How are people scaling so quickly

110 Replies

I've seen a few posts of people starting a year and a half ago but that already have 4k in cash flow and multiple properties. These same people are on track to reach 10k/month in cash flow by year 5 of investing. 

How are people doing this?

I'm funding my down payment with money from work. I've got a high-paying job but I'm not able to scale THAT fast. Any insight?

Having savings to start with; (we are older and spent our retirement savings on apartments). Getting commercial financing and buying multi-family helped scale faster. And we also had appreciation on an especially good buy that allowed us to use equity as collateral for a down payment on another group of 16 units. Also living in the midwest where there are cashflowing deals, self-managing, and doing value add where we do a lot of our own reno work.

The secret is understanding the meaning, and the impact of this number sequence, and applying it to every decision you make as a REI.

                                                                      1073741824

Buy with as little cash (that's your cost) as possible. When your increase in equity from inflation equals your cost (again, that's is only the cash that comes out of pocket), then you sell.  Repeat, repeat and repeat.

The secret is by compounding your initial seed money by using it to infinity, but NEVER , ever spending it. This way, you are your own bank for all of your future down payments, and that high paying job that doesn't accumulate enough for your SP fast enough, isn't used/spent. Every time you dip into your cash, sourced from your job, that's your money you're spending. Every time you use the profits from the REI, that's someone else's money (profit) you're spending...and doesn't cost you anything.

Einstein said compound interest was the greatest invention of the 20th century. What he said after that was more important, especially to REI.

@Jill F. - partner with money partners. I realized early on if I was going to get to my goal of 397 rentals in 10 years, my own capital was not going to get me there. At first I used hard money and private money to do some flips to build up down payments on rentals. That worked at first but as I moved into bigger, multi million dollar properties, it was unsustainable. Now I bring in money partners. We form an LLC. Their investment is completely passive and they get equity in the deal. I find the deal, negotiate it, handle all of the due diligence, pay for legal, closing, and management and for that, I get equity in the deal. My investors love their returns and the increased value I create with our properties. I have 127 rentals and should be at 158 in the next couple months.

Also @Joe Villeneuve - I'll bite....am I missing an inside joke or is sarcasm flying over my head?  What's the number sequence "1073741824"?  I Googled and couldn't find anything.

Originally posted by @Salvatore Lentini :

@Jill F. - partner with money partners. I realized early on if I was going to get to my goal of 397 rentals in 10 years, my own capital was not going to get me there. At first I used hard money and private money to do some flips to build up down payments on rentals. That worked at first but as I moved into bigger, multi million dollar properties, it was unsustainable. Now I bring in money partners. We form an LLC. Their investment is completely passive and they get equity in the deal. I find the deal, negotiate it, handle all of the due diligence, pay for legal, closing, and management and for that, I get equity in the deal. My investors love their returns and the increased value I create with our properties. I have 127 rentals and should be at 158 in the next couple months.

Also @Joe Villeneuve - I'll bite....am I missing an inside joke or is sarcasm flying over my head?  What's the number sequence "1073741824"?  I Googled and couldn't find anything.

 Long explanation,...too long for this format, but if you're interested...?

@Brittany Baker  There's also the possibility that a lot of people are exaggerating their accomplishments. But suffice it to say that it usually comes down to finding additional sources of money, a business partner, very inexpensive houses, or a combination of the aforementioned. I went from zero houses to 8 within 18 months and am happy to give you the juicy details privately if you're interested.  

@Joe Villeneuve is that your CPA's phone number?

@Brittany Baker great question; I would say often just smoke and mirrors, a superficial success. 

Networth and percent equity are better metrics than cashflow or number of doors to gauge success. 

You can grown your portfolio wide or deep, or a balance of both. If you acquire a lot of units fast without equity you are growing wide, but not deep.

It is easy to scale when you are 100% leveraged (a money partner plus a bank for example), so the investor actually owns nothing. It's like being the CEO to a business that someone else owns. 

Many portfolios that I have seen also carry a huge liability in form of deferred (ignored) capex. That is a very unhealthy condition and a few economic ripples combined with some vacancies and urgent repairs can sink that portfolio.

