18 to 60 Units During the First 9 Months of the COVID-19 Pandemic

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People say that the Chinese word for “crisis” is comprised of two Chinese symbols—the first symbol signifies “danger” while the second symbol signifies “opportunity.” In one of my last BP articles from December 2019, I detailed how I grew my rental portfolio

from 2 to 18 units in just 12 months using other people’s money (“OPM”). Just two months after I posted the article, the COVID-19 pandemic hit. It was a scary time—mainly from the uncertainty of what the pandemic would mean to me, my family, my tenants and everyone else out there. In March 2020, I had just put under contract another duplex in Harrisburg, PA (where I predominantly invest). Possibly even worse, the week before the government shut down, I had moved out one of my tenants (in one of my single-family houses) so that I could flip it. What on earth had I just done? I ended up doing what I believe every other landlord and real estate investor did out there. I held my breath, crossed my fingers, and just waited for March and April 2020 to play out. And guess what? Everyone of my tenants paid their rent. I had gone to great lengths to fix up my apartments and to screen and find the best tenants for them. All of that work paid off. Once we made it to May, 2020, I decided that this “crisis” was really an opportunity. Instead of hitting the breaks on real estate investing, I pushed down on the accelerator and never looked back.

During the first 9 months of the pandemic—from March 2020 through December 2020—I ended up adding 42 units to my portfolio—taking me from 18 to 60 units. This post is how I did it. This is also an opportunity I would like to offer to anyone else out there who has the same level of commitment/passion/desire when it comes to REI and would like assistance to start and/or grow their portfolio. I am grateful for the journey I just went through and would like to use this opportunity to give back to others so that they can experience the same growth and successes. The end of this article provides details on who I am looking to help on their journey and how to connect with me.

The reason I was able to experience exponential growth and success was because of the roadblocks I ran into during my journey. Sounds crazy, right? But it is so true. Those roadblocks forced me to try new things that opened new doors for me. My largest roadblock came with financing. In growing to 18 units, I found an awesome relationship with a bank who was offering me 30 year amortized loans with a 10 year fixed rate and also an option to do a 20 year fixed rate loan. At the end of 2019, that bank informed me they would no longer loan to my LLC. That forced me to shop around for financing, which is where I found a new bank that not only would loan to my LLC, but would loan based on the appraised value (even when higher than sale price) and even use the after repair value ("ARV") for the appraisal. If I could get an appraisal higher than the purchase price, they would still loan on the higher valuer contained in the appraisal. I am told this was a thing of the past. Had my first bank not stopped loaning to my LLC, I would have never found this better financing option. Recognizing the huge benefit here, I took full advantage of it. I closed on the majority of my properties from 18 to 60 units, not only with no (or minimal) money out of pocket to close, but I was even getting paid at closing to buy the properties. I could then use those funds towards renovation costs. Here is how it went.

March 2020

Property: 2 unit

Sale Price: $135,000

Renovation Cost: $50,000

ARV: $215,000

Rents: Increased from $1,500 to $2,375

Unit Count: 20

May 2020

Property: Single Family House

Sale Price: $130,000

Appraised Value at Sale: $166,000

Loan: $132,800

Unit Count: 21

July 2020

Property: 2 unit

Sale Price: $100,000

Renovation Cost: $50,000

ARV: $156,000

Rents: $2,320

Unit Count: 23

July 2020

Property: Single Family House

Sale Price: $145,000

Appraised Value at Sale: $183,000

Loan: $146,400

Rent at time of sale: $1,600

Renovations: $25,000

ARV: $235,000

New Rent: $2,100

Unit Count: 24

August 2020

Property: 3 unit

Sale Price: $115,000

Appraised Value at Sale: $190,000

Loan: $152,000

Renovations: $35,000

Rent: $2,625

Unit Count: 27

August 2020

Property: 7 unit

Sale Price: $485,000

Construction loan: $150,000

ARV Appraisal: $810,000

Rents (pro forma): $8,155

Unit Count: 34

August 2020

Property: 3 unit

Sale Price: $112,500

Appraised Value at Sale: $224,500

Loan: $179,600

Renovations: $100,000

Rent: $3,495

Unit Count: 37

September 2020

It was all base hits up to this point. But, this is where I finally hit my home run. This was two 3 unit apartment buildings which were attached to one another, but on separate deeds. They were listed on the MLS for $180,000 each, which was on the higher end of any 3 unit comps in the area and also more than I would have ever considered paying for a 3 unit apartment building in this market at this time. The real value I saw in this property, however, was the fact that if you viewed it as a single 6 unit commercial property, the income based appraisal would have a significantly higher value. Each of the units were huge and could be rented for significantly more than what they were currently being rented. I ballparked an ARV for a commercial appraisal would easily exceed $600,000, so I was willing to pay more than what I ordinarily would pay for a single 3 unit apartment building. Because this was on the MLS, I made a very aggressive offer--$185,000 each, waived my buyer's commission (I am a licensed Realtor), waived inspection, and even waived the mortgage contingency, banking on my new lender coming through once again. The Seller's agent called me and told me I didn't have the highest offer, but they would still sell to me if I increased my offer by $2,500 for each property and increased my earnest money deposit to $10,000. I agreed and locked up the property. Because the properties appraised for $467,000, I essentially didn't have to bring any money to close. And what truly makes this property a homerun, I put $37,000 into renovations into the properties, and within 1 year, they appraised for $742,500 using the commercial income based appraisal, meaning I got a new loan on the properties for $594,000 and walked away with a check for $227,000 at the closing for the cash out refi.

