Real Estate Deal Analysis & Advice

User Stats

David J.
  • Investor
  • Houston, TX
Votes |

How BiggerPockets created 100k in net worth in 4 months

David J.
  • Investor
  • Houston, TX
Posted Jan 12 2014, 09:04

This is a long overdue thanks to the BP community as a whole and the mentors and friends I have met through BP.

By way of background, my core investing strategy is buy and hold. I have a full-time job and consider real estate investing to be a solid hobby of mine. Some guys like sports, cars, legos... etc. While I like those things, I choose real estate. I have been trolling BP for almost 7 years now and for many years I have read and listened to conversations about whatever was discussed in the forums and podcasts.

I bought my first rental in 2007 and was hooked.

Enter BiggerPockets.

After slowly growing my portfolio to what I thought was a critical mass, I felt I would benefit from obtaining a RE license. Once I got the license finding deals became easier, but I was still limited by what was listed on the MLS, however, I was getting better deals and saving commissions. Happy investing.

I have been trolling BP for almost 7 years now and for many years I have read and listened to conversations about direct mail. I always thought it would be too time intensive for me with a full-time job. After hearing @Jerry Puckett and @Sam Craven podcasts (as well as all the others), I thought I might give it a try. I was quite skeptical at first as I have a full time job and thought engaging in a direct mail campaign would be time and capital intensive.

After a quick email to Jerry we set up a call. One call with Jerry and we were ready to go (skeptical, but ready to go). We engaged Jerry to help us with a very small direct mail campaign (500 letters a month at a total cost of $3,000 for a 6 month campaign).

Since it was our first campaign we opted to do as much as we could to keep the cost down so we chose to stuff and stamp the letters ourselves and knew we were taking a considerable risk with a small campaign.

We committed to a $3k campaign for a 6 month period and never thought we would see the $3k again (but we were excited for our expensive experiment). Since my partner and I have full time jobs (and manage our growing rental portfolio) time was our biggest constraint (and money). We set up a google voice number and started mailing letters. As the calls came in we let every one go to voicemail. Never answered a single call. We called back each individual and fumbled though the many scripts that can be found on BP. Low and behold, our 500 letters to the same 500 individuals a month got the phone ringing.

Let's talk results.......................

Remember I am a buy and hold investor with a RE license and a full time job. I was just hoping to get better deals than I could find on the MLS.

After 4 months of letters (500 a month to the same 500 people) My partner and I have COMPLETED the following deals solely from our direct mail compain (these results do not include current leads we are working or deals purchased on the MLS).

House 1 - Purchase price 48k, 12k rehab, rents for $1,100 a month. ARV = 90k (Net 30k equity and cash flowing rental)

House 2 - Purchase price 31k. Wholesaled (closed and relisted on MLS) for 59k two weeks after purchase. Netted 24k after holding/closing costs. House required 25k rehab and had an ARV of 110k.

House 3 - Purchase price 61k. Partnered with a local wholesaler (met on BP) who found a buyer at 73k and double closed it. We split the spread with the wholesaler and netted 5k.

House 4 - Purchase price 70k, $0 rehab, rents for $1,100 a month. ARV = 90k (Net 20k equity and cash flowing rental).

House 5 - Purchase price 70k, $0 rehab, rents for $1,100 a month. ARV = 95k (Net 25k equity and cash flowing rental).

Net Net Net.........

The value I place on the education and training that can be found on BPockets can not be calculated by a simple cost benefit analysis, but if you want one here you go.

My partner and I have increased our net worth by the following amounts solely from the 5 completed deals in the first 4 months of our direct mail compaign. These does not include the 7 other rental properties purchase directly from the MLS in 2013 that we used knowledge learned on BPockets to acquire.

Cash - 29k (properties sold)
Equity - 75k (properties held)
Total - 104k
Plus the net present value of the 3 cash flowing properties we held.

Subtract the 3k for our small direct mail campaign and we are still over 100k in net worth increase. Not a bad result from our 3k experiment with direct mail through contacts made on BPockets.

In the last 6 months, I have used the knowledge gained from BPockets to find, analyze, acquire, finance, rehab, advertise, lease and manage 10 additional properties. My modest portfolio continues to grow and my simple hobby has turned into a passion.

Thanks for the community @Joshua Dorkin and @Brandon Turner and all the moderators and contributors.

Loading replies...