In the end it's a balance between growing wide and deep. You have to find a balance between gowing healthy and growing fast. If you grow too fast and not deep enough your portfolio is volnerable to storms, just like a tree with shallow roots.

I have been BRRRR ing properties for over a decade here in Milwaukee and we have been growing every year, but it was always important to me to maintain a very healthy equity ratio. In the last 3 years it has been increasingly difficult to generate substancial equity during the rehab. Granted, we tend to overrehab a bit, but I'd rather be done with the property than having to come back every few years to replace something else. All of the deals I have bought this year I have (will have) actual money invested after refi, so of course that slows you down, but I think that is healthier.

Sometimes it's good to grow wide, but than take some time to consolidate. Succesful businesses can fail (not only in RE) when they grow too fast, that's a real concern. 

Originally posted by @Marcus Auerbach :

@Joe Villeneuve is that your CPA's phone number?

@Brittany Baker great question; I would say often just smoke and mirrors, a superficial success. 

Networth and percent equity are better metrics than cashflow or number of doors to gauge success. 

You can grown your portfolio wide or deep, or a balance of both. If you acquire a lot of units fast without equity you are growing wide, but not deep.

It is easy to scale when you are 100% leveraged (a money partner plus a bank for example), so the investor actually owns nothing. It's like being the CEO to a business that someone else owns. 

Many portfolios that I have seen also carry a huge liability in form of deferred (ignored) capex. That is a very unhealthy condition and a few economic ripples combined with some vacancies and urgent repairs can sink that portfolio.

In the end it's a balance between growing wide and deep. You have to find a balance between gowing healthy and growing fast. If you grow too fast and not deep enough your portfolio is volnerable to storms, just like a tree with shallow roots.

I have been BRRRR ing properties for over a decade here in Milwaukee and we have been growing every year, but it was always important to me to maintain a very healthy equity ratio. In the last 3 years it has been increasingly difficult to generate substancial equity during the rehab. Granted, we tend to overrehab a bit, but I'd rather be done with the property than having to come back every few years to replace something else. All of the deals I have bought this year I have (will have) actual money invested after refi, so of course that slows you down, but I think that is healthier.

Sometimes it's good to grow wide, but than take some time to consolidate. Succesful businesses can fail (not only in RE) when they grow too fast, that's a real concern. 

 LOL, no it's not my CPA's phone number.

...and percentages are useless...they lie to you...and should be left for use in the Stock Market. Percentages in REI, when used as a way of measuring success, will lead you in the wrong direction more often than not.

@Brittany Baker  I hope all is well with you. 

I agree with a lot of what people are saying that there are multiple ways to accomplish what you are talking about. Slow and steady can multiple on you quickly if you are able to take advantage of the market. I was able to own and manage 14 units in a year and half because I used my resources around me and different financing methods. I brought my first property in Oct 2019 with a $10k investment from family and purchased a four unit. After having a conversation with my fiancé (girlfriend at the time) about her condo and equity, she realized she could refi her condo and pulled money out for a down payment to purchase a duplex. Finally in Oct 2020, we were able to get a commercial loan for an eight unit priced at $245k that was bringing in $4k a month, and our mortgage is $946 a month. The property was cashing flowing but needs some work. 

Because of this last purchased and the cash flow that is coming in, I was able to walk away from my 9to5 and focus on my RE career while purchasing more investment properties. Getting my real estate license made this choice easier, because with my license it becomes another income stream to use for my investments and paying for everyday life. Even though I was able to own and manage 14 units in under 2 years, it took a lot of preparation to be ready to jump on an opportunity when it presents itself. I analyzed properties almost 6 months straight before I had the money, loan approval, and the right property to close on my first deal. As in most places, Milwaukee, WI (where I have all my investments) has gems if you are willing to invest in areas where others might not want to invest. 

With you have the high-paying job as a resource, you could hire someone or get a trusted partner who can do the leg work of finding the property and running the analysis while you provide the capital for the deal. This will give you the leverage to scale, if that is what you are trying to do. With your access to a high paying job, you could find other people in your circle who want to invest and then you have your next deal with their money. The key to growing and scaling is OPM. Other People's Money. It is the only way to scale and to grow your business. Just like businesses use the stock market (OPM) to invest, you have to use the bank and other investors (OPM) to grow your RE portfolio.

