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
- 2yJay HinrichsBusiness MemberReal Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
Quote from @Henry Clark:
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.
U simply negotiate release clauses if your going to be cross collateralized.. although if it comes to that then you have had an engine failure and a water landing is eminent - Investor · Atlanta, GA · Member since 2021 · 20 posts · 25 votes2y
First, pretty cool to see an NFL LB on here that cares about real estate investing. Continued success in your career and say hello to my guy Anthony Richardson for me!
Second, you can't believe half the things people say online or even on podcasts. I'm pretty sure several people that have appeared on the BP Podcast are in jail for fraud (not blaming BP podcast at all, just saying).
Most of the people who say they have 500 doors are levered to the T and are just now experiencing a market downturn for the first time. Reading tons of stories right now about these folks going bankrupt, investors losing it all, etc.
You obviously have a great career and earnings so wouldn't worry about trying to get to 100 doors. That's great that you have 5 already. We're at 2 now and would love to get to 5 in the next several years. If they're the right properties, that can be enough to make you financially free for the rest of your life.
Keep at it!
- Accountant · San Francisco, CA · Member since 2020 · 35 posts · 13 votes2y
@Grant Stuard
Hi Grant,
I have wondered the exact same thing. Through all my learning from books / podcasts, the best method in my opinion for scaling a SFH and small multifamily portolfio is the BRRR method. Instead of putting 20-25% down on each rental, you can create equity thru a rehab and hopefully get your capital back to repeat on the next deal. And even if you dont pull off a perfect BRRR, its likely you will still leave less money in a deal than if you went the traditional route.
- Investor · CO · Member since 2016 · 757 posts · 1k+ votes2y
Quote from @Account Closed:
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.
Spot on. I've seen plenty of new syndicators using the fractional shares to prop up their credibility.
Trust, but verify everything.
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes2y
@Grant Stuard most people are BS’ing. Run your own race. Scale @ your pace. Get wealthy + be extra generous. Go get em :)
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes2y
@Grant Stuard what is your current living situation? A house hack is great to stack units with low $ down! Live in 1 unit and have the other 3 units’ tenants pay the bills. Rinse and repeat !
- Rental Property Investor · Boston, MA · Member since 2019 · 2k+ posts · 1k+ votes2y
@Grant Stuard I read you have 400K. Great # to leverage other people’s $! Do you have a great relationship with a bank? Talk to them. They should have no problem funding your deals!
- Investor · PA · Member since 2013 · 1k+ posts · 602 votes2y
The way you grow quickly is not with traditional leverage but with short-term private money. The private money finances the distressed properties with nothing down on a short term and you finance the properties on a longer term and still cash flow. You can then sell the note or a partial note (after some seasoning) if you'd like additional capital without borrowing from the private lenders.
- Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes2y
@Grant Stuard you have to have balance. Flip two buy one. Say it takes you 1 month to do a lipstick flip and make $30k. If you do that twice you now have the capital to put 25% down on a $240k home. You could conceivably do this 6 times a year. 6 houses a year would put you into a building mode of cash flow. Now you have the flip money, cash flow, tax savings, and appreciation all feeding the beast. The more you focus on this very basic approach, the fast the beast grows.
Don’t get bogged down with learning everything under the sun. Pick a strategy where you can see the light at the end of the tunnel and get moving. - 2yShiloh LundahlPro MemberRental Property Investor · Gilbert, AZ · Member since 2016 · 3k+ posts · 4k+ votes
@Grant Stuard I scaled to 250 properties with a partner within 5 years. The way I did it was a combination of buying under market deals with hard money and private money lenders and some of my own lines of credit. I would put the rehab costs into the closing so that it wouldn’t look like I bought it so far under market value which helped me get it to appraise at market value in a shorter period of time. And then I would refinance it them and pay off the hard money and private money lenders and then I would do it again. It helped that I did this during an appreciating time in the market. But that is how we did it.
- Cleveland, OH · Member since 2022 · 811 posts · 578 votes2y
Grant,
I don't have any further insight than the people who already commented but I wanted to say you're definitely in the right place.
BiggerPockets is the place to go if you want to learn and hit your real estate investing goals.
All the best to you. Hoping the Colts make the playoffs. But Go Browns!