Properties: Package of two 3 unit apartment buildings attached to one another

Sale Price: $187,500 for each. $375,000 total

Appraised Value at Sale: $237,000 + $230,000 for $467,000 total

Loan at time of Sale: $373,600

Renovations: $37,000

ARV Appraisal: $742,500

Rents: $7,040

Unit Count: 43

That put me at 43 units (25 additional units since March 2020). Around this same time, I got a call from the Seller from Colorado who I had purchased a 3 unit and 2 unit from in 2018 (when I was going from 2 to 18 units). He was now looking to sell off the remaining 16 units he had in the area. These 16 units were not in Harrisburg, PA where all my other properties were located. Rather, he had a 9 unit and a 6 unit apartment building in Carlisle, PA and a single family house in Wormleysburg, PA (on the other side of the Susquehanna River from Harrisburg, PA). He called me and told me he was looking for $1.25M for the package. I had just experienced significant growth, had a number of renovations going on, and was not looking to take on a very large project. Also, I thought $1.25M was overpriced based on my analysis. So I passed. One month later he called me back and told me he wanted to sell to me, and he would take $1.15M. I was in the same position, and still felt the price was high. So, I told him to sell to someone else. One month later, he called for a third time. He told me he wanted to sell to me because he knew I would close (I always close), and he would do $1.05M. I was intrigued at this point. The price worked. But, I didn't have the cash for the down payment. I told him that, and he told me he would leave $140,000 in the deal towards seller financing on the deal. Everything made sense. So, I started a new LLC and bought the 16 unit package from him. I started by renovating the single family house, because that would be the easiest and quickest to refinance to free up cash for renovating the remaining properties. This is how the single family turned out:

Sale Price: $60,000

Renovations: $40,000

ARV: $158,000

New Loan: $126,400

Rent: $1,400

I am currently in the middle of renovating the 6 unit (looking to turn that into an 8 unit), and once that is completed, I will finish off the 9 unit.

Unit Count: 59.

January 2020

I ended up purchasing a new house as a personal residence. I kept the townhouse I had been living in (which I have a HELOC on), and rented it out, putting me at a total of 60 units within the first 9 months of the pandemic.

In August 2021, I put another 2 unit under contract, putting me at officially 62 units at the time of this article.

Unit Count: 62

2020 was a crazy year for so many reasons. While everyone will always remember it as the year of the pandemic, personally, I will always remember the opportunity it presented to grow my REI portfolio to levels I did not realize were conceivable. In that reflection, I also recognize the importance to give back to others so that they can share in similar experiences. As such, I would love to help others who may be where I was in March 2020 looking to grow, or even those just starting out. You, however, must commit to putting in the work. I do not offer to do the work for you. Rather, I will only show you the processes I used and will help you work through any issues / hurdles you are currently facing. If that's you, please feel free to connect. I would love to help you and watch your success.

@Cory Iannacone Really nice job on the renovations, well done, Cory! In speaking with other owners / investors, we agree that we can attract the right tenants when our properties are safe and well-maintained. Good to be reminded of what the Chinese word for “crisis” means: “danger” and “opportunity", thank you.

@Cory Iannacone Very impressive rehabs as usual! The exposed brick, subway tile, and plumbing/light fixtures are always on point. We even used the same bathroom sink faucets as you on one of your units. We love subway tile in our remodels. See below. 
What lender is doing those great loans? We used Member's 1st FCU for our 8 unit. The best they would do is 5 yr fixed at a 20 year amortization. For our triplex, we went with a nationwide lender called LendSimpli for a 30 year fixed commercial loan. Neither will loan on ARV or appraised value, though.

Nice work! @David Oechslein

Recently I have been working with Gratz Bank (which just went through a merger in Sept., so not sure how that impacts current lending terms), and also Hershey Federal Credit Union.  I have great contacts at both, so if you would like an introduction, I am more than willing to make the connection for you.  Just shoot me a message with your email and I can connect you.  

@Cory Iannacone Nicely done. Your story is motivating to say the least. I too invest in Harrisburg. I have 1 property in steelton a single family in Harrisburg and just acquired a 3 unit. I was looking to refinance one if the properties but I'm hesitant because of fear that it won't appraise. Would hate to lose appraisal $$. Any suggestions

Wow, that is amazing and your properties all look amazing as well. I'm sure that helps attract good tenants as well. I'm just starting out and I'm just weeks away from closing on my first duplex. 

@Steven Jefferson I have been using Gratz Bank and Hershey Federal Credit Union.  Shoot me a DM with your email address and I can make an introduction to connect you with the people I have been working with.  More than willing to help out. 

@Cory Iannacone , beautiful job on all your renovations.  I would love to speak to you re: investing in the Harrisburg area.  I have two properties that I am currently considering but totally new to this market.  Would greatly appreciate any info. you are willing to share.  Please feel free to contact me directly.  
Thank you

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