How are people scaling so fast?
Investor · Houston TX · Member since 2023 · 9 posts · 33 votes
How are people scaling so fast?
Most Popular Reply
Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes
2yGreat question... but the simple answer is you can't believe most of what you hear on podcasts.
There are some really valuable podcast conversations out there. Unfortunately most people aren't telling the whole story though.
A lot of these podcast guests fall into one of these buckets:
-Started with a bunch of money
-Made most of their money selling education before buying deals
-Don't actually do nearly as many deals as they claim to
-They own a tiny piece of a bigger deal (LP)
I still listen to podcasts a lot but you can't let the guests "successes" demotivate you. Just try to extract what value you can, then focus on scaling your own business based on your own personal circumstances... one deal at a time.
130 Replies
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes2y
Quote from @Grant Stuard:
I have listened to some podcasts, and have heard people saying they got their first 7 properties in 11 months. Some even crazier. I have 5 properties, but I have used all my money to purchase these properties at 25% down and now I am renting them out. I would like to have 30 rentals (that is my goal) and I have the deals. I just don't have the capital to move all at once. I know there is private money lending that can fund some of these new construction deals, but I don't want to sell them for profit after. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage? (over that long period of time)? What do you guys think I can do to get 3 properties a month?
There are three ways to accomplish acquiring real estate faster than most people. 1. Start off with a lot of money. or 2. Buy fractional shares (invest in syndications like an apartment building that has say 100 units and now, viola' they have "100 doors" whereas that actually menas they own just own a hinge on each door but you get what I mean or 3. Using creative finance like Seller financing, Subject To, Lease Options, Land Contracts which is how I teach it and how I did it. Most of the properties I was into totally for under $15,000 didn't need a bank or credit check and no down payment. But, I did need some knowledge.
- 2yAlecia LovelessPro MemberMember since 2019 · 3k+ posts · 2k+ votes
@Grant Stuard I think part of it depends on your market and what you are investing in too. It would be much easier to rapidly scale $35-50,000 houses than where I live and the cost to entry is $275-350,000 for either a SFH or a duplex.
- 2yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
1. Stick with the same lender so you can cross collateralize your equity buildup without selling.
2. Cash snowball. Do some deals that you will sell and take the cash. Then roll into your next doors. Example. 1/1 or 2/1; ADU into 2/1 or 3/2. Subdivide lot off and sell. Your in Texas buy off sale tax properties and resale.
3. Are all your doors single? Start looking at MFH.Sit down on paper and build your scaling plan.
- 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
@Grant Stuard
I've got 24 SFR and it took me 8 years. It was slow the first 5 or 6 years since I could only afford to buy 2 houses a year. But I found ways by getting creative with finances like doing five 401k loans to acquire houses. I've used 0% for a year credit cards to buy houses several times (just did one last month-lol). I used a HELOC to snag 2 houses (my first 2 rentals). And I've bought 12 houses with zero out of pocket $ by doing cash out refis on houses that had some equity I wanted to tap into. I've paid myself back every penny I've ever put into real estate so it's infinite cash flow from here on out. But I've found ways to get the cash for down payments then have harvested equity to scale up.
- Contractor · Scottsdale, AZ · Member since 2010 · 2k+ posts · 3k+ votes2y
Great question... but the simple answer is you can't believe most of what you hear on podcasts.
There are some really valuable podcast conversations out there. Unfortunately most people aren't telling the whole story though.
A lot of these podcast guests fall into one of these buckets:
-Started with a bunch of money
-Made most of their money selling education before buying deals
-Don't actually do nearly as many deals as they claim to
-They own a tiny piece of a bigger deal (LP)
I still listen to podcasts a lot but you can't let the guests "successes" demotivate you. Just try to extract what value you can, then focus on scaling your own business based on your own personal circumstances... one deal at a time.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes2y
Quote from @Henry Clark:
1. Stick with the same lender so you can cross collateralize your equity buildup without selling.
2. Cash snowball. Do some deals that you will sell and take the cash. Then roll into your next doors. Example. 1/1 or 2/1; ADU into 2/1 or 3/2. Subdivide lot off and sell. Your in Texas buy off sale tax properties and resale.
3. Are all your doors single? Start looking at MFH.Sit down on paper and build your scaling plan.
If you "cross collateralize" don't you run the risk of having all of your properties going into foreclosure at the same time in a down turn? Aren't you prevented from selling one off to cure the other if you cross collateralize?
- 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
It really comes down to entrepreneurship.
I invest in real estate. I'm not in the business of real estate (flipping, remodeling, sourcing off-market deals, putting together creative deals, etc.).
