Slow and Steady wins Birthday Deal!

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My wife and I started investing in Rental RE in early 2015 at the age of 29 acquiring our first property here in the Bay Area, CA. We lived in the property for about a good six months after realizing that we wanted to turn this into a family business that we can live off of later in life if/when we ever decide to retire. (likely never as I love what I do)

Already being a business owner, I realized that generating wealth through RE is a slow and steady process, so what we decided to do to ramp up savings a bit to help aquire the next property is we moved in with my wife's parents and rented our Bay Area home. Having our tenants pay down our mortgage while we saved away what would have been the mortgage payment in a money market account every month along with money from many side hustles. less than 1 year later, we were able to aquire our second property in 2016 in the Midwest (Michigan) where I have many boots on the ground. The property is nestled in a A/B neighborhood so I anticipated there was some appreciation coming. We purchased well below market at 25% down. The property was performing at 9% COC after all expenses. 10 months later, the property appreciated and I took that opportunity, and did a cash out refi. Pulled out my entire down payment, and now own that property for free. (3 years later, it is performing very well with positive cash flow monthly, and 60%LTV)

Late 2017 as we completed the refi transaction, we came across a 4-plex that was below market (15% discount) in a solid B neighborhood that I couldn't pass up. I prefer SFH, however this deal checked off alot of boxes and I was willing to take the $105k risk for this 2% rare deal as I could make that money back in the years to come if I busted balls. The owner was tired and wanted out so I made the jump and purchased the deal all cash before it went on market. 1 year later, the neighborhood appreciated a bit and I put a mortgage on it and has been performing well until this day (mid-2019) holding steady at 15% COC. (After remodeling the entire place, new parking lot, and 50% LTV mortgage).

2018 came around and my family and I decide that we want to move out of the Bay Area and sell my business so that we can start a new venture elsewhere. We had Henderson NV, Phoenix AZ, and Austin, TX on our list of possible new homes. After many visits we decided on Austin as it reminded us a little bit of home here in the Bay Area. We have a few friends there and started our hunt for our new home. End of 2018 we found the perfect house that will work well for our family and made the purchase. Currently being rented for the time being until we move end of 2020. 

With no plans to purchase another property this year (2019) as my primary focus was business and growing my second company, my friend called me from the Midwest and mentioned that they had a property for me 1 mile from my current one. It just touched market but he knew the homeowner personally. The numbers worked out well so I decided to say F*** it and closed on the property last week on my Birthday. The positive cashflow isn't crazy on this one but the equity is there and it's something I will utilize in the future to make more moves. 

I wanted to share my story with ya'll because I see too many posts on these forums about people wanting to jump in and aquire 1000 doors in 10 years with 0 money out of their pockets and generating $20k monthly cashflow. Unfortunately, it doesn't work that way. Yes there are creative ways of acquiring financing,  but you should still have money for at least reserves! I cant stress that enough. At the end of the day, it's a business and there are plenty of ups and plenty of downs and you need to be able to weather the storm. I personally keep 6-12/Months of reserves for EACH of my properties in their own accounts. It has taken me a long time, 5 years and I only have 8 doors. But I would rather have 8 quality doors, than 25 high stressed, D neighborhood doors. (Just my personal opinion and my own way of investing)

My point is, take your time, invest in yourself and educate yourself,  do plenty of due-diligence and invest wisely. Make smart calculated decisions and you'll be alright in the end. Stay diversified and don't put all of your eggs in one basket. Go at your own pace and it's ok if you don't end up with a 1000 doors. You will be in a better position than when you started, Just remember there will always be someone that would want to trade places with you. Don't be so hard on yourself, life is beautiful. 


Stay Blessed! 

Junior 

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