Help me understand - 25 doors by age 25???

Question

I have a 7 figure portfolio.  Not all of it is in cash but or accessible for rental properties, but most of it is not tied up in houses and is very liquid.

That said, I don't quite understand, even with those resources, how I would acquire 25 doors in just a couple of years and on presumably a relatively small income and very short time to acquire wealth if one assumes starting at zero or with college debt even.

One example of this was discussed on BP podcast 199.

Given all that, can y'all help me understand how people are doing this and what secret am I not quite understanding?  I can only write so many $30,000+ checks, even with a 7 figure portfolio for 20-25% down payments on rentals (whether SFH, duplexes, quads or small apartments).

Anthony Gayden · Answer

I just looked on Realtor.com. There are 235 listing within a 20 mile radius of Dallas, that are at or below $100,000. The lowest cost of which is $10,400.

http://www.realtor.com/realestateandhomes-detail/2618-Lenway-St_Dallas_TX_75215_M76473-59869

Thomas S. · Answer

It really isn't practical based on either time requirements or finances unless you purchase an apartment building (possibly with partners).

Daniel Y. · Answer

@Steve S.

I agree with you, Steve. To be more specific, I think it is a market thing. I have been researching the Dallas area and it has been growing, so it makes it tough. No one, and I mean NO ONE, can do that in the LA market with zero capital and student loan debt (even without student loan debt, forget about it). They could get private/hard money, but with cap rates so low here, you would be losing thousands of dollars per month if you had that many doors in a strong expensive market.

Steve S. · Answer

The conclusion I'm drawing is that people that seem to be doing this are buying properties that are less than $100,000 each and possibly way less, as in the $40,000-$50,000 range.

Where I live in Texas, these types of properties don't really exist.

Anthony Gayden · Answer

@Steve S.

At first I did not believe it was possible either. I had no clue that so many options were available to buy real estate. One such option is using a commercial loan to purchase many properties at once.

Imagine that you decide you want to purchase 25 properties, each one costing $100,000. The total purchase price would be $2,500,000. A bank decides to give you a portfolio loan that covers 70% of the cost. That means you only need $750,000 to buy all 25 homes.

If you truly have 7 figure assets to invest, it would seem pretty easy getting to 25 properties without even needing much creative financing.

Todd Campbell · Answer

I started when I was 25, so I can't speak to the 25 by 25. Here's what my first three years in real estate looked like.

Door number one duplex 3% down. 75k = $2250  (I lived in one side, so I'm not counting my door)

Door number two $20k = $2k down + backroom bank loan (sort of like a personal loan)

Doors 3,4,5,and 6 $110k = $0 down it was in the time of creative loans and financing.

So, that's 6 doors in two or three years for cash at close of $4,250

Now, some people will do wrap around loans, land contracts, and other means of creative financing. - Which you will have to, as you can only hold 10 loans (I think) loans through Fanny/Freddie.

The next two purchases happened within a few months of each other, the houses were next door. While I haven't shown you a path from 0 to 25 in a few years, you should be able to see that even my bungling around happened at a quick clip, and not for a ton down.

Anyway, I am sure somebody more savvy than myself will draw this all out.

Richard Asonganyi · Answer

The BRRRR method is one possibility to achieve that goal. In case you aren't familiar with the term its simply buy,rehab,rent,refinance and repeat.what you could do is buy below market value properties, rehab the property which gives you more equity in the property,rent it out then  refinance it pulling out your initial investment which you  will use to repeat the process again and again..that is how some investors build a sizeable portfolio in a relatively short period of time.a couple of good multifamily deals might do the trick too.hope i was helpful

Help me understand - 25 doors by age 25???

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