Others are in the business of real estate.
It's totally fine to not be in "the business" and just buy a property when your personal financial position is ready, to own it in your name, with conventional financing you qualify for, and buy periodically.
It's what I do.
And, frankly, I wonder if some of these folks who get a bunch of property seemingly overnight don't have paranoia, fear, anxiety, and live with the very real possibility of bankruptcy if things outside of their control happen in the market or a couple of pieces of bad luck strike.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes2y
You never really know what people actually do. How much access to money they had, access to other resources as well. The only person you should be competing with is yourself.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes2y
Quote from @Scott Trench:
It really comes down to entrepreneurship.
I invest in real estate. I'm not in the business of real estate (flipping, remodeling, sourcing off-market deals, putting together creative deals, etc.).
Others are in the business of real estate.
It's totally fine to not be in "the business" and just buy a property when your personal financial position is ready, to own it in your name, with conventional financing you qualify for, and buy periodically.
It's what I do.
And, frankly, I wonder if some of these folks who get a bunch of property seemingly overnight don't have paranoia, fear, anxiety, and live with the very real possibility of bankruptcy if things outside of their control happen in the market or a couple of pieces of bad luck strike.
@Scott Trench: I think the difference is this, in my markets, I buy in the $250,000 - $500,000 range. If I was to use conventional financing at 20% down, I'd need $50k to $60k for a down payment just to start looking at houses.
However, if I buy a property "off market" and buy enough below value, I have equity, in the event I need to liquidate. For instance, I just bought a property appraised at $750,000 for $525,000. Effectively a 30% discount. Yes, it needs a paint job and we'll add some value, but in a downturn of up to 30%, I'm covered.
Why did they sell for $525K? Well, they saved $45,000 in real estate fees, (no realtor involved), they had bought a house elsewhere, they didn't want to go through the requirements of the MLS (fixing things) and they are like most people, "they want it now". I was a fast solution.
It's those who overleverage that are going to be hurting.
And I can't imagine the amount of work and hassle and risk that some investors get themselves into in the $35,000 to $100,000 markets, far far away from where they live. I buy where it's safe, where people pay their bills and where I don't have to worry about walking through the neighborhood at night.
I not limited by banks or by credit or by down payments.It's not the number of doors that matters, it's the profitability and safety of the investment.
It's just a matter of mindset of how you get started in real estate and once you're satisfied with the way you do things, no worries.
- 2yHenry ClarkPro MemberDeveloper · Member since 2020 · 4k+ posts · 4k+ votes
Yes you have a greater chance to have all of them go into foreclosure at the same time. But, for the size of BP forum individuals you will be under Personal Guarantee any ways. Also the banks really don’t want to own real estate. If you have several properties versus one they are more likely to work with you.
You can sell one off to cure another loan. The banks like that.
With my current bank we have 6 properties with them. Our oldest and best term loans are tied to a property we were thinking about selling. Our bank will allow us to keep the best loan. Sell off that asset.
Pay off a higher interest rate loan with the funds and transfer those properties as collateral back to the loan where we were thinking about selling the underlying assets.
Since we don’t shop our interest rates around they gave us 7 year versus 5 year balloon terms.
Both of our banks we are preferred customers. Right now they won’t take new customers. Even if you have a loan with them but no accounts they won’t do additional loans with you.
I value my team relationship versus 1/2% point interest. Plus I can call either of them on a Friday and get a loan Monday or Tuesday once they review the deal analysis.
- Investor · KY · Member since 2022 · 204 posts · 77 votes2y
Private money lenders may do terms like a bank, but in essence your asking for a creative type of financing like sub to or seller finance deals.
Ive had a bit of struggle connecting to private money lenders. Without a significant reputation backing you or social media reputation thats positive it is difficult to get others to do deals with you.
Ultimately do you have equity you can tap into in the form of Heloc ? What is your purchase prices your looking into? - 2ySteve KenneyPro MemberInvestor · Auburn, ME · Member since 2015 · 72 posts · 45 votes
Firstly, I think it's awesome that you have five properties already! If you've bought these by yourself without the use of partners, that is amazing!
Like others have said, try not to get too fixated on the number of units someone has and how fast they've been acquired. There's usually always more to the story and it is hard to gain all those facts by listening to a one hour podcasts. A lot of those guys use partnerships or syndicate to buy deals, so if you are a solo investor you really can't compare your results to there's.
Ask yourself why you want to grow so fast, is it an ego thing? Just make sure if you want to grow, you are doing it in a way that makes sense financially.
