I'm a new RE investor and I've been absorbing as much content as I can from Bigger Pockets. I love the work you do, and I love the podcasts as well. As a result, I bought my first rental property last month (SFR in Huntsville, AL). I quickly see that I want to scale up my property ownership, but this is where I get lost.
I'm 50, I make a great salary (7 figures), I have a large stock portfolio, but I don't keep a ton of cash. I have no debt other than my mortgage (with a ton of equity). How do I build a portfolio fast??? I hear about all these folks that went from 0 to 20 properties in 2 years, and I can't wrap my head around it. Where do I go from here. There is so much information that I get info overload. I need to be pointed in the right direction. Any help would be appreciated!!! Thanks in advance
Rental Property Investor · Huntsville, AL · Member since 2015 · 181 posts · 136 votes
5y
If you really make 7 figures, you could just buy 20 homes off the MLS over the next year, and then get a local PM company to manage them. The only thing that people usually need to figure out is where to get the money to buy the houses, but if you already have it, there's not really any problems left....
Thanks David. Ultimately, I want to have a real estate business that is well rounded, and provides cash flow and appreciation to eventually replace my W2 income. A business that my wife and son can learn. Buying the SFR was an easy experience (after doing a lot of reading). I'd really like to get into owning a lot of multi-family units as the long term goal. I'd like to have some wholesaling under my belt and some flipping as well. Eventually, I could also see doing some hard money lending.
Real Estate Broker · Huntsville, AL · Member since 2019 · 1k+ posts · 872 votes
5y
Dave. I've been in and I am still in your position and I completely understand. It can be overwhelming. I think it's really just a game of patience. People that rush through this typically have partners or they take on a lot of debt. Focus on buying the next one and that's it. I'd be happy to chat with you.
Thank you Stephen. That is what I am doing. I bought the SFR with 30% cash from savings and then 70% on a credit line leveraged against my brokerage account. When I have a tenant, I will finance the home under a mortgage and pay back my credit line to fund the next buy. It's much slower than I want to go, but it is sustainable. I'd also like to learn wholesaling as a means to grow cash to buy more since all current rental cashflow will go to paying down the mortgage. What are your thoughts?
Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes
5y
@David Stelzer I'd say pick a niche in real estate, and start marketing for that property type. If it's single family houses in Virginia for example, then pull a list from Listsource, get a dialer (like Mojo Dialer) and start cold calling for your first deal. Or, you could cold call realtors and let them know you're interested in buying rentals, and give them your criteria.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
5y
Information overload can be translated to unorganized information. Education, is organized knowledge.
What you need is to organize your information, and develop a plan based on a combination of access to funds, type of funds you are accessing, cost of funds (not total, the cost to you...which is cash out of pocket ONLY), and market analysis to find markets (find the markets and the properties take care of themselves).
The Market analysis tells you where to invest, the knowledge of how money works (strategies) tells you how to invest, and the plan tells you when. All three must work simultaneously, or the entire system crumbles.
I agree with @Joe Villeneuve, you need to determine what you really want to do, and then figure an approach that works for you. Otherwise, it seems like you need to do one "business" at a time. It almost seems like you are having a "mid-life-type-crisis" and looking for something else to do.
However, with regards to building a portfolio fast, that has been discussed before. It looks like you have the resources. If you have the market available to do it (and the supporting team), I'm not sure of your issue.
Rental Property Investor · Huntsville, AL · Member since 2015 · 181 posts · 136 votes
5y
If you really make 7 figures, you could just buy 20 homes off the MLS over the next year, and then get a local PM company to manage them. The only thing that people usually need to figure out is where to get the money to buy the houses, but if you already have it, there's not really any problems left....
Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes
5y
David, as others have said having a clear goal is key. I wouldnt be too focused on owning 20 properties as quickly as possible since the goal isn’t to see how many properties you can own. The goal is to make money.
First don't focus on how many rentals you have. Quantity and quality are not the same. You can have a dozen houses, but if they are dumps what's the point.
Start slowly. If you want to do long term rentals and single family, find out how much borrowing room you have. If you truly have a 7 figure salary, you should be able to save for a down payment really quickly and be able to borrow a lot. Then find an area where the numbers make sense and look for a house. Don't go for super high end or expensive, but a place where there is pride in ownership and where you will attract the type of tenant that you want.
If you want multifamily, again start smaller.
I would avoid wholesaling for many reasons, mostly as it is less than honest.
Remember you won't know everything, there is more than one way to get to your goal and it isn't a race.
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
5y
Pick one of the strategies that you mentioned and go at it hard (like you did with your first property). They all can be profitable strategies but not all at once when getting started.
