very good at this, people who know exactly what their customers need, exactly where their customers want to be, provide them the exact experience their customers are looking for.
So if you’re going to compete with that, you have to be good too. And if you’re new, you may not be able to be as good, but you may not find that out until you get to start operating and it doesn’t produce the results that you’re looking for. And so if it doesn’t produce the results that you’re looking for, what do you do? Well, if you bought it and the only exit strategy you have is to keep it as a short-term rental, well, you’re in a world of hurt. If you can’t sell it and make money or break even, and if you can’t long-term rent it and make money or break even, then you’re going to lose money. It’s just a matter of when and how much. And so I always say buy with two exit strategies for every deal. If you’ve got two exits for every deal, you’re better protected.
It doesn’t guarantee you that you won’t lose money, but it makes it harder. And so you kind of already mentioned that you’ve already bought a third deal that you are short-term renting. So did you go specifically looking for one that you would do as a short-term rental now that you had found the other two?

Joe:
I’ll tell you what happened. I was on Facebook one day in the investor group or whatever, and I see somebody had posted the wholesaler that had posted a condo for sale at this place. So I was in Michigan at the time, so I call my mom. I go, “Hey, can you go check out this condo?” So she goes over there, she goes, “Yeah, it’s good.” So the guy’s on the phone with me, he was asking, he started at 99,000 and it needed some work. So I said, “Hey, I’d be a buyer, but not at that number. I can’t make it work. There’s no way.” I treat it like a flip, right? So I’m kind of old school, 70% minus repairs is the most that I’m going to pay. Dude, me too. I still do

Henry Washington:
That. I still analyze everything as a flip, even if I’m going to keep it as a rental because I buy it cheaper that way.

Joe:
Maybe I learned that from you. I don’t know, but that’s definitely what I do. So as time ticks, he’s going, “Well, what will you do?” So I paid 73,000 for it. Did

Henry Washington:
You pay cash or did you get a loan?

Joe:
I just paid cash for it. Here you go. Here’s 73,000. And that was beginning of June, end of May. So since then, I’ve already rehabbed the whole place, furnished it. It’s been rented for 22 days in the month of July we have on the books.

Henry Washington:
Are you going to refi out of this thing?

Joe:
I already did. So we already got all our money back out of that one and it appraised at 143.

Henry Washington:
Nice. That was higher than you expected.

Joe:
Yeah, it was good. So I ended up being in it all in, including furniture and everything, about 90-ish, and it appraised at 143. So we ended up refinancing it at 60%. So we got most of our cash back. I think we had 83,000 was our loan. So that’s good. And the kicker on a condo is that dues are 611 a month. And so you combine that with a couple hundred bucks in taxes and then your electricity because you’re paying for that. Everything else is included, but you pay for electric. And then your debt service, the payment principal and interest is about 600. So it seems like it’s going to be pretty good, but time will tell. Color

Henry Washington:
Me impressed, man. Three pretty amazing deals in 2026, no less, in Houston, Texas, no less. And now you said, I heard you earlier, you said you had one under contract right now, so I’m assuming that’s your fourth deal. So come on, give it to me. Tell me about this

Joe:
One. So the fourth deal, I haven’t done the whole thing yet, but we’re going to close the next couple days. So again, two houses because that seems to be my thing. So it’s got a five bedroom house in the front and then a two unit in the back. And it’s section eight rented. So two of the three units are occupied. So I got under contract at 355. The front unit currently brings in 2,800 a month and then the rear units are 1,400 a piece. Well, it gets better though. So

Henry Washington:
You’re bringing in 2,800 in the front, 2,800 in the back.

Joe:
5,600.

Henry Washington:
$5,600 gross rents and you paid 350.

Joe:
355.

Henry Washington:
My brain can’t even hold onto the numbers.

Joe:
So my plan with that one, we paid 355. We got about 75 in our construction budget to just bring everything up to nicer finishes. We’re going to put in. Even though it’s section eight, it’s going to be a nice place for people to live. And then actually the rents, when we do that, we can increase the rents. The section eight limits are higher, so we’ll be able to go up to 3,300 on the front unit. And then the rear units will go, one of them will be 1,730 and the other one will be 2,328. So we should be at about 7,300 a month cashflow. So

Henry Washington:
For the people listening, first and foremost, if you have a stigma in your head about section eight, get it out of your head. There are good tenants and bad tenants in every price class. I don’t care if it’s top tier $3,000 a month rent or if it’s bottom of the barrel under a thousand dollars a month rent. There are good tenants and bad tenants everywhere. Our job as investors is to be great at tenant selection regardless of the class of unit that we have. And so section eight can be very cash flow positive. And not only is it very cashflow positive in some markets, but obviously you get the guaranteed rents or a good chunk of that rent is guaranteed through the government. So in larger cities, places like Houston, typically Section eight will pay higher than market value rents. In other words, you can get more rent out of a Section eight rented house than you could if you took that house off Section eight and just rented it traditionally.
And the amount of rent the government is willing to pay per house goes up based on the number of bedrooms. So if you can add bedrooms, you get more rent. So it sounds like the one you’re getting 3,300 on, that’s probably the, was it a five bedroom? Five

Joe:
Bedroom, yeah.