I don't know your background, but buying three properties a month seems very ambitious.
A couple ideas for you:
Pull out equity:
I think the fastest way for you to scale would be to pull out equity from one of the five properties you already have and invest that into a multifamily property. If you are buying single family homes now, you'll scale much faster if you invest in multifamilies, so that's what I would focus on.
Promissory notes:
Another option would be to borrow money from a friend/family and use that to put toward a down payment on a deal. This method typically leverages a promissory note, the person lends you money to put toward the down payment, common interest rates for this method are around 10 or 11%, you make interest only payments over 24-30 months and then pay them back in full afterwards.
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Zachary Cain Humphrey:
Private money lenders may do terms like a bank, but in essence your asking for a creative type of financing like sub to or seller finance deals.
Ive had a bit of struggle connecting to private money lenders. Without a significant reputation backing you or social media reputation thats positive it is difficult to get others to do deals with you.
Ultimately do you have equity you can tap into in the form of Heloc ? What is your purchase prices your looking into?I really appreciate everyone chiming in. This is my first post on BP and I’m super grateful for the engagement. I didn’t consider people that are partnering in deals or just have a minority stake. I also didn’t consider there are people buying homes for 50k cash or something like that. To answer some questions, I have 400K in cash to purchase, and my home prices that I’m looking for are around 330K fully built, probably 190K to build. Thank you guys!
- 2yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
@Account Closed I'm sure you will be the exception that proves the rule. You do a lot of stuff on this forum, so I believe your claim on this deal. But, we can't pretend that this is reality for any novice, regardless of how much they spend on education claiming otherwise.
I wonder if the vast majority of claims by first year (or second year) investors who say they have bought properties for even 10-30% below market value are complete crap.
Putting my seller hat on, I ain't giving you or anybody else $225K to "take care of any problem" related to real estate in my life a few weeks faster than listing my property. And it's hard to imagine the vast wealth, carelessness, or generosity of a seller willing to give up this much value to their friendly, problem-solving local real estate investor, even if it is Christmas time. Only a select few professionals will get this. Not some first year investor.
Again, your exception proving the rule.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes2y
Quote from @Scott Trench:
@Account Closed I'm sure you will be the exception that proves the rule. You do a lot of stuff on this forum, so I believe your claim on this deal. But, we can't pretend that this is reality for any novice, regardless of how much they spend on education claiming otherwise.
I wonder if the vast majority of claims by investors who say they have bought properties for even 10-30% below market value are complete crap.
Putting my seller hat on, I ain't giving you or anybody else $225K to "take care of any problem" related to real estate in my life a few weeks faster than listing my property. And it's hard to imagine the vast wealth, carelessness, or generosity of a seller willing to give up this much value to their friendly, problem-solving local real estate investor, even if it is Christmas time.
Again, your exception proving the rule.
@Scott Trench: I know you already know the following, this is for the people reading who should become aware, but don’t know to ask.
TLDR Part
Don’t buy properties off the MLS using "Subject To" & using a secondary lender hoping to do “no money down deals”. It won’t turn out nicely.
REASONS:
If you want to know the mechanics of why: Read the following
My real concern is a popular "guru" who has a Subto "community". He openly teaches and encourages his students to buy properties off the MLS at full price, using "Subject To". Then he uses lenders to fund the down payment & closing costs and gets money back at closing. So, he has "no money into the deal". (But others are at great risk as a result of his transaction.) (this is from analyzing his current video on “Due on Sale”)
You and I are both good at math and logic and know how this works. If you buy a $300,000 property off the MLS for full price and have the added costs of borrowing the down payment, of closing costs and cash out, you are overleveraged. He says that if the bank should call the loan due, you talk the bank into not going forward with the DOS. Good luck with that.
His back up is "deeding back to the seller and doing an Executory contract". Sounds good, but an Executory Contract violates the DOS. He doesn't seem to know that.
He doesn’t mention the options of refinancing or of selling.
So, if you try to sell the property for $300k and you are into it for over $300k, you have roughly 8% sale costs and you wind up with $275,000 at closing. That means you have to come in with more than $25,000 to closing. The people attracted to his "community" are not people who have $25k sitting around. They believe it is zero down, because that is how he teaches it. (It actually costs money to do a Subject To and you need reserves as well.)
The sale fails, the bank forecloses, the secondary lender loses all of their money, the seller’s credit gets trashed, and the buyer faces a lawsuit or two. It starts hitting the news and lawyers start looking for these opportunities.
