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
- Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes2y
Congratulations on your 5 properties! Buying 3 properties a month is an ambitious goal. I don't have a whole lot to add other than if you try to scale too fast you might take on unnecessary risks. I have 2 SFHs solely owned (1 in the San Francisco Bay Area, 1 in an Indianapolis suburb with great school district) and 1 multi-unit in the Bay Area (11 unit, co-owned). It was going well.
I listened to people who said to scale to get more doors and go for "cash flow." I bought 2 Class C SFHs in Indy in 2023 and I'm losing money on repairs (on a renovated older home that went through a full inspection). As an aside I don't recommend buying Class C properties (go Class A or B). I'm trying to problem solve this situation.
Quality over quantity. Also congrats on your NFL success and go Colts!
- Investor · Miami · Member since 2023 · 7 posts · 1 vote2y
@Salvatore Lentini curious about your post since I’m planning to follow a similar path. Thinking back, were there ways to just jump into larger deals from the start? How are those early deals doing, if you still have them?
- Investor · Miami · Member since 2023 · 7 posts · 1 vote2y
Quote from @Salvatore Lentini:
@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.
@Salvatore Lentini curious about your post since I’m planning to follow a similar path. Thinking back, were there ways to just jump into larger deals from the start? How are those early deals doing, if you still have them?
- 2yJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votesI was able to buy 7 SFR the last two years. Find a lender who will work with you. I bought 5 with a great DSCR lender. If the deals cash flow, then they lend to me and close on them in 3 weeks. I also found a local commercial lender in Fort Worth that lends to me whenever I need capital. But my first 7 years of investing, I was only buying two SFR/year. Sort of like dollar cost averaging when you buy stocks over time. I’ve scaled up buying homes with the equity that has built up over time. I’ve been able to do cash out refis from some houses that have appreciated over time and use that cash as down payments for my next rentals. So it was like buying homes for free in a way since it wasn’t costing me anything out of pocket.
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?
- 2yJustin BrickmanBusiness MemberRealtor · San Antonio, TX · Member since 2021 · 502 posts · 274 votes
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
Justin Brickman Realty4.9144 Reviews - Lender · United States · Member since 2020 · 1k+ posts · 499 votes2yTwo things:
OPM - other peoples money
HML/DSCR loans - not wasting time on conventional stuff with DTI docs, etc. - Developer · Charleston, SC · Member since 2015 · 100 posts · 91 votes2y
You've got to focus primarily on three things:
1. Sourcing deals
2. Sourcing money
3. Refining your operations
Those are the only things that matter when it comes to scaling your rental portfolio. Don't worry about how fast other people are going. Get as many deals across your desk as possible so you can move past the bad ones to get to the good ones. Constantly on the hunt for private money lenders, and making sure the properties you do have are operating as best they can be.
Keep your head down and be relentless with these three things. You'll get there.
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Justin Brickman:
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
That's enormous debt to take on and rather difficult to weather. 5% down with these rates and price points, plus 6 months for a primary(most lenders are 12). If you have the means and ability to do this, then okay but if you had the means to you wouldn't do 5%.
It's the inverse of avalanche debt payoff method, but accrual. But this is the perfect example of how people are scaling so fast-- reckless leverage.
- 2yJustin BrickmanBusiness MemberRealtor · San Antonio, TX · Member since 2021 · 502 posts · 274 votes
2 of the 5 properties have already increased $100K since purchasing in 2021. The others were purchased $20+ under appraised value while cash flowing. Not only are they doing well, but they are in prime spots of San Antonio. I know you like to pick apart comments on here, but it’s okay to ask questions before trying to sound like the smartest investor on here.
Justin Brickman Realty4.9144 Reviews - 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votes
Quote from @Tim Bratz:
You've got to focus primarily on three things:
1. Sourcing deals
2. Sourcing money
3. Refining your operations
Those are the only things that matter when it comes to scaling your rental portfolio. Don't worry about how fast other people are going. Get as many deals across your desk as possible so you can move past the bad ones to get to the good ones. Constantly on the hunt for private money lenders, and making sure the properties you do have are operating as best they can be.
Keep your head down and be relentless with these three things. You'll get there.
