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

362 Replies

@Olu Sanya

Interesting that you're not using financing/leverage. Any particular reason for this? I find that staying leveraged significantly improves my ROI/IRR while I'm still "growing" my portfolio.

@Jay Hinrichs

Thanks for stopping by - love all of your contributions to this site, btw! I did consider paying off all of the loans (or at least starting to) when I basically reached my "unit goal" (50 right now, but could bump that up to 65-75). Since I don't need the cash flow right now, I found that staying leveraged increased my ROI/IRR. But when I'm ready to live off the income, I do plan to spend a few years prior focusing on debt paydown to really boost the cash flow.

@Mark S.

I don't blame you for sticking with turnkeys - I bought 4 myself a few years ago when I was new to the real estate investing world. I basically just reached a point where I felt I could do a lot better sourcing the deals somewhere else. I have met a few investors who have 10+ turnkeys though and they're doing quite well.

Congrats on your success. I really appreciate how in depth you went on your success story. This should literally be pinned to explain to people how to write a success story on here. Most folks post vague details and basically just do a drive by posts to get "likes". Congrats again and thanks for the inspiration.

@Aaron L.

They look something like this on one of the last properties I bought:

Rent: $3,000/mo ($750/unit)

Vacancy: -$240/mo (about 8%)

Expenses: -$895/mo

NOI: $1,868/mo ($467/unit)

Loan Payments: -$789/mo (30% down, 25 year amortization, 5.15% rate)

Cash Flow: $1,079/mo ($270/uni)

This is post-rehab. I suspect we can maybe raise the rents a bit over the next 1-2 years and stabilize vacancy around 5% to push cash flow to $300+/unit. Building was purchased for $190k, 4-plex.

Keep in mind, these are actual numbers I'm getting, not projections. Again, I would caution against using set/ballpark percentages for every deal you analyze and instead would consider them individually based on property location/type.

@Salvador Arias

See one of my other answers about market selection. I think it's a rather challenging, but a very important step if you're going to buy out of state, because most of your returns will be dictated by the macro-economic conditions of the market you're buying in. I don't want to start throwing cities at you because it's meaningless without knowing your goals, risk tolerance, available capital, etc.

As far as meeting people, you're on the biggest networking site for real estate right now. It's a great place to start. Also pretty much all investors I've ever reached out to are open to a 30 minute phone call or a cup of coffee if they're local. If you spend a few hours a week on networks, you'll eventually have a large network.

@Ernesto Hernandez

I did a very targeted, small-scale direct mail campaign. Part of my goal was to personalize the letters to the max and that included putting a phone of their property. It made it much more personal and more likely that they would call me, which I think turned out to be the case. I got the phone by taking a screenshot from Google Street View (drop the little yellow person on a road in Google Maps).

I've done a more in-depth writeup on how I ran this on Reddit if you want to check it out. 

@Anton Ivanov Congrats on your success.

I just read through the whole thread and really appreciate how you answer every single persons question. Thanks for breaking down the numbers. Truly inspired by this. The side hustle you mentioned in the beginning of making about $150k a year was the real estate? Or is that a different start up all together?

@Anton Ivanov , do you have a general idea about your friends’ monthly cash flow per unit on their TKs?  I’m sure much depends on when they bought and the particular market, but I’m curious.  

My biggest fear right now is buying TK deals that are too lean, locking up my 10 residential mortgage spots on small SFRs (yes, I know I can always pay these off later as I scale to re-open them back up), and burying myself with houses that are difficult to get out of later.  

I am trying to keep a long term perspective and think about things like rising rents, historically low interest rates on the rise, total return, etc., but sometimes it’s hard to get past the imaginary little person on my shoulder saying, “Are you really going through all this and buying out-of-state rental properties for a measly $125/$200 per month?”

I would love to send a colleague request but I haven’t figured out how to do that:( can you send me one. My husband and I do mainly 4plex units as well. We have 13 buildings currently and building our 14th. I would love to ask you a few questions!

Dude. This is epic. Congrats on the execution! Looks like you found a sweet spot in Kansas. I've just made on offer on my second property, a Milwaukee duplex with great cash flow. This is inspiring, and I'm looking to take a page out of your book here. I also happen to be a front-end engineer, but in SF. I lived in San Diego for about six years. What a city!
What does your startup do?

@Ernesto Hernandez

I think the mods removed it from here, I'll send you a message with it.

@Mitchell Litam

The "side hustle" is becoming more of a full time thing lately, haha. It's the company in my signature.

@mark 

@Mark S.

I think it was around $150/200 month if my memory serves me right. All of their portfolio was in Indi.

I think if you're buying in good, improving markets, then even with turnkeys you'll see price appreciation and rent increases over time, which will increase your safety margin and profit. The key here is the market though. There are many cities that are "hot turnkey destinations", but looking at macro economic/population/job growth and forecasts they're not really going anywhere. Many of these cities are also in the mid-west coincidentally... 

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@Anton Ivanov Great post! A few questions for ya. 

1. Is the $10k+ monthly cashflow purely cashflow, or is that amortization as well?

2. How levered is your overall portfolio?

3. Since all properties are mortgaged, whats the debt breakdown, 30-yr fixed, 15-yr fixed, ARMs?

4. How much do you keep in cash/credit lines to maintain a portfolio this size (no need to provide cash figures, but months of expenses would be interesting)?

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