** Here is an Actual Due on Sale for those of you who have never read one.
Please note that it says “the intent of which is the transfer of title by Borrower at a future date to purchaser.”
That is what an Executory Contract is. It's the intent to transfer title at a future date.
18. Transfer of the Property or a Beneficial Interest in Borrower. As used in this Section 18, "Interest in the Property" means any legal or beneficial interest in the Property, including, but not limited to, those beneficial interests transferred in a bond for deed, contract for deed, installment sales contract or escrow agreement, the intent of which is the transfer of title by Borrower at a future date to purchaser.
If all or any part of the Property or any Interest in the Property is sold or transferred
19. Borrower's Right to Reinstate After Acceleration.
However, this right to reinstate shall not apply in the case of acceleration under Section 18.
***************************************
Instead of that nonsense, I teach that “You Can Not Buy A Property “Subject To” If It’s Overleveraged” and yes, there are solutions to the Due On sale clause, just not the ones he’s pushing.
- Real Estate Agent · Denver CO · Member since 2019 · 209 posts · 332 votes2y
We're just going to skip over the fact that @Grant Stuard is an NFL linebacker...Congrats on the success sir, we should be learning from you. Forget scaling quickly...keep your day job!
But to answer your question I think most folks who scale very quickly were able to do so by assuming a massive amount of risk or own a little bit of a lot.
- Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes2yI got hit by a linebacker in high school. It hurt. I quit and went into making money. Much more fun ;-) I think most NFL payers go broke after leaving the NFL. He needs to be learning from us. Two very different skills.
Quote from @Marcus R.:
We're just going to skip over the fact that @Grant Stuard is an NFL linebacker...Congrats on the success sir, we should be learning from you. Forget scaling quickly...keep your day job!
But to answer your question I think most folks who scale very quickly were able to do so by assuming a massive amount of risk or own a little bit of a lot.
- Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes2y
Grant, many time I have seen new investors post that went from 0 to 300 "doors" in 6 months. Then after much adulation from other new investors they admit they invested $25,000 in a syndication. Scaling fast and owning lots of crappy properties shouldn't be a goal. Collect money not properties.
- Attorney · Columbus, OH · Member since 2023 · 193 posts · 145 votes2y
Quote from @Grant Stuard:
I have listened to some podcasts, and have heard people saying they got their first 7 properties in 11 months. Some even crazier. I have 5 properties, but I have used all my money to purchase these properties at 25% down and now I am renting them out. I would like to have 30 rentals (that is my goal) and I have the deals. I just don't have the capital to move all at once. I know there is private money lending that can fund some of these new construction deals, but I don't want to sell them for profit after. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage? (over that long period of time)? What do you guys think I can do to get 3 properties a month?
Deals on Properties we have here in Columbus, Ohio have a high ARV that allow you quickly refinance, have the mortgage covered by the tenants, and use your capital on the next one. It is just a matter of finding the right team who can bring you the deals.
- Investor · KY · Member since 2022 · 204 posts · 77 votes2y
Quote from @Grant Stuard:
Quote from @Zachary Cain Humphrey:
Private money lenders may do terms like a bank, but in essence your asking for a creative type of financing like sub to or seller finance deals.
Ive had a bit of struggle connecting to private money lenders. Without a significant reputation backing you or social media reputation thats positive it is difficult to get others to do deals with you.
Ultimately do you have equity you can tap into in the form of Heloc ? What is your purchase prices your looking into?I really appreciate everyone chiming in. This is my first post on BP and I’m super grateful for the engagement. I didn’t consider people that are partnering in deals or just have a minority stake. I also didn’t consider there are people buying homes for 50k cash or something like that. To answer some questions, I have 400K in cash to purchase, and my home prices that I’m looking for are around 330K fully built, probably 190K to build. Thank you guys!
I just private messaged you!
- Investor · Fresno, CA · Member since 2016 · 222 posts · 237 votes2y
Quote from @Grant Stuard:
I have listened to some podcasts, and have heard people saying they got their first 7 properties in 11 months. Some even crazier. I have 5 properties, but I have used all my money to purchase these properties at 25% down and now I am renting them out. I would like to have 30 rentals (that is my goal) and I have the deals. I just don't have the capital to move all at once. I know there is private money lending that can fund some of these new construction deals, but I don't want to sell them for profit after. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage? (over that long period of time)? What do you guys think I can do to get 3 properties a month?
