How, Where and What investment vehicle did you begin with?? and Y

9 Replies

Hey Guys, I'm Shawn, A real estate investor from NYC.  I began my investing career in the buy and hold arena.  The reason why I began with buy and hold was mainly for cash flow.  I started 700+ miles away from NY in the Milwaukee WI market.  The reason why I began there was the Mid-West  had all of the metrics that I was looking for i.e.. price to rent ratio, landlord friendly laws on the books and low cost of entry. 

I started as many others may have by using balance transfer credit cards.  To the tune of $130K.  Not a suggested strategy by any means but just how I got start up capital to begin.  I have a solid portfolio of singles, duplexes and even my first 11-Unit picked up this year.  I began about 5 or so years ago. 

I'm interested to begin a discussion on where others began and why?  Thank you for contributing to this post and let's engage/encourage one another!!!

Congrats on your accomplishments @Shawn Ackerman

 I started with a run down single family. It was just me, my dog, and my girlfriend. I wasn't willing to move out of town to house hack, so I decided to purchase my first home and put as much sweat equity into it as I could. My grandmother had left me some inheritance when she passed away, and I utilized every penny of it on the house. I wanted to best utilize that money so I gutted the house to the studs while living without a kitchen or an upstairs bathroom for a while, sleeping on nothing but a mattress on a dusty floor. I wasn't willing to settle for a turn-key property.

Originally I thought about flipping it, but the area is perfect for me I decided to stay. Ive since utilized the equity as a down payment on a duplex I just bought. Im currently fixing that up. 

@Shawn Ackerman I don't know how you do it: out of state, in tough areas and leveraging credit cards - but you have done it exceptionally well and that is really impressive!

I started in Milwaukee after my company has reloacted me here from Austria and I was looking for an alternative to Wallstreet and 401k - so it was not my choice and at the time (fresh of the boat) I would have preferred a more exciting city like NY or LA. But it turned out I got lucky with Milwaukee as a real estate market!

This was before BP and my agent was not much help either, so I read every book I could find, took seminars and enrolled in a one year course with Rich Dad Education, which was not the worst thing, at least it tought me a lot of theory.

I was still very sceptical if real estate investing would actually work - if it's so great why is not everyone doing it? Only one way to find out and I finally bought a 2/2 duplex for 125k and almost to my surprise - it did actually work. At the time I thought I might be potentially making the financial mistake of my life and I did not know anyone local to validate what I was doing.

While the cash flow was nice and I had proof of concept I found that a duplex required more management attention than I could handle with an international job and gone most of the time. I also started to realize that there was no equity component to my strategy. I have probably spent 30k in rehabs over time and ten years later the propery is still only worth 125k (and is due for a new roof soon). I started looking for value ad opportunities and changed from duplexes to single family for a more hands off management, which is what I needed to scale up while still working for a global company.

The following years the rehabs got more involved and the properties got more expensive, because I started to realize that only a certain quality of neighborhood would allow me to do a full blown gut rehab and not lose equity in the process. 

My wife started to get involved as well and I brought private money into the mix, so we could make cash offers and handle 2-3 gut rehabs at the same time, before refi - it did not start this way, but essentially evolved into a BRRR (or better BRRAR). Eventually we sold off city properties and changed our focus to the suburbs and equity growth at least equally to cash flow. New construction is my latest passion..

My recommendation to anyone getting started is to consider a house hack, if you are young and don't mind living in a duplex. This is probably the single best strategy, very easy to do and fund, low risk and is setting the foundation for future growth. If you are further in your career and life and have already a certain net worth, look for quality rental properties; what you pay is what you get. Flipping and wholesaling are not the easiest startegies for starting out - both are active jobs (as opposed to an investment) and require a combination of different skills that need to be developed and take a long time to master.

Congrats @Shawn Ackerman on your success! I have heard your name a few times when people ask about investing in Milwaukee C or D neighborhoods out of state. So many people tell investors to shy away, but you are proof it is possible!

I myself got started in September of 2017. I had recently moved to the suburbs of Milwaukee for an engineering position. I realized I didn't want to do what I was doing for the next 45 years so I needed to find alternate ways to make money. 

I also have a past in construction so I really enjoy that feeling when you take something old and make it new! 

I bought 1 duplex with a partner who's a local broker in Milwaukee. He was very helpful to learn the ropes of investing and especially the areas to avoid. 

Then I came into a creative deal involving a guy who was incarcerated and I helped him avoid foreclosure on his SFH.

I have now been growing my portfolio of 1-4 families in the greater Milwaukee area! 

I love it! I also love the reactions I get from tenants when I improve their quality of life by remodeling their unit or lowering their rent. A few of the properties I came into the rents were outrageously high (in my opinion) for the area the properties were located. 

@Marcus Auerbach so awesome to hear your story. You must be glad you selected the real estate vehicle man. You provide a great deal of balue to investors in the Milwaukee market and I follow you closely. Wish you much success going forward man!!

@Alex 

@Alex Witte thanks man!!! Been a lomg road but we are making strides each year.   How do you feel the construction backround has helped you grow your rental portfolio?

@Shawn Ackerman  

Awesome! Keep it up. Next time you're in town we will have to meetup!

I think the background in construction and understanding what the steps are for a given project helps me with writing out scopes of work that make sense to a General Contractor... or to a specific contractor like a carpenter or plumber. 

It also helps me organize contractors (when I am doing the GC work) to make sure all necessary steps are completed before, for example, the plumber shows up to rough in plumbing. You have to make sure all necessary demo and framing is done. Things like that.