Writing this to encourage, not brag! In 2001, I started flipping and did maybe 25 or so. It was tiresome, while also coaching two basketball teams, and maintaining my sales manager W2 position! I switched jobs in the 2009 economy fold, and probably messed up as I did not do any RE investing for 7 years, other than investing as a minority partner into a 72 unit college property using our HELOC for $202,500 as our portion of down payment. In 2016, I met with my son and financial advisor, and he informed me that we needed to hustle to replace income if I ever planned on retiring. So, in the last 4 years this is what I have accomplished;
1) flipped around 12 properties
2) bought into 5 plex in Lebanon 50/50 with my son for $375,000, rehabbed some and increased rents to market.
3) bought into 8 plex in Forest Grove 50/50 with my son for $642,000, rehabbed all 8 units and at market rents.
4) sold 5 plex in Lebanon by owner for $545,000 and invested into Crowdstreet Opportunity Zone in Atlanta, Ga.
5) bought fixer 4 plex in Albany, Or rehabbed, and rented at market
6) bought 2 fixer 4 plex's near Western Oregon college campus, rehabbed, and rent at market.
7) started hair salon, pretty much failed, and got rid of it 3 years later.
8) refinanced 8 plex and pulled out $100,000 on my portion to pay off debt.
9) Majority partner refinanced 72 unit building and received $145,000 I used towards debt.
I accumulated lots of debt during this 4 year period, using my HELOC for down payments and rehab work to get to market rents. I now have worked hard to pay off the entire $421,000 HELOC, so my personal home is now FREE and clear of any debt. I was cash flowing $8000 a month from this work the last 4 years of creation, but down to $7000 as we sold our Lebanon property, but I avoided CAP gains this year with the opportunity zone, which is a 10 year hold. I am tired, but this can be done IF you put your mind to it! So, I now average $13,000-14000 a month positive cash flow, after Capex and monthly repairs. That number also includes $3000 or so a month from stock dividends on an account worth around $800,000. I am 52 1/2 and after 30 years in the same industry, trying to figure out what I want to do. My career, I have to work Saturdays, and with a new 9 month old grand daughter, I am less than thrilled to have off Fridays and Sundays. I ask myself, "how much is enough?" Maybe its a mid life crisis question, but it is real folks. I am currently looking for a decent flip but the well seems to be dry. I am thinking maybe more one good buy and hold might be smart before I hang up my W2 job. I wanted to share my story because nothing is easy out there. I am have been grinding since 2001, but taking off 7 years, and probably the years I should have NOT taken off! Even in a hot RE market, I have worked hard to find off market deals, and worked hard to get sellers to carry the contract. Some say I am LUCKY, but that probably true. I like to say I am BLESSED. But, I define LUCK as Labor Under Correct Knowledge. My advice is to always be grinding, and do not look for excuses. I had no family support or money, I just started with reading books long before there were any HGTV shows out there. I sit here on a slow work day on a Saturday I despise, so I wanted to encourage you to reach your dreams, and also find a number that would actually make you happy. Money cannot buy happiness, but I am looking for my FREEDOM number, but health ins concerns always clog my mind. Curious of your thoughts and your story, no matter how big or small.
But 2 of my greatest joys in 2019 is the birth of my grand daughter on May 14th, and doing 2 Spartan races with my older son. We did the Trifecta!
This is so awesome Todd! Thanks for sharing your story! HGTV makes it all look so easy. It's real stories like yours that inspires people and let them know that it can be done!
When are you retiring to spend more time with your granddaughter? Do you have a timeline in mind or a number in mind?
Hope to see you around!
Nicely done. Hope you take some time to spend with your new granddaughter.
@Kayla Truong. I guess that is what I have been wrestling with, how much should work long term? One concern is health ins costs and if we actually use the ins as far as deductibles and balance. My wife and I live 80 miles away from our two kids, and of course the grand baby. I am wondering how long I should wait?
