How I built a portfolio of 35 rentals and $10k+ monthly cash flow

362 Replies

@Derrek H.

I'll respond on weather since I also invest in KC but I don't have as many units as @Anton Ivanov (yet!)

I live in CA too and we don't have to worry about weather. Here is what I've seen on my properties on KC:

-more weather means more expensive insurance (50/mo/unit)

-hailstorms: can take out roofs, make sure you have coverage for this

-wind storms: can do damage and make trees fall on your property, it happened to me. Make sure you have coverage for this. I put in non-storm door screen doors. That was dumb. Put in storm doors! 

-snow: it does not actually snow that often in KC. Make sure in the lease you specify who is taking care of snow removal. Make sure you have a plan to apply salt to icy walkways. It is more cold and windy than snowy. 

-cold: it is both hot and cold in KC. Make sure you have a good plan to heat and cool property. Make sure you have someone on call for when the heater or AC breaks during a heat/cold event. That has also happened to me. 

-wear and tear: yes, it is more. Budget for more upkeep on properties than you would in CA and for servicing of your heat/cool systems. 

The appreciation thing is pretty vague. It snows in New York City but that is an appreciation market. It snows in some areas of CA too. Kansas City is, in general, not an appreciation market. Although a lot of areas have had a lot of appreciation in the last 2 years. Maybe due to everyone from CA buying there! KC is a blend of cash-flow and appreciation in my view. It is still possible to buy props for the 1% rule but properties there are HOT! Especially MF. Going day of list for over asking and cash, remind you of anywhere? California!!!

Anton:  Very well written story.  I too am an engineer and enjoyed your analytical way of assessing things. I am most intrigued with your ability to increase your income.   Can you explain what your "side business" is that generates $150K per year? 

Thanks for the inspiring story. Congrats on your massive success. I have no doubt your story is helping newbies to keep pushing it. Greatly appreciate it.

@Dan Chaney

If you read through my comments in this thread, there are many more details than in the original post...

As far as lending, you are correct - you'll start maxing out on conventional loans at around 10 or if your debt to income ratio gets higher than 45%-50%. I used conventional loans as much as I could on my first few properties, which were mostly SFRs. In the last 2 years that I've been buying multi-family, I've been using only commercial financing, which works very differently and doesn't have a limit on the number of properties you can finance.

As far building your network out of state - it takes a lot of time (many months). I've visited the cities I invest in many times, met with all of the people I work there on each visit, on top of regular phone conversations with them, especially property managers. You can't expect people to "do the work for you" without putting in the work and processes in yourself.

@Ian Walsh

50% rule is too general. If you're serious about buying a property, there is no reason why you can't look up what the property tax bill actually is, what the insurance is going to cost, estimate maintenance and cap ex based on the actual property condition, etc. I just see to many people use these rules and think that's all it takes to analyze a property, which is not the case.

@Rene Dunnagan

If you're saying you've spent $25k just to "learn" and "set things up", without actually buying a property, I'm a little shocked. There are so many free resources, especially on this site, that I don't think you need expensive courses or seminars to start investing. 

Frankly, you also don't need an LLC, especially if you're buying SFRs with conventional financing and without partners. You won't get any benefit out of it.

@Jerome Kaidor

I think @Jay Hinrichs was speaking from the point of asset protection and risk mitigation. Once you get a few dozen properties, I would agree with him that you don't want to over-leverage your portfolio. But at the same time, refinancing to pull cash out is definitely a viable strategy to keep growing.

@Brian Kaplan

It's definitely gotten harder to find worthwhile deals across the board and you're right - we are due for a correction soon. I think at this point it's important to learn how to manage your cash flow, don't over-leverage and have an emergency fund specifically for your properties in case things go south. With those 3, you should be able to whether a recession, provided your properties have strong positive cash flow.

As far as buying more - I've taken a break in the last few months, but I'm going to start looking for off-market deals again soon. I think you can still find something, it just may not be as common place as a few years ago.

@Alan DeRossett

No, I travel to these places myself. You definitely need to take travel costs into account, but I wouldn't say they make up a large expense for me, as I don't have to visit these places often.

@Dalton Toelkes

Send me a pm or email and I can give you some recommendations.

@Leon G.

I've replied to this question on here before. Basically I only find them through referrals and have a detailed questionnaire I go through with each one.

Anton,

I appreciate you opening the door to your investment history and how you did it.

Im an active duty Marine, and reading your story motivate me to know is possible. I know in order for me to grow, I will need to get in to the Multi-fam. I currently only have 3 SFR, I m planing to retire within 6-10 years, so I would love to have 5k monthly passive income.

This is why i need to be able to get some 2,3,4 Plex in my portfolio. Question, can you give us more details on what you do to look the location/market. (why/how Kansas city).

thank you again and congrats!

Al

This article is so timely. I started taking financial freedom seriously when I decided I did not want to work anymore and saw people not making it to retirement. I too tried to talk to friends and family about this topic but no one wanted to engage.  I think people really don't think its possible so they dont try. Like you I made "executive decisions " about retirement and put my plan to work and never looked back. Its been so worth it.

congrats @Anton Ivanov ! Fantastic story.

Most people get the first house hacking right as you did in 2013 with your Duplex, with an 8% down VA loan and the income as shown by your salary (or self employed from a non RE work).

What I didn't see in your story, is how you financed your first "investment property". You probably had already a high DTI, and no significant cash in hand:

  • 2014 - 2015: Ready to buy more properties, but real estate in San Diego is too expensive and cash flow almost non-existent. Started looking out of state. Decided it was too risky to try to buy/rehab myself, so ended up buying 4 turnkey SFRs in Atlanta and Birmingham. Cash flow was good and prices started appreciating over the years, so still happy with these homes.

What type of loan? Where did you get the down from? How much down? Who financed?...

Also How did you get your first commercial loan?

I did the same thing in the Cleveland Ohio area. Im 43 now and I have about 120 doors all paid off. I'm trying to learn to leverage but I'm stuck in my paid off ways. I'm now working with a lender now to leverage the 4 million I've accumulated. So I'm going to do it at 7% fixed but I hate payment ugh
I did the same thing in the Cleveland Ohio area. Im 43 now and I have about 120 doors all paid off. I'm trying to learn to leverage but I'm stuck in my paid off ways. I'm now working with a lender now to leverage the 4 million I've accumulated. So I'm going to do it at 7% fixed but I hate payment ugh

Hi @Anton Ivanov , thanks for sharing! Although we're still several steps behind you in building our portfolio, my husband and I are similar to you and your wife in a lot of ways, in terms of our life stage, as well as how you treat money and evaluate new markets. We only have two SFRs at the moment but are preparing to either build our portfolio in that direction or take the next step into small multi-families. I especially like that you shared details of your financing, and demonstrated how your success has been possible with the financing options you use. Congratulations on your success and  good luck in the future!

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