I would like to finish off by saying, that being able to build a trusted partnership is the most effective way of growing quickly. I was able to get to 14 units because I partner with people close to me that had resources I didn't. I did not use any of my own money to close on any of my deals. I used OPM, but I had the knowledge and skills to put the deals together. Use your resources (your money) until you can use OPM to scale. I hope this helps you on your RE journey. 

Lots of ways to scale - refinance and roll strategy for single investors or leveraging OPM through partnerships. My strategy has been to create partnerships and leverage OPM to scale quicker. The most common term for that is syndication but JV structures work well too.

@Brittany Baker Working with others allows you to leverage resources and opens doors that you wouldn't be able to get into yourself. The components of getting a deal together include finding the deal, finding funding for it, and then managing the deal...contractors and realtors for flipping, property management for buy and hold, etc. Money is cheap and management isn't difficult...it's finding the deal that's the bottleneck. If your goal is to scale quickly, start looking for off market multifamily deals. Pull a list of multifamily units in your county (if that's a feature), or go driving around and writing addresses down. Find the numbers of the people who own said properties and start the conversation of potentially buying their place. Follow up with those who may be interested in the future. Once you actually are negotiating for something, so long as it's a good deal, you'll be able to find money and partners. 

Connect with realtors that work with larger properties and let them know you're buying. Lots of these bigger transactions happen off market through word of mouth and connections.

Just some ideas I'm throwing at you. The beautiful thing about real estate is that there's more than 1 way to do something. 

Originally posted by @Patrick Britton :

@Brittany Baker  There's also the possibility that a lot of people are exaggerating their accomplishments. But suffice it to say that it usually comes down to finding additional sources of money, a business partner, very inexpensive houses, or a combination of the aforementioned. I went from zero houses to 8 within 18 months and am happy to give you the juicy details privately if you're interested.  

Possible that some people are exaggerating for sure. Like the people that say they own 9000 units when really they only own a small percentage.

Originally posted by @Joe Villeneuve :
Originally posted by @Marcus Auerbach:

@Joe Villeneuve is that your CPA's phone number?

@Brittany Baker great question; I would say often just smoke and mirrors, a superficial success. 

Networth and percent equity are better metrics than cashflow or number of doors to gauge success. 

You can grown your portfolio wide or deep, or a balance of both. If you acquire a lot of units fast without equity you are growing wide, but not deep.

It is easy to scale when you are 100% leveraged (a money partner plus a bank for example), so the investor actually owns nothing. It's like being the CEO to a business that someone else owns. 

Many portfolios that I have seen also carry a huge liability in form of deferred (ignored) capex. That is a very unhealthy condition and a few economic ripples combined with some vacancies and urgent repairs can sink that portfolio.

In the end it's a balance between growing wide and deep. You have to find a balance between gowing healthy and growing fast. If you grow too fast and not deep enough your portfolio is volnerable to storms, just like a tree with shallow roots.

I have been BRRRR ing properties for over a decade here in Milwaukee and we have been growing every year, but it was always important to me to maintain a very healthy equity ratio. In the last 3 years it has been increasingly difficult to generate substancial equity during the rehab. Granted, we tend to overrehab a bit, but I'd rather be done with the property than having to come back every few years to replace something else. All of the deals I have bought this year I have (will have) actual money invested after refi, so of course that slows you down, but I think that is healthier.

Sometimes it's good to grow wide, but than take some time to consolidate. Succesful businesses can fail (not only in RE) when they grow too fast, that's a real concern. 

 LOL, no it's not my CPA's phone number.

...and percentages are useless...they lie to you...and should be left for use in the Stock Market. Percentages in REI, when used as a way of measuring success, will lead you in the wrong direction more often than not.

 I could only get to 32768. Am I halfway there?

Originally posted by @Todd Rasmussen :
Originally posted by @Joe Villeneuve:
Originally posted by @Marcus Auerbach:

@Joe Villeneuve is that your CPA's phone number?

@Brittany Baker great question; I would say often just smoke and mirrors, a superficial success. 

Networth and percent equity are better metrics than cashflow or number of doors to gauge success. 

