How I went from 0 - 20 properties w/out investors or my own money

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I'm not saying this is the right or wrong way to do things but it was the way I did.  The mentorship I have had along the way from real estate investors with millions in property has been priceless. 

I bought my first real property on foreclosure for roughly $16,000 cash, under my own name. Put $5,000 of upgrades into the property. It appraised for $65,000. I went and got a HELOC on that property for $42,000 (paid myself back the 21k I orignally put up). I bought the property in my own name to win the over investors and because I knew I wanted to do the HELOC, which you can't get on a investment property. This was the only property I bought in my own name.

The remaining $21,000 I used to buy 2 other rentals, one for 40k (10k down payment) and one for 32k (7500 down payment). The property that was bought for 40k, appraised for 72k at which I got a cash out refinance for roughly 32k back in cash. 

I then found a foreclosure for $12,500 that I decided to flip..used the 32k as payment for the house and the remaining 20k for improvements. I also used another 5k of my own money. The house sold for 118k, netted 100k and ended up clearing around 70k on the property and used the 1031 provision to avoid tax implications. 

Rolled the 100k into a 4 unit property which cost 140k. I did a cash out refinance on this property as well and received around 60k back in cash. Paid myself back the 5k I used on the flip and bought a foreclosed duplex for $17,500 cash and a 7 unit complex for 198k (40k down payment). 

The duplex that was $17,500 needed some work. I used 10k of my own money to upgrade the property. It appraised for 75k. I did a cash out refinance and got a check for around 45k. 

This allowed me to pay myself back the 10k and buy two more separate duplexes. Both were around 50k. 

Obviously there is much more detail that went into this process but this is the overview how everything worked out. They currently gross around $14,000 per month. 

@Brian M Sweeney What a great sequence of events to build up rental properties and more importantly a growing monthly cash flow steam. I would love to learn more of the specifics as I’m in the military and looking to retire out soon as I want to pursue real estate investing full time.
Originally posted by @Brian M Sweeney :

I'm not saying this is the right or wrong way to do things but it was the way I did.  The mentorship I have had along the way from real estate investors with millions in property has been priceless. 

I bought my first real property on foreclosure for roughly $16,000 cash, under my own name. Put $5,000 of upgrades into the property. It appraised for $65,000. I went and got a HELOC on that property for $42,000 (paid myself back the 21k I orignally put up). I bought the property in my own name to win the over investors and because I knew I wanted to do the HELOC, which you can't get on a investment property. This was the only property I bought in my own name.

The remaining $21,000 I used to buy 2 other rentals, one for 40k (10k down payment) and one for 32k (7500 down payment). The property that was bought for 40k, appraised for 72k at which I got a cash out refinance for roughly 32k back in cash. 

I then found a foreclosure for $12,500 that I decided to flip..used the 32k as payment for the house and the remaining 20k for improvements. I also used another 5k of my own money. The house sold for 118k, netted 100k and ended up clearing around 70k on the property and used the 1031 provision to avoid tax implications. 

Rolled the 100k into a 4 unit property which cost 140k. I did a cash out refinance on this property as well and received around 60k back in cash. Paid myself back the 5k I used on the flip and bought a foreclosed duplex for $17,500 cash and a 7 unit complex for 198k (40k down payment). 

The duplex that was $17,500 needed some work. I used 10k of my own money to upgrade the property. It appraised for 75k. I did a cash out refinance and got a check for around 45k. 

This allowed me to pay myself back the 10k and buy two more separate duplexes. Both were around 50k. 

Obviously there is much more detail that went into this process but this is the overview how everything worked out. They currently gross around $14,000 per month. 

 how do you 1031 a home you fixed up and flipped ????   and what years did you do this.. foreclosure auctions are pretty competitive not often you find deals with 100k spreads that get passed over I would call that very rare.. but congrats.. 

also this is not with out any of your own money you started it with cash.. and did a BRRR and I think the other thing for others to take from this is you have no doubt super good credit and income to qualify for all those loans..

BRRR is the premier strategy for locals to scale there is no doubt in my mind..

@Jay Hinrichs I found the flip in this way..believe it or not. My best friend was on a run by his house and came across a live auction. He called me and said ‘hey I was out for a run and there’s an auction going on. The current bid is 32k, do you want me to put in a bid for you’ I said no. Someone else won the bid. But the auctioneer asked if anyone wanted to put down information to be contacted Incase the deal didn’t close. My friend put my information down. 3 weeks later I received a call from the auction company, asking if I wanted to make an offer, because the other deal didn’t close. I went to the property and took pictures of all the property flaws (the bank was out of state, so I knew they didn’t see the property) and submitted an offer for $12,500. They accepted.
Originally posted by @Brian M Sweeney :
@Jay Hinrichs I found the flip in this way..believe it or not.