Henry Washington:
That’s fantastic. So if you’re in a larger city and you’ve already got rentals, you may want to call down to the housing authority and see what they pay for rents and see if it’s higher than what you’re currently getting, man. I love that. So 3,300, 1,730, 2,328. And what’s your debt service on that? What are you paying for mortgage taxes and insurance? So

Joe:
I haven’t purchased it yet, so I couldn’t even tell you exactly what the payment will be, but probably about four grand a month, I’m going to guess. I

Henry Washington:
Mean, that’s probably about right. Somewhere between 38, 42. But you’re bringing in after you fix it up, 73. Wow. That’s cashflow, folks. That is cash flow. Was this an MLS deal too? It

Joe:
Was. Geez,

Henry Washington:
Man. Geez. Man, oh man. I don’t even got to do the math to know that that’s a screaming deal. Man, that’s awesome. And you’ve done it by using some of your own cash, but pulling it back out. I mean, these are just traditional things that people talk about, but I love hearing how people take these methods that we talk about and they implement them in their business, man. Fantastic deal. Why don’t you give us a summary? How many deals and/or units do you have and what’s that putting in your pocket every month? So

Joe:
We have currently five, about to be eight once we get this next one closed. And I think that should cash flow us at about 6,000 a month net after all expenses. I’ll

Henry Washington:
Take that all day long, my man. That’s incredible. And like I said, you were using some of your money, but it looks like you’ve been able to pull the majority of your cash back out.

Joe:
I would say by the time we finish up this round, I’m going to call it, we should have all of our cash back and probably then some.

Henry Washington:
So all your cash back in your pocket, plus you’re getting $6,000 a month in net cash flow, and sounds like we’re just getting started. I would like for you to share with our audience maybe some lessons that you’ve learned over the past 12 months because you’ve done a lot. It’s not just that you bought these eight units, it’s that you’ve renovated them and you have refinanced them and you are operating them. And so what was maybe something that was a lesson on a deal that you weren’t expecting or maybe something that did not go to plan? So

Joe:
Lots of things didn’t go to plan, so I don’t want to give the impression that this is easy. It’s definitely not. The hardest challenge for me has been the financing piece because I’m ready to move really quick and I haven’t had the right lending relationship is how I’m going to say that. And I’ve tried a few different ones. So I’m still trying to work that out. That’s probably the biggest piece I would say. And then the other thing is sooner or later you just have to do it and that’s going to be your lesson. So for me, the first one, it was only $135,000 purchase. So I figured what’s the worst thing that’s going to happen? It’s not going to be worth zero. So my risk is fairly limited and it worked out good, but I think just my best piece of advice would be if you’re ready, just do it.
You got to do one. And it may not go perfect, but that’s how you’re going to learn. If

Henry Washington:
You’re starting with a single family home, I mean, as long as you’ve done enough analysis to at least have a general understanding of what kind of discount you need to be buying properties at, just buy it. Real estate, very rarely is it ever going to go to zero. You’re right. So your risk isn’t that you’re going to lose all your money. Your risk is that you might lose some money, right? You might have to deal with some headaches, but you’re going to learn something in exchange for that. And if a single family home not going well is going to put you in the poor house, then I’d say you’re probably not financially ready to invest yet. You need to save up some more cash before you jump in. That’s why it’s important that you take your bumps and bruises on a deal where your risk is limited.
So just be careful, protect yourself. I love that. Any other lessons or things that you wish you would’ve done different?

Joe:
I think the short-term rental, one thing I will say there, that looks really good at first glance, but there’s a lot to it. You hit it right on the head. You can’t just give people a bed. Nowadays you got to have this house you end up putting in a hot tub and a fire pit and all this kind of stuff. And we do little, you’ll appreciate this. We do little gift baskets where we give them customized gear and a Bluetooth speaker and try and make it really an experience. But the Airbnb side, the other thing I didn’t fully anticipate is how much it costs to furnish a complete house. And people think it’s not very much. And I’m like, when you do three or four bedrooms and I’m talking, you got to do everything, three sets of bedding, the bed, the mattress, the TVs, all that stuff, you can spend 30 grand in the blink of an eye furnishing a house, especially if you want it to be nice.
So that was one thing I kind of under anticipated a little bit. All

Henry Washington:
Right. Before we get out of here, I wanted to revisit something. You said that your second deal, which was the two SDRs on one lot, had $13,000 in annual taxes and you were able to get that reduced to $5,000. How did you do that?

Joe:
So I anticipated that. That was one of the things. Just to give you a flavor of MLS, I called the realtor and I go, “Geez, the taxes are 13,000. Is that right?” And she goes, “Yeah, if that’s what it says, that must be what it is.”

Henry Washington:
Thanks, lady.