1. Sure
2. You need to be the money, sourcing OPM and private lenders is on the wrong side of a high-rate, hard asset scarcity cycle. Fundamental shift in view, don't leverage money be the leverage behind the hard asset.
3. Agreed
For someone in Grant's case, I'd aim to buy 2-3 very high quality, low leverage property per every 1 speculative, high leverage property. For every 4-5 properties I buy, I put 25-33% of the debt I accrue against a note before stepping into the next property. In regards to speed of scale; its all about income, risk and opportunity. Go at your own pace.Remember-- fast solutions have slow problems!
- 2yV.G JasonPro MemberInvestor · Member since 2022 · 3k+ posts · 3k+ votesThat's 2021. If someone was trying that now, no telling where it'd go. The advice transitions, don't get so distraught over my comments. It's not wrong, but you may have gotten lucky. And that's a great thing, take stride in that rather than being sore over practical advice.
Quote from @Justin Brickman:
2 of the 5 properties have already increased $100K since purchasing in 2021. The others were purchased $20+ under appraised value while cash flowing. Not only are they doing well, but they are in prime spots of San Antonio. I know you like to pick apart comments on here, but it’s okay to ask questions before trying to sound like the smartest investor on here.
There's literally a thread about overleveraging on here, and an large percentage of users here leveraging to leverage. Best to be cautious. And no, I don't think I'm the smartest investor but I am more than confident that my investing has had more success in a month than most here have done in a lifetime. With that said, it doesn't mean my next investment will be that prosperous so always be ready. - Member since 2019 · 44 posts · 10 votes2y
Quote from @Steve Kenney:
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.
I have rental properties. None of the banks are willing to let you pull out equity form rental properties. I mean to say, although I have equity in my rental property, they will not give me HELOC. How do you pull out equity form a rental property? I could be missing something here. Thanks in advance
- Property Manager · Charlotte, NC · Member since 2022 · 138 posts · 87 votes2y
- Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes2yNothing quite like openly admitting to mortgage fraud on a public forum.
Quote from @Justin Brickman:
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison.
But don’t let me stop you. - Investor · Bucks County · Member since 2023 · 196 posts · 156 votes2y
I am interested in a JV. I will manage the properties but I want my partner to put up all of the cash and be the bank guarantor. I am looking for a partner who is willing to invest $2,000,000 in cash so we can acquire $8-10M in real estate over the course of the next year. This is how I can scale quickly, right?
- 2ySteve KenneyPro MemberInvestor · Auburn, ME · Member since 2015 · 72 posts · 45 votes
Quote from @Sendil Thangavelu:
Quote from @Steve Kenney:
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.
I have rental properties. None of the banks are willing to let you pull out equity form rental properties. I mean to say, although I have equity in my rental property, they will not give me HELOC. How do you pull out equity form a rental property? I could be missing something here. Thanks in advance
I should have clarified - by "pulling out equity" I was referring to doing a cash out refinance on one of the existing properties. Your lender can give you more details on the specifics of doing this in your situation. You typically can't use a HELOC on an investment property.
- Rental Property Investor · Rochester, MN · Member since 2017 · 224 posts · 323 votes2y
@Grant Stuard
Some people are just born around real estate. Maybe their parents didn’t fund their deals, but they put them in front of the right people.
- Investor · Houston TX · Member since 2023 · 9 posts · 33 votes2y
Quote from @Account Closed:
Nothing quite like openly admitting to mortgage fraud on a public forum.Quote from @Justin Brickman:
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison.
But don’t let me stop you.clarify what you mean. If the lender is aware of this strategy, and they have a 6 month primary residence term, how could this be fraud (legally)
- 2ySteve KenneyPro MemberInvestor · Auburn, ME · Member since 2015 · 72 posts · 45 votes
For a lot of owner-occupy loans, there is a 12 month occupancy requirement. You need to live in the property for 12 months before moving and renting it out. If someone is buying a property with the intent of occupying it, but doesn't end up doing that and instead rents it out, it would be considered mortgage fraud.
It's best to confirm with your lender on occupancy requirements for the particular loan being used.
- Investor · Phoenix, AZ · Member since 2018 · 420 posts · 388 votes2yI’ll just drop this link, it’s a lengthy explanation but worth a read. In short, the lender doesn’t have the option of giving you a 6 month primary residence term.
