Rental Property Investor · Milwaukee, WI · Member since 2013 · 6k+ posts · 4k+ votes
Has anyone ever read these books (volume I and II)? In it, the guy talks about his strategy for buying and renting out over 300 single family homes.
For the first property, he started off with around $28,000 or so from an insurance settlement, but he talks about taking out a HELOC or getting money from credit cards and buying the property in cash.
Then, once that property is fixed up and rented out, get another loan from a bank on that property for 75-80% LTV, and use that cash to buy another property. Repeat to infinity is what he says. He and his partner did this for over 300 properties.
I have read and read and searched and searched and cannot see how on earth he was able to do this, with the current Fannie/Freddie limits of 10 mortgages per person. Even if he and his partner each were somehow able to get 10 apiece (and I'm only seeing the ability to get 4 per person), that would only make 20.
So what is the secret to how these guys were able to do this?
I downloaded the book 1 from amazon ($23 print and $9.99 for kindle)
I'm about halfway through and have enough information to begin commenting.
I think I take the place on BP as one of the larger low-end investors...I own in Toledo and buy in two adjacent neighborhoods...$30k and $20k areas...I buy 3/1 houses for less than $10k and put a pretty significant renovation into them so I'm $15-$20k total by the time I rent...and I have nine sect 8 houses now, three for rent (rental market is a bit slow in Toledo with record cold and snow) and two more in process of renovation)...I've been sect 8 investing for four years now.
The author is a certified cheap a**. I find much of his advice laughable and think a property walk in one of his places would have me leaning on door frames trying to catch my breath from laughing...I do not recommend you follow his advice any further than the knowledge that sect8 rentals can be productive and if you want to get crazy you can minimize your expenses and still pass inspection.
Ok- when I buy a house...circa 1940...my goal is to make the neighborhood better...call me an idealist. By this I mean I want the exterior to be basically maintained, the front respectable, and the yard safe for kids. Since I'm a family business if I don't find something myself I normally get a text from my mother-in-law that we have something amiss that needs to be addressed. I regularly tour BP folks past my buildings and in such instances the properties reflect ME so I want them basically presentable.
I fix anything that I don't want to mess with when a tenant is in place...unlike our author I don't dumb the whole place down because my tenants are animals, I fix them right while it's vacant so I can move a tenant in and start the relationship right...not with a two-page punch list of repairs needing to be addressed. I remove all galvanized pipe AND COPPER (theft-prone) and apex the entire structure. Furnaces are 80% efficient...I just bought a house with a ~40% efficient octopus furnace and got it upgraded to a used 80% efficient furnace for a damned good price...again, I believe in basic upgrades- if my tenant is blowing 100% more heat up the chimney then their bills are double and not sustainable for them to stay with me. 80% is the norm in my area and there are always used units available from the nicer areas of the city. I either finish hardwood floors or carpet the whole house...carpet is cheap. Paint is cheap. A good quality glue-down vinyl is cheap. However I do all my renovations with a some-day sale in mind.
Author recommends boarding over and siding any more than one window in each room. Whaaaa? So you want me to take a 1200sqft 3/1 and board over easily six windows, just because you don't want to maintain them? A new vinyl window is maybe $160...$40 install...and that's IF they need a replacement. There are pictures in the book of houses with windows blanked off. How can we hurt rent appeal and eventual resale more I ask!
Author pulls ceiling fans and 220 air conditioning outlets from the houses...I won't fight this one other than to say I install $30 fans in my bedrooms...to me that cheap and easy. I don't install a circuits but don't destroy them if I find them either.
Author removes all closet doors from his rentals...
Author removes the bedroom door handles and installs a $.50 hook and eye..to avoid a $9 handle expense.
I swear I would walk these places just to see how excessive the author could be.
Anyway, my main take on sect 8 inspections is that they are pretty subjective...if the inspector likes you and is impressed with the first 2 minutes of the walk through and you show honesty and integrity in your place, then you will pass...any minor issue can be fixed on the spot and you will get the benefit of the doubt. I think that an inspector who reached for a door handle and found a hook/eye and no closet doors and painted plywood subfloor for flooring would be looking to fail you...because you would stand out in their mind as the cheap a** they were trained to fail...you would be the talk of the office when they returned.
Renovate reasonably, renovate responsibly, and you will do well. Don't get too high-end with granite and don't put old sidewalk slabs in for countertop simply because they're durable and the sect 8 regs don't say you can't.
I read both books. I think they were written prior to the mortgage meltdown when all of the rules changed. For example, I used to get no-doc loans. Those went out with Vin Diesel.
The books were very good. I think they are a must read for any landlord that deals in lower income properties.
I read them a while ago and found them to be quite informative - even if you aren't doing Section 8 (which I am not). They have a lot of tips on handling tenants (including some great stories) and some info on making all of your rentals the same, so that maintenance is easier.
It would be nice to know if these guys are still running the biz and see where they are now - but I haven't had time to Google research them.