Sounds like you have plenty of capital for more properties. Get a HELOC on your personal residence and continue to leverage your brokerage account...may also be able to use a 401k loan. If you want to scale, buy properties where you can add value and refinance (or sell 1 or 2 along the way to create capital). Just keep going...your answer lies in generating deal flow and making real offers. You're in a great position.
Investor · Singapore · Member since 2013 · 1k+ posts · 3k+ votes
5y
@David Stelzer You make 1m per year in income and you want to wholesale or flip or buy cheap rentals? Something does not add up here at all. If you want to diversity your stock portfolio then just buy some high quality real estate. Dont chase dribbles of cash flow.or steal equity from helpless grandmothers or deal with ripoff contractors. You must be great at what you do in your day job. Why mess around with this stuff?
@Anish Tolia remember that I lose 40% to taxes, I max out my 401k, invest in the stock market and keep some in savings. I have a mortgage, kids, etc., so there is not as much leftover as it seems. In looking at all these areas, I am really looking to learn and be well rounded and well versed. I don't think I would stay with wholesaling, but I would like to learn it. Same with flipping. I think ultimately, I would end up in buy and hold with SFR and Apartments and dabble in hard money lending.
And you still will… profits from wholesome and flips are taxed as ordinary, active income. So you even get to pay self employment tax (ie the full 15.6% not the half for fica).
Like we said. It looks more like you actually haven’t studied these investing methods sufficiently or I don’t understand your goals fully, yet
I'm a new RE investor and I've been absorbing as much content as I can from Bigger Pockets. I love the work you do, and I love the podcasts as well. As a result, I bought my first rental property last month (SFR in Huntsville, AL). I quickly see that I want to scale up my property ownership, but this is where I get lost.
I'm 50, I make a great salary (7 figures), I have a large stock portfolio, but I don't keep a ton of cash. I have no debt other than my mortgage (with a ton of equity). How do I build a portfolio fast??? I hear about all these folks that went from 0 to 20 properties in 2 years, and I can't wrap my head around it. Where do I go from here. There is so much information that I get info overload. I need to be pointed in the right direction. Any help would be appreciated!!! Thanks in advance
With that kind of salary, I think going in as a passive investor on syndications and the like would be a great way to build your portfolio. Unless you really want to take on the active role, I think that's the way to go. Trade money for time.
Real Estate Syndicator · Phoenix, AZ · Member since 2018 · 903 posts · 1k+ votes
5y
@David Stelzer Scaling up quickly requires two fundamental things, like any business. Partners and Systems. If you build the systems learned from mistakes made, your progress accelerates. If you partner with others to outsource roles and functions, your progress accelerates.
We went from 0 to 26 units in 15 months applying these principles. Now we are General Partners on over 600+ in three years. Only thing that has changed from the start is we have more partners and more systems. People miss that real estate investing too is just a business, so if you have worked in a business, the same concepts apply. Scalability is dependent on systems and partnerships.
Start with the end goal in mind, break it down to 90 day sprints and improve that 1% daily.
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
5y
@David Stelzer I have often said for most people that real estate is a get rich slow process. Yes there are people who scale super fast, but it takes significant effort, partnerships or decent funds. For every podcast guest who went from 0 to 20 in two years, there are thousands of people who get stuck at one property. It can be done, but it isn't like the stock market where you click, buy and forget about it.
Probably the best way to scale fast is buying larger properties or portfolios of properties. Doing it one at a time can be a grind.
Information overload is a real problem. It is further complicated by the fact that much of the information is just noise or even worse some is bad information.
It may be better if you can network locally and find a more experienced investor to partner with.
@Peter McDonough made a good point that 7 figure salary is fairly large and you should be able to set aside plenty of cash to fund real estate. Just to clarify 7 figure salary means you make over $1,000,000 a year.
Rental Property Investor · Huntsville, AL · Member since 2015 · 181 posts · 136 votes
5y
PM me. I will get you set up with a realtor local to huntsville who specializes in investment real estate. We will help you figure out anything you're missing.
I have an awesome realtor in Huntsville, who helped us buy our first property earlier this month. I'll continue to work with her for single family, but wouldn't mind finding someone good with multifamily
I think I am as puzzled as others for the 7 figures. I am newbie myself, so forgive me for not giving you any meaningful advice. I just want to understand something
with a 1,000,000 salary at W2, - 40% in taxes you get 600,000 clean a year, which translates to $50,000 a month. Even if you maximize your 401(k) it is just <20,000 a year, before tax, meaning more monthly. Without knowing your mortgage and other expenses, let's just apply a 50% rule so you spend 25,000 a month leaving you a 25,000 for savings and investments. If you focus on buying houses of 200K-250K, you will need around 60-70K out of pocket for each purchase. Meaning you could be buying 1 property in 3 months.