You can grown your portfolio wide or deep, or a balance of both. If you acquire a lot of units fast without equity you are growing wide, but not deep.

It is easy to scale when you are 100% leveraged (a money partner plus a bank for example), so the investor actually owns nothing. It's like being the CEO to a business that someone else owns. 

Many portfolios that I have seen also carry a huge liability in form of deferred (ignored) capex. That is a very unhealthy condition and a few economic ripples combined with some vacancies and urgent repairs can sink that portfolio.

In the end it's a balance between growing wide and deep. You have to find a balance between gowing healthy and growing fast. If you grow too fast and not deep enough your portfolio is volnerable to storms, just like a tree with shallow roots.

I have been BRRRR ing properties for over a decade here in Milwaukee and we have been growing every year, but it was always important to me to maintain a very healthy equity ratio. In the last 3 years it has been increasingly difficult to generate substancial equity during the rehab. Granted, we tend to overrehab a bit, but I'd rather be done with the property than having to come back every few years to replace something else. All of the deals I have bought this year I have (will have) actual money invested after refi, so of course that slows you down, but I think that is healthier.

Sometimes it's good to grow wide, but than take some time to consolidate. Succesful businesses can fail (not only in RE) when they grow too fast, that's a real concern. 

 LOL, no it's not my CPA's phone number.

...and percentages are useless...they lie to you...and should be left for use in the Stock Market. Percentages in REI, when used as a way of measuring success, will lead you in the wrong direction more often than not.

 I could only get to 32768. Am I halfway there?

 Nope

@Brittany Baker BRRRR method + using a portfolio commercial lender has helped me a ton.

However, I think that it's important to note a ton of my scaling success (and on these forums) is due to a rising market. It's not too hard to BRRRR when properties values go up 10,000% every 30 minutes.

Originally posted by @Joe Villeneuve :
Originally posted by @Todd Rasmussen:
Originally posted by @Joe Villeneuve:
Originally posted by @Marcus Auerbach:

@Joe Villeneuve is that your CPA's phone number?

@Brittany Baker great question; I would say often just smoke and mirrors, a superficial success. 

Networth and percent equity are better metrics than cashflow or number of doors to gauge success. 

You can grown your portfolio wide or deep, or a balance of both. If you acquire a lot of units fast without equity you are growing wide, but not deep.

It is easy to scale when you are 100% leveraged (a money partner plus a bank for example), so the investor actually owns nothing. It's like being the CEO to a business that someone else owns. 

Many portfolios that I have seen also carry a huge liability in form of deferred (ignored) capex. That is a very unhealthy condition and a few economic ripples combined with some vacancies and urgent repairs can sink that portfolio.

In the end it's a balance between growing wide and deep. You have to find a balance between gowing healthy and growing fast. If you grow too fast and not deep enough your portfolio is volnerable to storms, just like a tree with shallow roots.

I have been BRRRR ing properties for over a decade here in Milwaukee and we have been growing every year, but it was always important to me to maintain a very healthy equity ratio. In the last 3 years it has been increasingly difficult to generate substancial equity during the rehab. Granted, we tend to overrehab a bit, but I'd rather be done with the property than having to come back every few years to replace something else. All of the deals I have bought this year I have (will have) actual money invested after refi, so of course that slows you down, but I think that is healthier.

Sometimes it's good to grow wide, but than take some time to consolidate. Succesful businesses can fail (not only in RE) when they grow too fast, that's a real concern. 

 LOL, no it's not my CPA's phone number.

...and percentages are useless...they lie to you...and should be left for use in the Stock Market. Percentages in REI, when used as a way of measuring success, will lead you in the wrong direction more often than not.

 I could only get to 32768. Am I halfway there?

 Nope

 Doubling a dollar 30 times was my guess.

Some probably started with money but the market of late has really put the wind in RE investors sails. Things are tough on one side with the eviction moratorium, but really nice for property values.

That being said, there is an unfortunate tendency for many to exaggerate their success. $10K in cash flow probably doesn't include CAPEX expenses. And I've seen more egregious exaggerations than just that. I'm not accusing anyone in particular, but be weary of the "bragging about my success" posts out there.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you