31 units in 30 months at age 24, $70k Annual Cashflow

115 Replies

@Joel Florek congratulations on your great deals!

I've got a couple of questions related to moving forward with multiple banks simultaneously:

1. Did you inform each bank that you're simultaneously running the process with competitors when they asked you?

2. Until what point did you proceed with multiple banks before you stopped and chose the bank to go with?

I am asking because I had just purchased my 1st apartment and was denied (due to a lack of direct  comps in the area (3 bdr 2bth Coop's)) after 2.5 months from my 1st lender! So this bank did the final part of their underwriting 2.5 months into the process while my 2nd lender (the one that I finally went with) was able to give me the green-light after only 2 weeks... Long story short, there seem to be huge differences in loan approval processes across the banks... Going forward, I definitely want to mitigate such a situation.

Thanks for all your insights!

Very inspiring Joel! Just getting started myself and stories like yours helps to build my own confidence.

@Sandro Hagenbuch I am always 100% honest about my intensions when working with anyone. I have found it to be the best policy. With that said yes, I did let them know I was looking to see who could provide me with the loan package I was seeking. If your not shopping you loan I feel you arent doing your job as an investor. 

With respect to timing it has to do with a couple of factors. First and foremost you are looking to get approved by their underwriting. They will then send a letter stating what terms they are offering. You can negotiate on some of these terms and usually there is a timeline to accept. You are also looking at your desired closing date and determining how much time the appraiser needs and anything else required prior to closing. 

Sounds like a tough situation you got in. In my initial interviews with banks to see if they can work with my deal structure I ask them what their process is for underwriting deals. Typically the banks that say they can get it done in a few days I havent had luck with when getting creative as they underwrite the easy deals quickly. But give them all the ammo they need to underwrite the deal and generally I have experienced 1 to 3 weeks. Sometimes, depending on the size of the loan request a board approval is required which could delay the process further depending on how often the board meets. 

Originally posted by @Joel Florek :

@Sandro Hagenbuch I am always 100% honest about my intensions when working with anyone. I have found it to be the best policy. With that said yes, I did let them know I was looking to see who could provide me with the loan package I was seeking. If your not shopping you loan I feel you arent doing your job as an investor. 

With respect to timing it has to do with a couple of factors. First and foremost you are looking to get approved by their underwriting. They will then send a letter stating what terms they are offering. You can negotiate on some of these terms and usually there is a timeline to accept. You are also looking at your desired closing date and determining how much time the appraiser needs and anything else required prior to closing. 

Sounds like a tough situation you got in. In my initial interviews with banks to see if they can work with my deal structure I ask them what their process is for underwriting deals. Typically the banks that say they can get it done in a few days I havent had luck with when getting creative as they underwrite the easy deals quickly. But give them all the ammo they need to underwrite the deal and generally I have experienced 1 to 3 weeks. Sometimes, depending on the size of the loan request a board approval is required which could delay the process further depending on how often the board meets. 

Thanks for this great advice!

We did shop around quite a lot prior to starting the process with the 1st lender. Next time, I will start the process with multiple lender. I somewhat believed the 1st lender when they said that they can do the deal since they are one of the top lenders (but also big bank) and my employer (lol). Anyway, lesson learned! Next time, I'll start the process with multiple banks until completion of their underwriting.

Thanks again!

Originally posted by @Joel Florek :

@Sandro Hagenbuch I am always 100% honest about my intensions when working with anyone. I have found it to be the best policy. With that said yes, I did let them know I was looking to see who could provide me with the loan package I was seeking. If your not shopping you loan I feel you arent doing your job as an investor. 

With respect to timing it has to do with a couple of factors. First and foremost you are looking to get approved by their underwriting. They will then send a letter stating what terms they are offering. You can negotiate on some of these terms and usually there is a timeline to accept. You are also looking at your desired closing date and determining how much time the appraiser needs and anything else required prior to closing. 

Sounds like a tough situation you got in. In my initial interviews with banks to see if they can work with my deal structure I ask them what their process is for underwriting deals. Typically the banks that say they can get it done in a few days I havent had luck with when getting creative as they underwrite the easy deals quickly. But give them all the ammo they need to underwrite the deal and generally I have experienced 1 to 3 weeks. Sometimes, depending on the size of the loan request a board approval is required which could delay the process further depending on how often the board meets. 

 Great advices and congratulations on all your success at such a young age Joel. I started my own company like you - young at 24 years of age. I want to learn about multi family rental investments (out of state) and the art of self managing them along with securing the best loans for them. 

I have ran LLC, S Corp forms - so want to dive into incentives of owning properties through them as well.