Quote from @Grant Stuard:
Quote from @Account Closed:
Nothing quite like openly admitting to mortgage fraud on a public forum.Quote from @Justin Brickman:
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison.
But don’t let me stop you.clarify what you mean. If the lender is aware of this strategy, and they have a 6 month primary residence term, how could this be fraud (legally)
https://www.supermoney.com/encyclopedia/occupancy-fraud - Flipper/Rehabber · CA · Member since 2023 · 1k+ posts · 1k+ votes2yThanks for the link whit, highly valuable for me to share rather than tell to others. I've seen some advice givers recommend to flippers, smh.
Quote from @Account Closed:
I’ll just drop this link, it’s a lengthy explanation but worth a read. In short, the lender doesn’t have the option of giving you a 6 month primary residence term.Quote from @Grant Stuard:
Quote from @Account Closed:
Nothing quite like openly admitting to mortgage fraud on a public forum.Quote from @Justin Brickman:
Love this question. I've been able to buy every 6 months for the last few years using a conventional 5% down with the same lender. However I move into the home and live in it, while adding value with cosmetic updates (flooring,paint, etc) and I also spend time furnishing it. Once it's ready to go, I put it up for midterm rental and try to keep the cycle going. Although it's worked for me, I know most people can't move homes every 6 months. But you can also get creative with financing through owner finance, subject-to, hard money, etc.
For those curious…this could absolutely land you in jail. It’s not a strategy, it is a class C felony punishable by up to 20 years in prison.
But don’t let me stop you.clarify what you mean. If the lender is aware of this strategy, and they have a 6 month primary residence term, how could this be fraud (legally)
https://www.supermoney.com/encyclopedia/occupancy-fraud - Rental Property Investor · Member since 2019 · 411 posts · 148 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?
For starters, congrats on your success to date. Many people want to invest in real estate and don't even come close to what you have done.
Secondly, there are a lot of people who BS or exaggerate what they are doing.
Third, the people who are doing this successfully are typically doing the following items: Partnering with others & raising private capital. These items are easier said than done, and also come with some risks, so its best to get educated in these topics, including researching possible partners.
Lastly, regarding your exit strategy, you need to ensure that your monthly profit as a rental would make sense after the refi/building, plus ensure you can pay back your lender with interest.
- Member since 2024 · 13 posts · 3 votes2y
@Justin Brickman this is my strategy yet I have to occupy the house for 12 months not 6. It is definitely getting harder the more I scale because lenders are making me jump through a million hurdles. Where are you finding lenders that only allow you to occupy a home for 6 months. How many have you purchased doing this and have you found that it gets harder the more you purchase?
- Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes2y
Hey @Grant Stuard - I would just echo what others are saying....that you are hearing the best and coolest stories on podcasts. Assuming the guests are being 100% honest and transparent those wild and crazy success stories are anomalies.
Slow and steady will win the race my friend...snowballs get bigger as they roll downhill. You are doing all the right things so just keep doing those.
Maybe consider looking for a partner though...I've found partnering up to be the easiest way to scale. That is what I did here in Chicago after continually running into walls on my own.
If I could adjust one thing when I was getting started it would have been to be less scarcity minded...
Quality Builders4.966 Reviews - 2yJustin BrickmanBusiness MemberRealtor · San Antonio, TX · Member since 2021 · 502 posts · 274 votes
Quote from @Ursula Leake:
@Justin Brickman this is my strategy yet I have to occupy the house for 12 months not 6. It is definitely getting harder the more I scale because lenders are making me jump through a million hurdles. Where are you finding lenders that only allow you to occupy a home for 6 months. How many have you purchased doing this and have you found that it gets harder the more you purchase?
Yeah I just make sure to find homes I can add value and build equity. I put 20% down on 2 of the 5 properties and 5%-10% on the other 3. I'm taking a break to pay off equity for a while and it's not something I plan on doing for my next few properties. But this was actually a recommended strategy I heard from Brandon and David when I started listening in 2021. It's also important to have cash reserves because of the leverage risk of course.
I don't see it much different than house hacking or BRRR strategy, so I don't agree with some of the comments above. I just didn't want to make this thread about me. I only move forward if the lender approves my files and they're good with it, not the other way around.Justin Brickman Realty4.9144 Reviews
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