My best friend was on a run by his house and came across a live auction. He called me and said ‘hey I was out for a run and there’s an auction going on. The current bid is 32k, do you want me to put in a bid for you’ I said no.

Someone else won the bid. But the auctioneer asked if anyone wanted to put down information to be contacted Incase the deal didn’t close. My friend put my information down. 3 weeks later I received a call from the auction company, asking if I wanted to make an offer, because the other deal didn’t close. I went to the property and took pictures of all the property flaws (the bank was out of state, so I knew they didn’t see the property) and submitted an offer for $12,500.

They accepted.

 that's a cute story... how did you 1031 a flip ?  and what years were these .. market today is a tad different.. and I suspect you were using local banks or credit unions for your helocs'?  its nice to get the full perspective..   Ohio still has opportunities in the low end I have been buying sherrif sales and its still pretty amazing how cheap the stuff is there.. 

Originally posted by @Brian M Sweeney :
@Jay Hinrichs The property qualified for 1031 as the property was held over the course of two separate tax years and rented for 6 months.

 got it … so this was a progression over a course of a few years..  these kids these days want 0 to 20 units in 37 days   LOL

AH yes rural PA  I get the price points now.. !!  but a lot like Ohio as well in the outskirts of Cleveland were we have been buying..  anyway good job.. you going to keep growing.

and did you use local banks and credit unions ????  since so many of the folks on this site are buying cash flow rentals from out of state financing can be a huge hurdle for them.. locals especially established ones have a much easier way of it. 

@Jay Hinrichs Anyone that is growing ‘overnight’ will fail overnight. I’ve seen it many times. Also for the sake of this thread. I used leverage in these scenarios which isn’t the best course of action for everyone unless you fully understand what you are doing.
@Jay Hinrichs I used one local credit union which I have established a great relationship with. I don’t plan on growing anytime soon. I think the markets are way over heated across the country. That being said, if a off market deal comes about I would probably pursue it. Side Note: A couple of family members have been buying in Destin, FL and are doing extremely well.
Originally posted by @Brian M Sweeney :
@Jay Hinrichs Anyone that is growing ‘overnight’ will fail overnight. I’ve seen it many times.

Also for the sake of this thread. I used leverage in these scenarios which isn’t the best course of action for everyone unless you fully understand what you are doing.

there was a thread last week of this guy in CA.. with no real prior experience in the rental business.. leveraged his personal home in CA pulled all the equity out and bought a bunch of D class rentals in Memphis.. with 400 .00 renters... so the title was 0 to 15 doors in one year.. 200 plus response with way to go your a rock star.. I was the only Debbie downer I think..  

My thought was what the heck are you doing..  out of state investors have in my mind next to zero chance of making D class 400.00 doors in the mid west work.. and now this guy just leveraged his families whole net worth or nest egg on what I see is total risky.. but this irrational exuberance to own rentals at any cost and get financial freedom clouds judgement.. Locals or like you within a car ride away and understand the area .. they make it work .. but sitting in CA and buying like that boy oh boy.. one can only prey for that family that it does not take them down.. emotionally and financially.  

Originally posted by @Brian M Sweeney :
@Jay Hinrichs I used one local credit union which I have established a great relationship with.

I don’t plan on growing anytime soon. I think the markets are way over heated across the country.

That being said, if a off market deal comes about I would probably pursue it.

Side Note: A couple of family members have been buying in Destin, FL and are doing extremely well.

 I like Destin its pretty there.. I was there in 09.. flew my plane into the airport there and it was really cool airport right on the water.. 

but it was a ghost town them.. all sorts of boarded buildings etc.. but blue water.. very pretty.. as you say the market has come back 

and that is good.. no one wanted to buy 15k houses that stayed at 15k for ever right?? we all make our money on appreciation of these assets.. cash flow just allows us to hold them long enough for them to go up in value.. and forced appreciation is the absolute best play like what your doing..  we are morphing more and more into the new construction.. which I kind of like better than big rehabs.. more controls and stuff is selling in the markets we play in.. usually at framing stage.. so risk it mitigated.. 

its an exiting time right now no doubt and those that saw the buying opportunity and took advantage are looking good today.. 

the fact is in those areas your buying in and many areas of Ohio and rust belt homes are still available for far less than replacement cost even if the dirt was free.. so they are not over priced from that stand point.. the only thing now holding them back is rent.. if rent don't rise and most investors will ONLY buy if there is positive cash flow with minimum down.. then values will stagnate since these areas have little to no sales for owner occ..  Owner occ's usually want nicer homes.. and simply wont buy those no matter how cheap they are.

But I do think some of these could have a retirement play for those in fixed or smaller incomes.. I mean you can buy a home to live in these areas for 50 to 75k that's livable.. as opposed to pay 5k a month to live in a retirement village out our way..