All and all - they are no bull books, and good to have on hand.
The books were okay, they were more funny than anything. But you have to have a strong stomach for bad grammar and misspellings because the books are full of them.
They both have been on my Amazon wish list for years. I have section 8 tenants and never thought I needed an expensive book to deal with them. Glad you informed me that they are full of misspelled words and bad grammar. Maybe it's time to delete them off the list.
I thought the first book was way better than the second. Book 2 was phoned in with tips from other landlords.
Yes, both books were probably edited by a third grader, but I would still read them. The $100 price on Amazon is absurd. I bought them from the site that I posted.
Has anyone ever read these books (volume I and II)? In it, the guy talks about his strategy for buying and renting out over 300 single family homes.
For the first property, he started off with around $28,000 or so from an insurance settlement, but he talks about taking out a HELOC or getting money from credit cards and buying the property in cash.
Then, once that property is fixed up and rented out, get another loan from a bank on that property for 75-80% LTV, and use that cash to buy another property. Repeat to infinity is what he says. He and his partner did this for over 300 properties.
I have read and read and searched and searched and cannot see how on earth he was able to do this, with the current Fannie/Freddie limits of 10 mortgages per person. Even if he and his partner each were somehow able to get 10 apiece (and I'm only seeing the ability to get 4 per person), that would only make 20.
So what is the secret to how these guys were able to do this?
Hi Dawn,
Sorry I am all late on this, but I just found your post and really caught my attention. This was my plan as well, if it were me, and 10 loans were allowed by banks, I would use all profits to pay off 1 loan at a time, and use any other capital I had to pay off 1 loan for a couple of years. I plan on doing this next month with my first Multi-family property, I will get about 3 buildings with about 21 units each and pay all the mortgages up 2 years in advance, and then move from the states to Thailand to lower all my personal living expenses since it is so cheap to live there. At that rate, I do not think it would take very long for those loans to be paid off.
you'd think that by property #10 (and if they were doing it correctly), they'd have enough cashflow coming in to pay for it cash. so, they did not need a mortgage.
Their purchases were before all the regs on number of mortgages, which btw is just another idiotic reg. A person with 1 mortgage and $1million debt is better than another person with 10 mortgages and $100,000 debt? The number of mortgages by itself is a meaningless number and by itself is no indication of credit worthiness or non-credit worthiness.
Once a person gets to the 10 limit, the next step is for their spouse to get 10 more mortgages. Then the next step is portfolio mortgages from brick and mortar local lenders which have no limits. Then there are lines of credit, signature loans, private lenders and hard money lenders. And after you reach a certain point whether that number is 100, 200, 300, or whatever, you should be able to buy the properties for cash and not worry about lenders. Somebody I know had 1,000 low priced houses, some of which people gave to him, or he paid very low prices sometimes $1,000 to $5,000. when you're buying a house for $1,000, you don't get a mortgage anyway.
What is the lowest price you paid for a house? I bought a 3 story brick house with a new roof and new electrical service for $50. It was a mistake, it was a really bad house in a really bad area and it needed everything, except a roof, & electrical service.
What is the lowest price you paid for a house? I bought a 3 story brick house with a new roof and new electrical service for $50. It was a mistake, it was a really bad house in a really bad area and it needed everything, except a roof, & electrical service.
Well my lowest price was $21,000. But that house I don't regret buying.
As Joe and David said above, this is very possible using portfolio lenders. I know several investors who have 30+ mortgages on their rental properties via portfolio lenders.
Amen, I'd had 50 mortgages and never once did a lender tell me they were not going to lend. Lenders are in the business of lending, let them do their job.
After exhausting the 20 Fannie conforming loans there are there are plenty of brick and mortar local banks and credit union with money to lend. Use them.
I downloaded the book 1 from amazon ($23 print and $9.99 for kindle)
I'm about halfway through and have enough information to begin commenting.
I think I take the place on BP as one of the larger low-end investors...I own in Toledo and buy in two adjacent neighborhoods...$30k and $20k areas...I buy 3/1 houses for less than $10k and put a pretty significant renovation into them so I'm $15-$20k total by the time I rent...and I have nine sect 8 houses now, three for rent (rental market is a bit slow in Toledo with record cold and snow) and two more in process of renovation)...I've been sect 8 investing for four years now.
The author is a certified cheap a**. I find much of his advice laughable and think a property walk in one of his places would have me leaning on door frames trying to catch my breath from laughing...I do not recommend you follow his advice any further than the knowledge that sect8 rentals can be productive and if you want to get crazy you can minimize your expenses and still pass inspection.
Ok- when I buy a house...circa 1940...my goal is to make the neighborhood better...call me an idealist. By this I mean I want the exterior to be basically maintained, the front respectable, and the yard safe for kids. Since I'm a family business if I don't find something myself I normally get a text from my mother-in-law that we have something amiss that needs to be addressed. I regularly tour BP folks past my buildings and in such instances the properties reflect ME so I want them basically presentable.
