I am new to Bigger Pockets but I have had quite a bit of experience in 4 1/2 years. Dropped out of college at 20 and bought one unit with 20% down in 2010. After that it was a snowball effect and I dove in head first.
Currently I own 44 Units (14 with a partner 50/50 and 30 I own solely)
Most of the units I have put 20% down and gotten conventional loans had a co-signer on my first 50,000 loan and after that I found a bank willing to approve me. After I owned 3 units I had a land contract deal for 6 units which I only put 5% down, which I have since refinanced with a bank. 34 of my units now have loans with a bank at a little above 50% of the appraised value. and 10 units I have a land contract in place for another 2 years. The values were dirt cheap in 2010-2012 in my area which helped me get started. I get 15 year loans on everything and am trying not to extend that to draw money out. Most of my units were vacant or significantly below market rent and in need of updates. So a combination of market going up, remodeling, and raising the rents the values on my properties have gone up.
Business insider did an article on me a few months back. I am 25 now and have 44 units (article states 24 with 42).
In 2010, Mike Henkel dropped out of college after only two years at Central Michigan University.
"It was always in the back of my mind that I never wanted to work for anyone else," he explains. "I was going to college and doing what everyone else was doing, and one day I stopped."
Henkel got his real estate license in only eight days and, two weeks later, he started looking for properties to buy with the $10,000 in his bank account saved from years of summer jobs.
At 20 years old, he bought a five-bedroom condo for about $60,000 near the college campus, and rented the four spare bedrooms to friends for $300 a month.
The income provided him with a free place to live while he spent his time replenishing his bank account by holding three jobs: a morning position as a realtor, an afternoon gig as a leasing agent at an apartment complex, and another night and weekend job working at a combination bowling alley/golf course.
In the spring of 2011, the opportunity arose to buy two more five-bedroom units in the same area. "I had saved barely enough to put down a down payment, and I didn't have enough money to close," Henkel remembers. "I have three credit cards, and I took out three cash advances and went to a payday loans place and bought five $800 loans. As soon as I closed, I used every dime I got to pay off those little loans." He estimates it took him about 2-3 months to eliminate about $6,000 of debt, and that fall, he bought another unit.
Henkel turned his attention to making the units easier to rent to local college students. "The units were five bedrooms, two bathrooms, 1,700 square feet, near the university — it was strange they weren't renting out well. I went in there and said 'Ok, if I was going to live here — and I did live there! — what would I want done?'"
He ended up spending about $5,000 per unit ("I put it on the credit card and then paid that off as soon as I could") to replace the flooring with laminate and new carpet, coat the walls in fresh paint, and bring in new appliances.
Over the next few years, Henkel kept acquiring new properties near campus. In 2012, he got a deal to buy six new places for only 5% down, which ended up costing him about $14,000. That year, he bought a total of eight units.
"At that point, every time I bought something, my bank account would go to zero or pretty close, and then I would build it up and do it again," he remembers. "I know it was risky, but I was 21 and 22 and I wanted to just go."
He admits that taking on so much risk made him uneasy. "It used to really get to me," he says. "I'd get really stressed. With the first couple of units I was taking a leap of faith. I would puke every other day, and I wouldn't sleep. But I think there's something about working in the business and doing it, you get to the point where stressing out isn't going to do anything about it. Now I feel like I react. Like I told a friend: If someone chucks a ball at you, you're not going to freak out about that ball coming — you're going to get the hell out of the way. Worrying about the ball won't stop it from coming."
In 2013, he bought another 15 (14 of which he purchased with a partner), and in 2014, another group of 15. The units now sell for closer to $80,000, and he puts about $8,000 into renovating each one before renting them to local students for about $300 per bedroom each month. He slowly phased out his three jobs, and now devotes his full time to managing his properties out of his three-bedroom apartment in one of the bigger buildings, which he turns into a leasing office in the afternoons.
Renting to college students comes with its own set of challenges. Henkel says he's seen his properties completely trashed, and makes a point of doing joint leases that make every roommate responsible for the unit.
He estimates he has to take one out of every 10 groups of renters to small claims court for unpaid rent, and he sends damages to collections. However, he explains, so far he's been able to work out payment plans with errant tenants and not had to go so far in the process that their delinquency appears on their credit reports.