What a great trajectory, persistence pays off! Thanks for sharing - this is huge motivation for myself. I'm also in my mid-20s and want to get started in multifamily. I appreciate that you are upfront in your situation with sellers, about that you don't always have the down payment financing lined up. I'll likely be in the same boat! It's encouraging to know that even though you scramble to get the financing that you still pull through. Going to definitely take your advice of having multiple lenders in the queue in case one (or many of them!) falls through. 

Wow, my jealousy knows no bounds.  Your story is what I feel I can only dream about accomplishing.  But every word you said with your goal resounded with me.  I just hit 30 and I'm still at 0 properties.  You are at a massive number of properties (to me) in 30 months. I'm doing it very wrong.

Maybe I need to study your story a little closer and figure out how to get myself into that same spot...

@Varun Parkash Let me know how I can help! Love seeing others succeed in this game. 

@Meredith L. Thanks for the kind words! I wouldn't necessarily say scrambling is the right word. Even those using a traditional down payment can end up jumping between banks and running into issues. Just a nature of the game. I am just financing the deal in an unconventional way that only a small percentage of banks have experience working with. I do make the sellers aware I have banks lined up ready to work with the structure I am proposing and have experience closing similarly structured deals in the past. All of which helps to make them more comfortable with the proposal. 

@Adam Britt it all starts with your first property. I bought a 4 unit to get me started and then focused on finding the next deal. Focus on how do you go out and buy your first deal. Then learn, get better, and go find another! 

Hello,

First, Great work!

I am looking at your number. It appears to me a few numbers are questionable. Maybe I am not familiar the practice in your area. First, the property management cost is only $3k for 8 units. Does that mean you manage by yourself? Second, the insurance is $1.5k which seems to be low as well. 

@Joel Florek Curious who you used to insure the property? $1,500 seems like a great deal for that many units and that purchase price. Small local insurance company or a national provider?

Your article was a pleasure to read. Thanks for sharing.

@H. C. and @Trevor Laramee I went through a local insurance company and was happy with the rate. I use high deductibles($10k) which saves me a lot of money. Overall I save abut $8k a year on all my 31 units from what the previous owners paid. Even if I have a claim every 10 years I will have saved $80k over that time period compared to the people who pay for better insurance. If you only have a property or two I get it, but in my case the extra cashflow is worth it. I also look at it from the perspective of I now have extra cashflow to remove dangerous trees or do preventative maintenance to systems that have higher likely hood of causing damage.

For the management I self manage for now so that fee just goes to me. But a fee must still be applied. For those who build their own management teams you can achieve a 5% cost factor. You can even work out a base 5% and they get additional bonuses for beating the planned vacancy rates to allow them to achieve 8% or 10% of gross rents which is industry standard. 

In the future I will likely use a combination of a leasing agent for doing showings and a virtual assistant for handling leases, marketing, recording rents and calling for collections. I am confident I can hit or beat the 5% number with that combo. Will take some refining but that is the plan. 

Congrats Joel and thanks for sharing! 

Originally posted by @Joel Florek :

@Will Sellenraad exactly. Pick your favorite, I have found Realtor.com to be the most accurate and I get the alerts there first. I do have alerts on all the platforms though. While I love the idea of having a great agent or broker helping to be on my team finding deals I have yet to meet a broker that has brought me a deal that I havent already seen. Generally I always work with the listing agent. 

Can you please explain what you mean by "generally I always work with the listing agent" Do you mean you work with listing agents on all your deals? If a listing agent brings you a deal you will work with them to represent you on the deal as well? Please clarify. 

inspirational to say the least. I missed that first post so I’m going to read it now.  At 33 in north west Georgia I’m starting to feel like I missed the boat but I’m ditching this pity party and pushing forward for my first multi family deal or any deal for that matter. 

Really impressed with what you've achieved and so glad you shared your story with us.

@Joel Florek  Way to go! Very meticulous plan in action. I am working on a deal now and you just inspire me to push harder!

Great story Joel!  What a tremendous accomplishment at such a young age.  Keep up the great work!

Hi Joe you are a real inspiration to us. Congratulations. I own a 3 apartment income property (almost paid off) and I wanted to ask you for some advice regarding acquiring more properties like this. would you suggest selling the income property and use the profits to acquire more properties or keep it and finance any new property with a new loan. what is more appealing to banks? cash in hand or money in the form of an asset. if I sell i would have money in my bank ready for any deal. what do you think. Thanks for your input in advance.

@joel even if you convince the bank,  did you put 5% of your own money down,  or someone else's? 

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

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.

Lock 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

Start here