@Theresa Harris . Thank you. My wife and I head up to portland, roughly 80 miles away every week or two. We love our family for sure! Just kind finding my W2 very inspiring.
@Todd Powell thanks for sharing this was inspiring and real! I like that you shared your successes and failures.
@Paul Ellis thank you. Do you invest in RE?
Great investing history story. I enjoyed the good and the bad. I would like to say everything works great and I always make money. In the real world that’s not the case. The HGTV shows are not real because they don’t show all the numbers but, it is entertaining.
Thanks for sharing.
I appreciate this post because I’m feeling a bit discouraged today after deal hunting / grinding with not much to show for it Atleast for the day anyhow . I think the barrier to entry is a mental one in this business .it is difficult especially with limited capital and fierce competition with deep pockets .
It’s certainly the most difficult thing I’ve ever pursued in my 42 years and there are very defeating days like you eluded to . I find that I need to remind myself I’m blessed to have all these assets and skills etc.. but that’s hard to do at times when it seems like everything goes wrong at once and your banging your head on the wall out of frustration .
I think you have to love it ..be obsessed about it to become a success in this field because it’s so hard and requires daily motivation /self talk because any sane person would give up ! Who would put up with this crap and devote their time money and resources to get kicked in the gonads for years on end !
You need “why “power ..not “will “power to stay in the game long enough to see your dreams come to fruition and accounts start to multiply . This is a get rich slow business that’s for sure . Congrats on your success and I’m looking forward to seeing you post that you are not plugging away on Saturday’s any longer!
@Kenneth Garrett absolutely! I was 1 for 1 at the courthouse steps using a "expert". That expert costs me $26,000 in a state tax lien that was not obvious. I broke out on that flip about even selling it non MLS. My worse loss was $7500 just months ago. More wins than losses but you are right, HGTV does not show all the true costs to do a project and holding costs until closing.
@Dennis M. Thank you so much for your kind words and thoughtful post. I am normally that fast charging guy, and one who has succeeded despite the negative stuff out there. I have found my best deals off market and finding solutions for sellers. Lately, I am striking out and your post was spot on for me ! I am trying to build some cash in order to move away from my W2, but finding it harder than ever to find a deal. I am counting my blessings, and you are right about getting kicked around when it comes to managing tenants as a 2nd job. I am pretty good at it, but boy does it take work. Whoever termed this “passive income” should seriously revaluate that term. Thanks again for your input
@Todd Powell yes but I’m afraid have Listen to a lot of Dave Ramsey and only taking out debt on homes I live in, pay off and turn into rental properties. It’s a much slower process but I believe it will snow ball.
@Paul Ellis I earnestly am a conservative type investor, and also took his course, but honestly Dave's thoughts and methods would have cost me millions in net worth. I believe his basic principles are great for the masses to stay out of debt, but there is good debt. For example, when I bought a property for $228k that was worth $300k and I took a mortgage, it was good debt. Today, that said 4 plex is worth $459,000 and I owe $90k. If I would have saved the "cash" I would have never gotten this deal. I buy and flip, and again use borrowed money from my HELOC. I respectfully am telling you that Dave does NOT have all the answers.
@Paul Ellis I could write a book about my dealings, and buying properties well below market values using borrowed money and smart leverage. Saving cash is slow and will cost you tons of money. In our Ramsey meeting, I was the only one who would NOT give up my Alaska credit card. You see, everyone was cutting them up and I was racking up massive monthly airline points as my card was linked to all my Home Depot purchases. I also paid off my card EVERY month and I maintain absolute control! I was not popular, but I am telling you sincerely, those people may have paid off debt, but I have amassed $4 million in RE equites. Just being honest here
Wow, man that is absolutely incredible! Thank you for sharing that inspirational path, and all that you have accomplished. What a great bonding experience to share with your son as well. Two generations of self made men in one endeavor!
Congrats on making so much headway!
So what IS your freedom number?
