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

115 Replies

@Joel Florek Awesome job, thanks for sharing the numbers and the philosophy. Just had a question, didn't see property management in your numbers so do you self manage? If so, how can you go on so many vacations (camping) when you have to deal with tenant issues? Also, where are you finding these deals you said you get alerts?

Joel that is so exciting! You're killing it man! Sharing your journey with detail and actual numbers from a Midwest guy is incredibly useful and motivating (also 24, just landed my first deal yesterday, and from Midwest!) look forward to following your journey

@Joel Florek I'm curious to know what you were expecting for the appraised value of the triplex when you were getting your LOC? When the reassessment occurs on the property what are you expecting for that to appreciate? 5-15% or higher? I'm also curious if the amount that you get for the LOC, would the fees get higher as your LOC increases?

@Isaac Antoine I invest in a market in northern Michigan and now in Indiana. They are about 400 miles apart. Currently I am working with one bank in each market. Each of which allowed the seller financed piece on my two biggest loans. 

I would consider doing a portfolio loan in the future but for now thats not necessary. I would need to learn more about my options though as my experience is limited to podcasts and a few articles on that subject. 

@Ray Lai I do have 5% allocated for property management in my numbers. I would hire out a leasing agent and work a bonus structure in that allows for them to exceed the 5% given they beat my planned vacancy number. 

For now I do self manage though. Its really not that bad. Take care of your properties and follow up with issues. If people complain about something I dont go right away. I schedule my work out so that way its manageable on my part and 95% of complaints are not urgent. Schedule with your tenants to visit them and they will be happy that they are being heard. I spend a total of probably 5 hours a week dealing with tenants and property management related duties. I spend a total of 5 days a month performing maintenance related duties(replace flooring, windows, plumbing issues, ect.). That stuff I can hire out more in the future but I am choosing to put more of my maintenance budget in my pocket for now. 

Since I have all my tenant information on a database I built through Podio I  always have tenant info with me. Also all docs are available via google drive. I use Grasshopper for my phone line which I love. So far it hasnt been an issue for me. As I grow I will hire a virtual assistant to take a few more tasks off my plate to allow me to live the same lifestyle. 

Alerts I set up through sites like Realtor.com or Zillow. 

@Eric J Nelson The appraisal was a bit disappointing. The appraiser went with only the comp sales approach and totally ignored the income approach... Since one unit is int he basement the square footage put me in line with other small duplexes. Needless to say a bit frustrating but I learned a lot through the process. Still appraised higher then my purchase. 

The LOC adjusts each year. I will be charged $150 a year to have them do all their paperwork and keep the line going for me. I have two other properties with that bank so if they make my life difficult ever I have a lot loans I can pull from them and move to other banks. They have been amazing though so I dont anticipate that happening under their current management.

This is a very inspirational post. Thank you! Im expecting to jump on my first investment deal in the next few months or so. Will start bank shopping asap! Using local banks to help guide my direction as to how their loans work. I'm thinking a 4 plex to start and going the FHA route or Fannie Mae but Im also considering pulling a HELOC out to help fund a deal with private money or a HML. Thanks again for your post. You have already help many just by sharing your story.

As I don't have a deal yet, or a request for any loan structure. How should my conversation go with just bank shopping my local banks for loans to buy my first multifamily unit?

This is incredible!! I hope to get as far as you very soon. I live in NYC so finding the properties you have with a great price can be challenging here. I intern for a developer, I'm learning so much and one of things I've been noticing is that it seems that all the good deals have been taken lol. I mean I know by the time I start it may be a bit of a challenge to find a good deal but its  a challenge I am definitely up for. Sometimes I debate if I should start my investing career in Canada? or even different parts of New York. Like Long Island, Orange County. lol I definitely would love to start right here in NYC though that would be the ultimate goal for me.  

You mentioned it took months to find deals. What would you say was the key to finding these properties after months? Just persistence. I love driving around and looking. I do think its more effective because you get to see whats out there. 

Congrats again!! 

Terrific post Joel!  Thank you for taking the time to provide the details and the pro forma #'s.  Very helpful.  The challenge for me will be to attempt to mirror this type of financing approach to Southern Calif. real estate.  Haven't seen an 8.5% cap since 4 qtr. 2009!  Hats off to you for your diligence!

Perry Skoll

Long Beach, CA

@Henry F. I would just start out by meeting with bankers, telling them your goals and mentioning some of the ideas you had(FHA vs conventional) and ask for their advice. They will have some questions and ultimately you can get pre qualified.

@Theresa Amouzou A lot of factors go into finding good deals. Its persistence, jumping on the research and numbers fast, and being ready to pull the trigger when everything looks good. I made my offer on the first day of a major price drop for the 8 unit. There were other showings lined up in the following days but I got there first. That is a big part of it. 

Wow that’s amazing. I’m just starting out in this field and I am still trying to understand the financial aspect of it but reading your story definitely is motivating.

Hey Joel definitely have to connect. I have three big commercial deals that I know you will find interest in. Please connect with me, and I’ll introduce you to my network of deals that you can’t walk away from.

@Joel Florek , Hey Joel! Thank you very much for this post. It is a great inspiration to me! I am a recent college grad who is practically drowning in student debt. I would love to continue learning and eventually using Real estate investing to climb out of my hole. No more debt for me, I would love to follow your example and build up rental properties of my own someday!

Amazing journey Joel. Love how you give a general break down of your goal-setting. I'm definitely getting that specific with regards to figures. Keep doing your thing mate. Godspeed on your endeavors!!

You are building such an epic story Joel! You can clearly see the fruits of your labor are paying off to how dialed in and sold out you are. I appreciate you being so candid and detailed with your stories allowing us all to extract value from them. 

Thanks for sharing and look forward to more of your posts!

@Joel Florek I just started this past July with my first triplex and now I'm trying to get more into bigger MFH, so this has been a great inspiration.

You mentioned that `We agreed on $345k with the seller carrying 10% on a 20 year note at 5% for 18 months`. What happens after the 18 month? Why is it a 20 year note if "something" happens after 18 months?

Originally posted by @John Moon :

@Joel Florek I just started this past July with my first triplex and now I'm trying to get more into bigger MFH, so this has been a great inspiration.

You mentioned that `We agreed on $345k with the seller carrying 10% on a 20 year note at 5% for 18 months`. What happens after the 18 month? Why is it a 20 year note if "something" happens after 18 months?

 The 18 months is a balloon payment. I will have to have money lined up somehow to pay him. I know that I can either save the money(which I have via cash and line of credit), I can refinance the property with the bank for all or a portion of the amount I owe the seller, or I can get private money to take on a note and pay back the seller.

My goal is to get private money. Although I will probably pay a slightly higher interest rate. With the network I have been building I am confident that this will be a viable option in 18 months. What this also does is give me the chance to prove that its a good property, operate it to my written plan and present my 18 month historical financials as proof. If I can do this my case will be much stronger for a private lender to give me money in exchange for moderate returns on their money in the form of a note. 

@Joel Florek thanks for the answer. Just to clarify. 

The owner is giving you a 20 year note at 5%. However, there is a balloon payment at 18 months in, where the current owner expects to get paid off. Your goal is to secure this payment at the 18th month mark, by either selling the note to an private investor who's interested in a guaranteed 5% or you're going to refinance and pay the note off completely. 

Is that right? 

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