Joe:
Instead of saying like, “Yeah, hey, but you could appeal that and get it way knocked down.” So to me, I went, “That doesn’t make sense. I wonder if I get that knocked down.” So I did some research and you can do it here. It’s once a year and you get a pretty tight window. So I anticipated that as part of my buy was that I’m going to get them knocked down. So what surprised me, Henry, is how easy it was. It’s

Henry Washington:
So easy. People do not realize this. It’s so easy. Listen,

Joe:
Here’s how easy it is for everybody listening, at least where I am. I filled out the form and then I went down to the place in person. So I sit down in the lobby for 10 minutes and the girl goes, “Yeah, come on back.” And she goes, “Tell me what’s going on.” I go, “Well, hey, I just bought this property for 295 and it’s tax assessed at 780 and that seems bananas.” And she goes, “Oh, okay. How’s your day?” “Oh, good. “He’s typing away. And then she goes,” Okay, are you good if we just drop it to 295? “And I go,” Yeah, I guess. “And she goes,” Yeah, your tax will be like 5,000. “I go,” Okay. “So that’s how easy it was. So it’s shocking. So I don’t know why you wouldn’t do that. I’m lessen to myself every time I’m going to go down there.

Henry Washington:
Every year, folks, find out what your window is. In some cities, it’s a longer window. In some cities, you can do it whenever you want. You just need to figure out when you can do this. But yeah, you can challenge your property taxes. So a lot of times what happens with investors, guys, is you buy something and then you renovate it and then you refi it. And then maybe a year down the road, six months, depending on whenever they do their inspections and assessments, you’ll get a letter in the mail that says, Hey, your property taxes are now why? And what most people do is they just say, man, that sucks. Okay, I guess there goes my cash flow. But you don’t have to do that. You can challenge them. Some people, you have to provide comps to show that, hey, this property is similar and its taxes are lower.
And sometimes you just go down there and say, hey, I don’t think this is fair. And then they just look on their computer and go, okay, how’s this sound? And then your taxes are lower, but it’s very easy process. There are companies that will do this for you, but you don’t need to do that. You can literally negotiate these things yourself. And most of the time they will reduce your tax bill. Not always, but most of the time you can get a reduction, which is going to save you money and put more cash flow in your pocket. This is something everybody should be doing every year, but most people don’t do it at all.

Joe:
I agree. All right,

Henry Washington:
Joe, thank you so much for coming on the BiggerPockets Podcast. I love that you’ve had so much success really in a seemingly short period of time. I’m curious though, have you had more or less or as much success as you thought you would in your first year of real estate investing? No,

Joe:
I’ve had a lot of road bumps along the way getting all these projects done, but at the end of the day, I think it’s gone really good. So I think that probably now, if I look at it as going, here’s the portfolio and here’s what’s in there, I go, geez, yeah, we’re killing it. That’s great. So

Henry Washington:
What’s the goals moving forward? Are you going to continue to buy more? Are you going to just focus on paying off what you’ve got? Where are you headed? Oh

Joe:
No, I’m definitely not going to sit still. So my first goal is to get to 10 and trying to figure out our lending relationships, I think that’s the one thing that’s holding me back right now is you only have so much cash. And so working that piece out, that’s over the next year. And I think once I get over 10 projects completed, that door will really open up. So no, I want to keep grinding. I think 30 is where I need to be just in my head to maybe shift away from my W-2 employment and into doing this full time. But if it keeps going like this, yeah, I’ll keep rocking it. It’s fun. How

Henry Washington:
Much longer do you think it’s going to take you to get to where you want to be in terms of being able to not travel 300 days a year and work six 12s? I

Joe:
Think somewhere between one and two years from when I started, I’ll be at a point where I will have replaced my income. Hey,

Henry Washington:
That’s pretty incredible, especially for starting in literally the last month of 2025 and getting this far now. Congratulations, man. Thank

Joe:
You. We

Henry Washington:
Talked a lot about these amazing deals, and I think it almost gets lost that you’ve done all this while traveling 300 days a year and working six twelves. So if you are listening to this and you have been hesitating jumping in to investing in real estate because you don’t think you have enough time or you don’t think you have the resources or you don’t think you can find a deal, I hope you find some inspiration in this story because none of those things are true. You can absolutely do this. You just got to do it. And I know that sounds cliche, but just talk to Joe. You just heard him for the last hour telling you he just did it. This is not an easy business. It is challenging and scary and uncomfortable, but it’s a simple business. Buy something that you can add some value to, add the value, monetize it at its new higher price, rinse and repeat.
If you do that, you’ll look up in 10 to 15 years and realize you’re pretty wealthy, and that’s super stinking cool. Thanks for sharing, Joe.

Joe:
Welcome. Thanks for having me. All right

Henry Washington:
Guys, thank you so much for listening to this episode of the BiggerPockets Podcast. And if you, like Joe, have a pretty amazing real estate investment story and you’d love to come on the podcast and share it with us, then go to biggerpockets.com/guest and fill out the form. Maybe we’ll get to interview you on the show and you can share your story with our audience. Thank you so much for listening to this episode. We’ll see you on the next one.