"When I was 19 or 20, so many people I looked at that did what I was doing — pinching pennies and trying to save and spend this much — that wasn't for me," he shares. "I want more in life. I don't want to be tied down to a job. If my units are filled, I want to get to the point where I can hire other people, so if I want to go to Vegas next week, I can go. If I have kids someday, I can go places with them without worrying about work."
Henkel now owns a total of 42 units (177 rentable bedrooms) worth about $4 million. "My goal is to get enough units to where I can have a team," he continues. He explains that his strengths are filling the rooms and figuring out what's needed to attract tenants, but says he struggles with remaining organized. "My first employee will be someone really organized so I can worry about filing the units, then I'll get another person to rent the units and slowly take myself out of the equation."
Inspiring story! Keep it up. Currently working on my first buy and hold
Great success story! Thank you for sharing it! Glad you joined BP!
Hey Mike, welcome to BP. Congrats on the success. It's amazing what you have been able to accomplish at such an early age. Keep up the good work and thanks for sharing.
Congrats @Mike Henkel it is beyond inspiring to hear success stories of young real estate investors. Hopefully one day I can share an article of this magnitude.
@Mike Henkel Way to take massive action!
ah, the perks of investing in areas where properties values are or ever were THAT cheap!
having recently closed on only my 2nd fully owned (all cash) property here on the west coast, do know how its like being broke and bank accounts practically zero'd out as well as juggling jobs as a homeowner, investor as well as agent and in my case pm, putting every paycheck that comes in directly back into bills/taxes/utilities/insurances'improvements/repairs etc on the latest purchase properties.
the woes trials and trivials... =D
I remember reading your story. Great job of knowing your market and being able to take advantage of it at the right time.
great job. what bank are you using? i need another bank to work with..
Appreciate Mike for sharing your success with detail numbers. You have a big heart. It's encouraging to whoever reads.
Which I knew about REI and had started as young as you. Way to go!!!
I know you stated that you were working three jobs when first starting out. But I was wondering if you had any problems with your debt to income ratio? If so how did you get around them? I'm currently looking for my first deal and am worried about the future and how fast I can start my snowball. I'm looking for ways to purchase properties fast instead of having to save up for a whole year to buy another. If I anyone else has any input it would be greatly appreciated.
Welcome. Of course, you are really a co-owner until you gave 100 percent equity, plus you have all of the legal and regulatory liabilities, while the lenders only risk the remaining balance.
@Mike Henkel Woah! Talk about taking leaps of faith! This is AMAZING!
Great story Mike...I remember reading this a few months back actually. Are all your properties in the Mt Pleasant area? I live and invest in the W Michigan area but have family around MP. Where are you finding your LC deals?
It helps when the property is dirt cheap lol. Congrats none the less!
Thank you Mike for sharing your story and keeping me inspired!
I wish you continued success and L.U.C.K (Laboring Under Correct Knowledge) with your future endeavors!!!
Dang man you did exactly what I want to do and I am 20. Reading the comments on that Business Insider post is hilarious, everyone is so butthurt that you are so successful at such a young age.
What made you pick real estate and what were some of the things that catapulted your success? I am where you were when you started and I just bought my first duplex but I have no idea where to go from here to get that next one @Mike Henkel
Probably the most perfect timing I've ever seen. Would be much more difficult now. Keep it up, but watch out for 2022-2024 bubble bursting. See my Blog.
Congrats on your success. I went to Northwood University just down the street from you.
Your story is the second inspiration success that I heard this week. So, you have to be able to come up 20% on every deal you acquired? Is the bank you deal with is one of those giant banks? Thanks and congrat again.
Wow, dude. Inspiring story! Way to go. I got my start in student rentals as well, but I'm up to 2 units at age 25. Got a long way to go to catch up to you!
Very cool! Congrats! Keep up the good work!
I need to move by you! Awesome stuff.
You should hire a student part time! That's would be a great person for you! I hire military wives (my demographic) and have done amazing!
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Create Lasting Wealth Through Real Estate
Join the millions of people achieving financial freedom through the power of real estate investing