I fix anything that I don't want to mess with when a tenant is in place...unlike our author I don't dumb the whole place down because my tenants are animals, I fix them right while it's vacant so I can move a tenant in and start the relationship right...not with a two-page punch list of repairs needing to be addressed. I remove all galvanized pipe AND COPPER (theft-prone) and apex the entire structure. Furnaces are 80% efficient...I just bought a house with a ~40% efficient octopus furnace and got it upgraded to a used 80% efficient furnace for a damned good price...again, I believe in basic upgrades- if my tenant is blowing 100% more heat up the chimney then their bills are double and not sustainable for them to stay with me. 80% is the norm in my area and there are always used units available from the nicer areas of the city. I either finish hardwood floors or carpet the whole house...carpet is cheap. Paint is cheap. A good quality glue-down vinyl is cheap. However I do all my renovations with a some-day sale in mind.
Author recommends boarding over and siding any more than one window in each room. Whaaaa? So you want me to take a 1200sqft 3/1 and board over easily six windows, just because you don't want to maintain them? A new vinyl window is maybe $160...$40 install...and that's IF they need a replacement. There are pictures in the book of houses with windows blanked off. How can we hurt rent appeal and eventual resale more I ask!
Author pulls ceiling fans and 220 air conditioning outlets from the houses...I won't fight this one other than to say I install $30 fans in my bedrooms...to me that cheap and easy. I don't install a circuits but don't destroy them if I find them either.
Author removes all closet doors from his rentals...
Author removes the bedroom door handles and installs a $.50 hook and eye..to avoid a $9 handle expense.
I swear I would walk these places just to see how excessive the author could be.
Anyway, my main take on sect 8 inspections is that they are pretty subjective...if the inspector likes you and is impressed with the first 2 minutes of the walk through and you show honesty and integrity in your place, then you will pass...any minor issue can be fixed on the spot and you will get the benefit of the doubt. I think that an inspector who reached for a door handle and found a hook/eye and no closet doors and painted plywood subfloor for flooring would be looking to fail you...because you would stand out in their mind as the cheap a** they were trained to fail...you would be the talk of the office when they returned.
Renovate reasonably, renovate responsibly, and you will do well. Don't get too high-end with granite and don't put old sidewalk slabs in for countertop simply because they're durable and the sect 8 regs don't say you can't.
pg 62... Sect 8 requires 4' of counter space...what do we do to fix this if we don't have counter space? (The author asks)
Why we cut a 48" piece of countertop, screw a 2x4 to the wall horizontally, then put two 2x4 legs on it..."problem solved".
Jesus dude, Menards sells 24" base cabinets in OAK needing to be stained...cabinet bottom with drawer top for $80 each. That's $160 to prevent your proposed abortion.
While I may not agree totally with starting out this way, I feel that this can be done if you get away from the big banks and get to know your small home town bankers. I know these are few and far between, but around here we still have banks where you can find the owner of the bank in his office most of the time. No need to go to commitee, just build a long term relationship with them and cut though all the fluff.
Maybe I'm just very lucky but, I've formed a great friendship with my banker, have always remained loyal to them, unbelievably in 30 years have never not made a payment on time to them, and because of this we both have done hundreds and hundreds of profitable deals together. Sure I may have to pay a little more in interest , (not really though), but its really worth it to me to talk to one of the men in charge of things as opposed to the 20 year old metro sexual in a fancy suit that just got hired on and is looking to "shake" things up and if I would just take his advice my business would skyrocket. (these big hat, no cattle guys really annoy me :) ) Get away from those big bank monstrosities, and take a small town banker out to lunch, I don't think you'll be disapointed.
Alright- final thoughts on the book- I did really like their methods for managing tenants, NO is probably a term we could use more often. Author initiates eviction if the tenant doesn't pay their monthly water bill of ~$50 and I am DEFINITELY going to be requiring that tenants arrive with their voucher in hand to show a house.
We do a good amount of pre-showing where tenants arrive without packet and then leave and want to think about it...never to return. I recently got a punch in the gut when a good tenant arrived, said they wanted the house, arrived with the packet...and somehow we didn't check their bedroom allowance.
So two weeks later (and after the listing was pulled and potential tenants were turned away) I got a call from the administrator that we'd signed a 2 bdrm voucher for a 3 bedroom house. So I could reduce the rent by $100 or re-list the property and sit around for another month. I ate the $1200/yr and will request an adjustment the following year. It was January and I was going to spent 1/4 of that just heating the house...painful decision.
Overall I think the book is a good intro to sect 8... I disagree with their level of renovation and wouldn't be interested in one of theirs myself as an investment. I cannot FATHOM 300 sect 8 houses which the authors claim to have held over the timeframe of the book - 7 yrs. Having 40 door knobs now is a challenge, I can't even comprehend 300 annual inspections...that's more than one a day considering there are 200 business days in a year.
