Just closed on my 23rd Door and I haven't seen 1 property!
Last week I closed on my 23rd door and I got started investing in real estate less than two years ago. I want to share this success story to give others some encouragement, especially if you're investing long distance.
I started listening to the BP podcast about 2.5 years ago, when I realized I was terrible at trading stocks and started looking for other outlets of semi passive income. I had some money in the bank and needed something to do with it. I listened to about 30 episodes, read multiple books and decided that small multifamily would be niche. I encountered one problem from the get go, I lived in California and needed cheaper properties to even consider investing. So begins the journey...
After market research I focused on Omaha, NE as my first market. I reached out to between 15-20 agents that I found through the BP forum and let them know I was interested in investing in their city. I got a reply from 2 of them. That was good enough. The one I ended up working with has thrown some good deals my way. I quickly jumped on a plane in January of 2018 and checked out the market, confirming it was the right decision. From there I went back home and started analyzing deals that came my way. I purchased my first two properties in April of 2018. Details below:
April 2018 Purchases:
Duplex (vacant) for $40k - needed $13k in siding and about $5k in internal cosmetics. I built in the $18k construction loan and purchased the property for $58k with 20% down (less than $12k). Rents are $695 for the top unit and $715 for the bottom unit = $1410/month. I stabilized it with tenants and cash out refi'd almost a year later which allowed me to pull out $50k in equity. I'm now cashflowing a few hundred dollars a month on this property
4plex for $120k - I purchased this with a friend and rehabbed 3 of the units. We had a tenant destroying the bottom unit and gave them a 60 day notice to vacate. They left and our PM had to clean up the trash and debris they left behind, not to mention the cockroaches we had to get rid of. Rents total $2410/month. We haven't made much money on this unit because there's been issue after issue, but we've built equity and we're breaking even right now.
March 2019-September 2019
Another friend that I've met through a mastermind group turned me onto Bay City, Michigan because of the cheap property prices and gentrification of the town. We saw opportunity for passive income. Last year we purchased 4 buildings together, 2- 5 plex's and 2-3 plex's for a total of 16 units. Each building cost $85k or less, and we should be cash-flowing about $4k/month net total by the end of this year. We inherited some bad tenants that we've been swapping out and getting the current ones up to speed with paying on time.
February 2020
In between the timeframes above I started a vacation rental management company with a business partner, we currently manage 17 properties. This industry has turned me on to purchasing vacation rentals, which until I started managing them, seemed too risky. Last week I closed on a 2bd/2ba cabin in Sevier County, TN. Purchase price was $269k, I put down 10% and locked in a 4% rate at 30 years. All said and done I put down $35k and the place is fully furnished, ready to be listed on Airbnb. It's been consistently grossing about $39k/year which should give me about $1k/month in cashflow after the mortgage and expenses are paid for.
I haven't physically seen ONE of these properties and can truly say that once you get the first property done, you're on your way to more! I've dealt with my fair share of bad tenants but I have a property manager in both states to deal with those. My company will be managing the Tennessee property, so I leave that properties destiny in my own hands. I also purchased my first property for dirt cheap which allowed me to get my feet wet, without taking on a huge risk. If you find reliable people in each market, you can purchase properties anywhere without physically seeing them. David Greene's Long Distance Real Estate Investing book is a great place to start if you're in a similar situation. Please feel free to reach out if you need some motivation or want to connect! I'm by no means an expert, but I took action, which is what got me here and will continue to drive my portfolio forward.
I hope this encourages someone to get started on their journey.
Tom