-Ben
- Member since 2023 · 40 posts · 30 votes2y
Quote from @Account Closed:
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.
exactly this
- Investor · Hillsboro, OR · Member since 2016 · 304 posts · 153 votes2y
Hi Grant:
Ignore everyone else.
We have come out of a period of velocity that was crazy. Cheap money, multiple offers. Economic conditions have changed.
Let's be clear. Folks that made a lot of money from 2019 to 2023 had Perfect Economic conditions. They made money and I am happy for them. But, that is not a flex. It is so cringe.
People have made some "Change Your Life " money. But, it only changes your life if you keep it!
Listen carefully to what people say. " My portfolio is worth ten million" does not mean the same thing as " I manage a portfolio worth ten million dollars." This does not mean "My net worth is ten million dollars".
"My portfolio is worth ten million." Okay. This could be true. At the same time, it could also be true that your portfolio is worth ten million and you owe twelve million. This would mean you are negative two million. Not good. Or it could have negative cash flow.
"I manage a portfolio worth ten million." Okay. This could be true. At the same time, do you own any of it? "I manage" does not mean that you own anything.
"My net worth is ten million." Okay. This could be true. This would mean that all of your assets ( stocks, bonds, real estate) is worth A. Subtract all debt. ( IRS debt, mortgage debt, student loans) If the amount left over is ten million then you would have a net worth of ten million. Great! But, can they prove it?
Focus on the Quality of the Deal not the number of deals.
Best of Luck!
- Member since 2023 · 40 posts · 30 votes2y
Quote from @Christie Gahan:
Hi Grant:
Ignore everyone else.
We have come out of a period of velocity that was crazy. Cheap money, multiple offers. Economic conditions have changed.
Let's be clear. Folks that made a lot of money from 2019 to 2023 had Perfect Economic conditions. They made money and I am happy for them. But, that is not a flex. It is so cringe.
People have made some "Change Your Life " money. But, it only changes your life if you keep it!
Listen carefully to what people say. " My portfolio is worth ten million" does not mean the same thing as " I manage a portfolio worth ten million dollars." This does not mean "My net worth is ten million dollars".
"My portfolio is worth ten million." Okay. This could be true. At the same time, it could also be true that your portfolio is worth ten million and you owe twelve million. This would mean you are negative two million. Not good. Or it could have negative cash flow.
"I manage a portfolio worth ten million." Okay. This could be true. At the same time, do you own any of it? "I manage" does not mean that you own anything.
"My net worth is ten million." Okay. This could be true. This would mean that all of your assets ( stocks, bonds, real estate) is worth A. Subtract all debt. ( IRS debt, mortgage debt, student loans) If the amount left over is ten million then you would have a net worth of ten million. Great! But, can they prove it?
Focus on the Quality of the Deal not the number of deals.
Best of Luck!
he asks something else and you make a point, not saying I disagree, but it is completely irrelevant to the question he asked. He asks about scalability, not net worth and etc
and yeah, quality over quantity, but it doesn't mean that both cant coexist. - Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes2y
Quote from @Christie Gahan:
Hi Grant:
Ignore everyone else.
We have come out of a period of velocity that was crazy. Cheap money, multiple offers. Economic conditions have changed.
Let's be clear. Folks that made a lot of money from 2019 to 2023 had Perfect Economic conditions. They made money and I am happy for them. But, that is not a flex. It is so cringe.
People have made some "Change Your Life " money. But, it only changes your life if you keep it!
Listen carefully to what people say. " My portfolio is worth ten million" does not mean the same thing as " I manage a portfolio worth ten million dollars." This does not mean "My net worth is ten million dollars".
"My portfolio is worth ten million." Okay. This could be true. At the same time, it could also be true that your portfolio is worth ten million and you owe twelve million. This would mean you are negative two million. Not good. Or it could have negative cash flow.
"I manage a portfolio worth ten million." Okay. This could be true. At the same time, do you own any of it? "I manage" does not mean that you own anything.
"My net worth is ten million." Okay. This could be true. This would mean that all of your assets ( stocks, bonds, real estate) is worth A. Subtract all debt. ( IRS debt, mortgage debt, student loans) If the amount left over is ten million then you would have a net worth of ten million. Great! But, can they prove it?
Focus on the Quality of the Deal not the number of deals.
Best of Luck!