What cash flow will meet all of your needs? Do you still have debt on any of those properties? Can you increase your cash flow by paying them down or slowly raising rent over time? Will your rents hold up in a down market? Most rent will increase in a down market but if you are airbnb'ing anything or if your properties are at the high end of the rental market they may decrease some.
What if you never touched your principal? You could move a lot or all of that $800k into a self directed account and lend out through private lending in real estate at 8-10% and never ever touch the principal if you can live off the interest. In my personal experience only the more desperate for deals and/or cash go after the 12% hard money in this market so would be personally wary of someone willing to do that. Just my two cents though.
Lots of markets will support multiple deals with that kind of money.
Buy only you can decide what your freedom number is. Personally, working Saturdays with a young grandchild would get me there very quickly.
Updated 11 months ago
I really can spell, really. I got auto corrected.
@Keegan Burkholder thanks man!
@NaDean Bowles . Thanks for your input. My FREEDOM number has been my struggle. My wife likes to spend more money than I do, for sure. Although my W2 is really high, my family ties are making me question my WHY. The $800k nest egg, my plans are to NOT touch the principal, but just take $3000 in mo dividends. I do not think I would deploy any of this into RE. I do have mortgages on my properties, but they all have 60-70% equity positions in them. One goal is to pay one 4 plex off thats worth $459,000 that I owe $90k on currently. Its a 3.87% rate so I never cared but it would provide another $1200 per month cash flow as that is the Wells Fargo payment. I am really asking myself what is enough, as I am a simple guy, but I then ask myself can I keep up with my wife’s spending, and possible health care issues as we age. I cannot get medicare until age 65, and I am 52 and my wife is 50. Our kids and now grand baby is really making me re evaluate what I want in life.
@Todd Powell I agree with you on the credit cards I used them for the protection and the cash back but of course pay them off every month. Also buying a home I used debt but I think buying a 200k home that can rent for $1700 a month minus repair, vacancy and property management and having is 100% paid for eliminates a lot of risk, you’re not forced to rent to a bad tenant. For me it’s all about eliminating the risk of the debt on the property, owning as few properties as possible and making the most from each one. Please poke holes in my RE strategy, it helps me see things maybe I’m blind too.
@Todd Powell congratulations, it sounds like it's been a long road with plenty of trial and error! Not sure what you do for W2 work, but could you leave that job and consult/freelance in whatever field you're in to have things more on your terms from a schedule perspective?
You could double that $3000/mo by doing real estate private lending and/or grow the principle. My ultimate goal is to be the bank which is what private lending provides you.
Ok.... what about this approach:
Buy more properties. Perhaps up to $300,000 more of down payments and have even more cash flow.
Sell some of what you have rehabbed before it needs anything fixed again so the new roofs/new HVAC's will be on someone else. You should have raised your value significantly with the rehab by raising the rents.
Add storage and/or gyms to raise rent. Gyms and storage are pretty cheap actually if you have a larger complex and space. Space for either can fit under staircases, etc.
Do a 1031 move over into new properties using your old money as the down payments for the new properties and I would expect your cash flow to skyrocket.
Make sure to leave room to supplement Medicare. Perhaps put your own utilities on some form of renewable energy to cut monthly costs long term if you have a larger home.
Have you talked to your wife? Would she be reasonable about it? Would she stick to a budget?
Could you modify your work to open your own business to supplement your current cash flow? Are you putting any of your current cash flow back into your real estate?
@Paul Ellis I will not poke holes in your strategies, as I can understand owning less units while trying to owe less. You will have less headaches with less tenants for sure, but I believe in good debt. By no means, am I a high risk high leverage guy. I just do not believe in Dave’s thoughts as a RE investor. He would have cost me tons of money. You make money on RE over time, no waiting to save cash for purchases makes zero sense to me. Hey, there are lots of ways to make money, so whatever works for you is awesome ! Best of luck
@NaDean Bowles lots of thoughts here I had never considered. Thanks
I always wanted to know how much someone else held in their 401K. Thanks for sharing
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