How are people scaling so fast?
Investor · Houston TX · Member since 2023 · 9 posts · 33 votes
How are people scaling so fast?
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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
- Member since 2024 · 3 posts · 2 votes2yLots of good advice in this thread; and so much that I may have missed this response.
But, you can REFI out private money with a traditional loan -- so if you have the ability/access to a hard money investor for the acquisition, and your sure you can add value to the property and it'll appraise with an equity cushion than you can refinance out the private lender and convert to a traditional loan.Just make sure you're crossing your t's and dotting the i's so the private lender isn't getting crazy fees or something if you payoff early.
- 2yJames MurphyPro MemberMember since 2024 · 18 posts · 16 votes
Some mortgage brokers or financing companies offer Debt Service Coverage Ratio based loans. The loans evaluate the property's ability to pay the principal, interest, taxes, insurance, etc. from the rental income without considering the investor's separate W2 wages. The interest rate and fees are higher than a conventional loan but this is the approach that I plan on using to scale. The key is that the market rents need to support all ownership costs. In some cases, the long-term rental income won't support the current high property prices in many markets so you will need to find a deal where the figures work for this approach.
- Raleigh, NC · Member since 2019 · 5 posts · 1 vote2y
Quote from @Alecia Loveless:
@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.
I agree that is what I am doing now and I don't mind waiting 30 years I will buy anything I can get my hands on.
- Member since 2024 · 13 posts · 3 votes2y
Hi Grant! Love what you’ve built! As far as getting HELOC’s did you find it difficult to find lenders willing to do this on your investment properties? I know it’s much easier for primary residence’s. Can you share the lenders you’ve used to achieve this?
Quote from @John Morgan:
@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.
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Ursula Leake:
Hi Grant! Love what you’ve built! As far as getting HELOC’s did you find it difficult to find lenders willing to do this on your investment properties? I know it’s much easier for primary residence’s. Can you share the lenders you’ve used to achieve this?
Quote from @John Morgan:
@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.
Hey @Ursula Leake I have never used a Heloc, only cash. I believe your question could be directed to @John Morgan.
- Investor · Baltimore, MD · Member since 2008 · 17k+ posts · 13k+ votes2y
@Grant Stuard
"What do you guys think I can do to get 3 properties a month?"Why would you want to? I would much rather buy fewer deal that are better deals. Scaling that fast may work for a very few but for most that will be more stress and risk for not much more if even any extra reward.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Ned Carey:
@Grant Stuard
"What do you guys think I can do to get 3 properties a month?"Why would you want to? I would much rather buy fewer deal that are better deals. Scaling that fast may work for a very few but for most that will be more stress and risk for not much more if even any extra reward.
For someone of his means, 30 high quality properties is what most cash-flow midwest lovers here would do for 150 properties. So in his case it could be quality over quantity. With that said, the fixation on 3 per month or X per year is kind of asinine. Buy quality as it comes, and you can afford to manage the financial & physical risk.
For most average folks, that's once every 20-30 months. For high earners that's once every 9-15 months. For the highest of earners, it'll average out probably to that number(3/month). That's the math of it, but not the actuality of it. So stick to buying quality as it comes.
As for how people are scaling fast, different means, risk tolerance, etc. And yes, I am sure there's some that say stuff without really doing it but for the most part you can get a hint of that by the way they speak or the questions they ask. Or what they prioritize when they invest. It's almost irrelevant what they are doing though, it's what you're doing.
- Member since 2018 · 107 posts · 92 votes2y
Quote from @Ned Carey:
It's simple People are taking on much more risk than they realize and they have been lucky that they bought in a rising market.
This is a great response. Your investment strategy should be what YOU are comfortable with. You may not be scaling as fast as other people because you are more comfortable with a measured approach. This doesn't make you wrong and them right. I have been very measured in my approach. Has it cost me some missed opportunities? Absolutely. But I can sleep well at night knowing that I am not taking on unnecessary risk. If you are comfortable taking on additional risk, go for it, but don't do it because you are wanting to keep up with the Joneses. Pat yourself on the back for getting started and being smart!!!!
- 2yJoe S.Pro MemberInvestor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes
Quote from @Salvatore Lentini:
@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.
So are you the sole owner or is it a Syndication?
- 2yReggie NworieBusiness MemberLender · San Antonio, TX · Member since 2020 · 55 posts · 40 votes
Hi Grant,
Yes, there are lenders who can do Ground Up Construction and then convert your loan into a DSCR loan if you want to keep it as a rental. That is something we can help you with. Feel free to connect so we can discuss your deal in detail. I can provide you with some specific examples and illustrations if that helps.
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Ned Carey:
@Grant Stuard
"What do you guys think I can do to get 3 properties a month?"Why would you want to? I would much rather buy fewer deal that are better deals. Scaling that fast may work for a very few but for most that will be more stress and risk for not much more if even any extra reward.
Personally, I see that many good deals a month. If I could acquire 30 of these in a year, or even 15 of them, then I can spend the rest of my high earning career to pay them off, or at least pay enough per month to get the homes bought out over 7-10 years. I guess I am not trying to really acquire THAT many, but I want to learn how other people are doing it to see if I can adapt some of that strategy. I know 5 deals RIGHT NOW that I would move on if I had unlimited money. Just trying to figure out how people are doing it. Maybe I can do 2 instead of the one that I'm lasering in on.