I feel you. It can be discouraging. We are in a similar position on door count and I've listened to a ton of content, read books, etc. Here are the commonalities that I've observed:
1. They have an investing system/framework that they know, or believe in enough to act as if, works. They are confident in the acquisition, management, and dispo of properties. This makes them confident to actually execute. This is an often overlooked component. One commenter here noted that he was purchasing distressed inventory off market and/or using creative financing, delayed financing, private money, or all of the above. Yes, this is great and definitely works. The part that is not stated is that there is a whole sales and marketing engine that needs to be set up to execute on this. And that either takes time (tons of time) or money (can cut the time or just hire labor and advertising to start the business engine), neither of which you're likely to put into this without a strong belief that it will pay off.
2. They have a financing system. They either have lots of money, have a deal pipeline which reduces out of pocket cash, partnerships, private lenders, hard money, bank relationships, or some combination of the above. It takes money to make money, no matter what. The exception is where you're putting in "sweat equity" to create a great deal for yourself, but that takes knowledge and time at the very least (or marketing $), and your time is worth something. So not really an exception.
3. They have deal flow.
4. They have relationships.
You can find examples of people who have succeeded highly with just one of these components, but the more you have behind you the better off you'll be to scale quickly.
To get to 3 properties a month, start building out the system for yourself to do this. I would focus on relationships and deals. Also, it's pretty tough to buy 36 properties/yr, even if it's your full time gig. But buying 1 40 unit property/yr.? Probably a lot easier.
- Member since 2019 · 7k+ posts · 4k+ votes2y
Quote from @Eric Gerakos:
Grant, many time I have seen new investors post that went from 0 to 300 "doors" in 6 months. Then after much adulation from other new investors they admit they invested $25,000 in a syndication. Scaling fast and owning lots of crappy properties shouldn't be a goal. Collect money not properties.
LP investment is not real investment that people should be bragging they have this and that many doors , who cares lol they can't even stay for free in that apartment. Even GP investment sometimes is not real investment if their skin of the game is coming from their parent or loan as well ( a LOT doing this). At the end of the day it doesn't really matter how many house or door they have but how many actual dollar they save.
- Rental Property Investor · Somewhere over the Rainbow · Member since 2021 · 1k+ posts · 1k+ votes2y
A lot of them are cheap *** properties
Talked to a "guru" recently that has like 24 doors in a few years. He bought his houses for 60kish and half the doors are mobile homes.
I don't have a house worth less than 175k and I have about half as many doors.
A lot of its lying, low numbers, partial ownership. Not all by any means but a lot
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Timothy Howdeshell:
Quote from @Grant Stuard:
I have listened to some podcasts, and have heard people saying they got their first 7 properties in 11 months. Some even crazier. I have 5 properties, but I have used all my money to purchase these properties at 25% down and now I am renting them out. I would like to have 30 rentals (that is my goal) and I have the deals. I just don't have the capital to move all at once. I know there is private money lending that can fund some of these new construction deals, but I don't want to sell them for profit after. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage? (over that long period of time)? What do you guys think I can do to get 3 properties a month?
I feel you. It can be discouraging. We are in a similar position on door count and I've listened to a ton of content, read books, etc. Here are the commonalities that I've observed:
1. They have an investing system/framework that they know, or believe in enough to act as if, works. They are confident in the acquisition, management, and dispo of properties. This makes them confident to actually execute. This is an often overlooked component. One commenter here noted that he was purchasing distressed inventory off market and/or using creative financing, delayed financing, private money, or all of the above. Yes, this is great and definitely works. The part that is not stated is that there is a whole sales and marketing engine that needs to be set up to execute on this. And that either takes time (tons of time) or money (can cut the time or just hire labor and advertising to start the business engine), neither of which you're likely to put into this without a strong belief that it will pay off.
2. They have a financing system. They either have lots of money, have a deal pipeline which reduces out of pocket cash, partnerships, private lenders, hard money, bank relationships, or some combination of the above. It takes money to make money, no matter what. The exception is where you're putting in "sweat equity" to create a great deal for yourself, but that takes knowledge and time at the very least (or marketing $), and your time is worth something. So not really an exception.
3. They have deal flow.
4. They have relationships.
You can find examples of people who have succeeded highly with just one of these components, but the more you have behind you the better off you'll be to scale quickly.
To get to 3 properties a month, start building out the system for yourself to do this. I would focus on relationships and deals. Also, it's pretty tough to buy 36 properties/yr, even if it's your full time gig. But buying 1 40 unit property/yr.? Probably a lot easier.
Thank you Tim. This was the most helpful!
- Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes2y
@Grant Stuard
Many of them are full of it and it’s easy to say stuff on the internet without having to back it up
Real estate is a marathon not a sprint
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