I think I speak for everyone who was actively investing from 2019 to 2023 when I say that you are way off base here. These were not "perfect economic conditions." In fact, I don't think such a thing exists but for the sake of argument here are a few things you seem to fail to appreciate the gravity of.
My company laid of 20% of its staff in March 2020.
An ungodly amount of in person services closed their doors leaving their staff (our rental pool) scrambling to pay the bills.
Local governments shut down schools leaving mothers and fathers (ourselves and our rental pool) scrambling for childcare.
Local governments put a moratorium on evictions for non paying tenants
Small businesses who didn't fraudulently apply for PPP loans took a bath for years.The list goes on and on. The people who survived 2019 - 2023 did so through unprecedented conditions. You owe them the respect they've earned. It may look good to you in hindsight, but if you moved through the weeds as I did, you'd have a very different appreciation and a much less cavalier attitude.
The lesson here is that you will always face obstacles as a RE investor. Your longevity in this business will live and die with your ability to adapt. Sure, some of us made a ton of money through this period. But some of us were wiped out entirely. I'll bet dollars to doughnuts that the ones who survived don't consider this period "perfect economic conditions." FFS
- Investor · Hillsboro, OR · Member since 2016 · 304 posts · 153 votes2y
My comments clearly state that I am speaking to real estate investing and the velocity of money. I never said life was easy.
- 2yStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
Resist the temptation or pressure to make real estate acquisitions based on what you see others doing. Depending on your financial background this could play a role in ability to scale. But more frequently those who appear to scale portfolios quickly are either lying as Chris correctly stated or are highly leveraged and/or are fee developers who own minimal ownership interest and are backed by LP equity.
You also shared your objective of holding your assets for a long period time. In most instances if you are reliant on outside capital, there will come a time where you are forced to sell which is usually not in the best interest of the underlying asset or the sponsor. Unless you have access to outside LP equity (not mezz or high interest accruing pref equity) that is closely aligned with your objectives my advice is to stay the course. What you are doing with conservative leverage will set you up for success.
- Member since 2023 · 25 posts · 74 votes2y
Quote from @Account Closed:
Quote from @Christie Gahan:
Hi Grant:
Ignore everyone else.
We have come out of a period of velocity that was crazy. Cheap money, multiple offers. Economic conditions have changed.
Let's be clear. Folks that made a lot of money from 2019 to 2023 had Perfect Economic conditions. They made money and I am happy for them. But, that is not a flex. It is so cringe.
People have made some "Change Your Life " money. But, it only changes your life if you keep it!
Listen carefully to what people say. " My portfolio is worth ten million" does not mean the same thing as " I manage a portfolio worth ten million dollars." This does not mean "My net worth is ten million dollars".
"My portfolio is worth ten million." Okay. This could be true. At the same time, it could also be true that your portfolio is worth ten million and you owe twelve million. This would mean you are negative two million. Not good. Or it could have negative cash flow.
"I manage a portfolio worth ten million." Okay. This could be true. At the same time, do you own any of it? "I manage" does not mean that you own anything.
"My net worth is ten million." Okay. This could be true. This would mean that all of your assets ( stocks, bonds, real estate) is worth A. Subtract all debt. ( IRS debt, mortgage debt, student loans) If the amount left over is ten million then you would have a net worth of ten million. Great! But, can they prove it?
Focus on the Quality of the Deal not the number of deals.
Best of Luck!
I think I speak for everyone who was actively investing from 2019 to 2023 when I say that you are way off base here. These were not "perfect economic conditions." In fact, I don't think such a thing exists but for the sake of argument here are a few things you seem to fail to appreciate the gravity of.
My company laid of 20% of its staff in March 2020.
An ungodly amount of in person services closed their doors leaving their staff (our rental pool) scrambling to pay the bills.
Local governments shut down schools leaving mothers and fathers (ourselves and our rental pool) scrambling for childcare.
Local governments put a moratorium on evictions for non paying tenants
Small businesses who didn't fraudulently apply for PPP loans took a bath for years.The list goes on and on. The people who survived 2019 - 2023 did so through unprecedented conditions. You owe them the respect they've earned. It may look good to you in hindsight, but if you moved through the weeds as I did, you'd have a very different appreciation and a much less cavalier attitude.