But to answer your question more directly, I have lofty goals of 100K net monthly rental income. (mid and long term rentals) If I get 30 homes that get 3000 income a month (all my (4) currently do) then my goal is done and I can move forward with that firm financial foundation to do things that I really want to do in my personal life/non-profit space. I don't want to acquire one a year, because that will take 30 years lol. If I got em all now, I could pay them all off in 7-10 God Willing, and reach my goals much faster. I do not want to HAVE to do something like smash my face against someone else to maintain the cashflow that my current W-2 brings in. I honestly would like to maybe be a school teacher or pastor. I always feel weird about pastors raking in cash, so I would like my real estate to be able to front my income at a larger scale than most. Sorry for the winded answer, but my 100 acre ranch isn't gonna buy itself lol.
- Real Estate Investor · Lowell, MI · Member since 2009 · 13 posts · 13 votes2y
Quote from @Eliott Elias:
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.
Thank you this reminder to avoid comparing myself to what others are doing. I've been investing in real estate for almost 20 years and I only have 7 properties. For most of those 20 years I've been feeling like I'm not doing enough. Recently, I started reading "The Small and Mighty Real Estate Investor" by Chad Carson, this book has put a new perspective on my real estate investing. I'm starting to see that I'm doing okay.
- 2yMichael SmytheBusiness MemberReal Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
It takes money to make money, but it doesn't have to be your money.
Logical Property Management4.9453 Reviews - Rental Property Investor · Russellville, AR · Member since 2014 · 684 posts · 509 votes2y
You really can't trust that you are hearing the full story when you hear about those "rapid scalers". I follow an STR guy on Insta and always talks about how easy it was to get started and how successful he is now. What he fails to share is that he had a $300k/year salary before he got started. Anyone can be a successful real estate investor if they have that kind of money coming in.
Don't be distracted by others. Run your race and grow at a pace you are comfortable with and keeps you out of trouble with leverage. Network with other investors and get some tips and strategies that they have used to grow and apply them to your business.
- 2yRobert EllisBusiness MemberDeveloper · Miami, FL · Member since 2014 · 3k+ posts · 1k+ votes
Quote from @Reggie Nworie:
Hi Grant,
Yes, there are lenders who can do Ground Up Construction and then convert your loan into a DSCR loan if you want to keep it as a rental. That is something we can help you with. Feel free to connect so we can discuss your deal in detail. I can provide you with some specific examples and illustrations if that helps.
there are ground up DSCR loans. why convert it for new construction? and some of those loans also convert to permanent debt as well.
Section 8 Launch52 Reviews - 2yReggie NworieBusiness MemberLender · San Antonio, TX · Member since 2020 · 55 posts · 40 votes
We used to offer an all-in-one financing program, but it wasn't very popular among our investors. Mostly because the interest rates are higher than for a standard DSCR loan without the construction component to it. Also, there is the flexibility of being able to decide if you want to sell it along the way and not being locked it.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes7 properties in 20 years is more than most people here will do. They'll get to 2 or maybe 3, and then find it difficult then sell it all.
Quote from @Richard Lambert:
Quote from @Eliott Elias:
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.
Thank you this reminder to avoid comparing myself to what others are doing. I've been investing in real estate for almost 20 years and I only have 7 properties. For most of those 20 years I've been feeling like I'm not doing enough. Recently, I started reading "The Small and Mighty Real Estate Investor" by Chad Carson, this book has put a new perspective on my real estate investing. I'm starting to see that I'm doing okay.
- Member since 2024 · 1 post · 0 votes2y
opm other people's money get percentage of the deals don't out up any money
- 2yJay ThomasPro MemberReal Estate Agent · Houston, TX · Member since 2021 · 1k+ posts · 715 votes
Impressed by your ambitious real estate goals! Owning 30 rental properties is a substantial endeavor, and your commitment to a long-term strategy is wise. Since you've utilized your initial capital, exploring alternative financing like private money lending for new construction deals can be beneficial. Build strong relationships in Houston's real estate community for potential lenders. Consider blanket mortgages or portfolio loans for multiple property financing. To acquire three properties monthly, explore partnerships, creative financing, and continue private money lending efforts. Build a reliable team as your portfolio expands. Local market nuances matter, so conduct thorough due diligence. Best of luck on your journey to 30 rental properties!
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Eliyahou Gronstein:
opm other people's money get percentage of the deals don't out up any money
**(off topic entirely)** could I ask about your name? Thinking of naming my son Elihu from the book of Job. Is your name the Hebrew variation of the name? Also could you tell me more about your name? When we told someone about the possible naming of our child that, they said "Do you mean Eliyahu?" Just curious. Thank you!
- Broker / Investor · Tewksbury, MA · Member since 2008 · 1k+ posts · 351 votes2y
People say they are cash flowing on x doors and acquired them in a short amount of time. But they probably own a fractional interest in those doors. If they want to own the entire door they need to have deep pockets especially if they are scaling very quickly. You need your own capital not borrowed money.
- Real Estate Consultant · San Francisco, CA · Member since 2023 · 109 posts · 71 votes2y
"and have heard people saying they got their first 7 properties in 11 month"
Keep in mind people say a lot of things for clout. I'm not saying they haven't achieved what they say the have, I would just take it with a grain of salt - Rental Property Investor · Doylestown, PA · Member since 2008 · 1k+ posts · 1k+ votes2y
@Joe S. - My brother and I are partners so we do everything 50/50. All our deals in the beginning were done with private lender money (interest only). We'd buy cash, rehab, refi and pay them back. In recent years as deals have gotten larger and the down money and capital needed for rehab has increased, we've used a combination of banks and money partners. They get equity but we don't have to make interest payments (because they are partners) which is especially helpful in the first year or two of owning these larger commercial properties if we are in the process of turning them around. So long story short, I'm 50% owner on many properties and 25 - 49% owner on remaining properties. But as the properties get larger that smaller percentage = a much larger monthly income than the smaller properties where I have a larger percentage ownership.
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