The lesson here is that you will always face obstacles as a RE investor. Your longevity in this business will live and die with your ability to adapt. Sure, some of us made a ton of money through this period. But some of us were wiped out entirely. I'll bet dollars to doughnuts that the ones who survived don't consider this period "perfect economic conditions." FFS
Well said man
- Rental Property Investor · San Diego, CA · Member since 2013 · 3k+ posts · 4k+ votes2y
I just hit 2,000 doors (without investors). But I wouldn't say it was "so fast" In fact, it was almost exactly 15 years. There is no way around it. It's going to take time -- unless you're raising money by giving up equity -- in which case do you really own it?
If I have a $1m property with no investors and $500k of debt, I feel like I own the property 100%. But if I have a $1m property with $500k of investor equity (let's assume they have 1/2 the deal) and no debt, I'd feel like I only have 1/2 the propertyJust accept the fact it's a long game. The good news is once you start building a portfolio, it really starts feeding on itself. Cash flow issues go away and you're really just dealing with lenders to take advantage of the equity to fund more purchases.
Also stop listing to podcasts. You won't likely learn anything that'll help and you'll likely hear people taking nonsense. Remember if they're on youtube or a podcast, they're doing that for a reason. Likely to build their own brand. And so, personally, I wouldn't put much stock in anything they say. - Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes2y
@Grant Stuard - if you're using only your money it's pretty hard to grow quickly unless you are already wealthy. Reason being, real estate, transactionally, is a pretty slow business. Even a flip which is "fast" takes about 6 months (searching, finding, financing, rehabbing, listing, selling). Rentals are longer so your money gets tied up even longer. The whole time it's tied up in another property it can't be used for the next property. I always teach my students to have an "Escape Plan for Your Money". With a rental, that Escape Plan is through a refi. If you have a money partner, private lender or hard money lender, you need an Escape Plan for their money (eventually) but it doesn't prevent you from buying another rental because you can get another money partner, private lender or hard money lender. Or if you don't feel comfortable with that you can alternate. Buy a rental with other people's money and when you're halfway complete, get the next property under contract and use YOUR money. Then when you're partway done with that one the money will have escaped from the previous property (through a refi) and you can get another one with the same "other peoples money". And you can do this with or without giving away equity. As you start doing more deals per year it gains momentum. I did 8 single family rentals in year 1. In year 2 I bought two 4 units, a 6 unit and a 14 unit - so 24 additional units. And it accelerated form there. 7 years after that my recent acquisitions have all been over $5M each and I'm into multi family, retail and office. So in summary, you have the experience so don't be afraid to use money besides your own to scale.
- Real Estate Agent · Houston, TX · Member since 2018 · 15 posts · 5 votes2y
@Grant Stuard There's a lot of good advice here, but I think it is important to understand what kind of deals you've already invested in. From your post, it sounds as if you've exhausted your cash putting 25% on ready-made single-family rental properties.
My suggestion to you would be to study the BRRRR method and link up with investors and wholesalers in your area. Between those people and the MLS, I'd begin looking for value add properties where you can purchase at a deep discount with hard money or private funds, improve it, capture more equity and have less out of pocket. If you find them at a dep enough discount, you can end up being in a deal for none of your own. I know! I've done it!
Of course, the next level of scaling would be multi-family.
I see your from the Houston area. That's where I am as well. Let me know if you want to link up.
-cg
- Investor · Minneapolis, MN · Member since 2016 · 145 posts · 108 votes2y
Wow, first of all congrats on obtaining 5 properties. The fact that you own them 100% if impressive. Most people scale by raising money via JV or Syndication. They give up equity but are able to create scale. If you are looking into private money lending I would worry about being over leveraged. If things go south having equity and a lower loan to value would allow you to weather storms.
Best of luck! Keep on rocking!
- Investor · Pittsburgh, PA · Member since 2023 · 108 posts · 57 votes2y
Quote from @Account Closed:
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?
If you're going down, you're going down. It's why you be smart on the growth...in theory, you're correct. However, if you find yourself going into foreclosure, there's a bigger issue going on that you need to check. Having the ability to cross-collateralize does help the growth. I have 6 properties (personal residence, international vacation rental, and 4 commercial properties). The ability to cross-collateralize helped fuel that growth.
- Investor · Miami · Member since 2023 · 7 posts · 1 vote2y
most wont get it but heres a simple formula bruds. buy distressed at 70% of arv-rehab. rehab, then cashout refinance after 3 months. repeat until youre at 1000 doors
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