Real Estate Broker · Chicago, IL · Member since 2013 · 6k+ posts · 5k+ votes
Last week we hit our investment goal of $35k a month gross rental income. We bought our first investment property in August 2011 and the vast majority of our growth has happened in the past 10 months. We (my husband and I) now own 21 buildings and 59 units in Chicago and Milwaukee.
Life is still crazy, especially since we just got back from Mexico and are leaving for a two week trip to Europe this week… but I foresee a more steady and manageable pace moving forward.
It hasn’t been all sunshine and rainbows. We have had our fair share of problems. Some buildings were an easy takeover where the tenants stayed, paid rent, and didn’t cause problems. Some we had tenants leave in the middle of the night or leave the place trashed. Some properties were profitable from day one and some won’t be profitable for at least a year. The good thing is because we have scale it all balances out and we are not putting our own money into them every month.
BP has been such a huge part of my success. I gained the confidence I needed to go into this full time and have met some amazing friends who have helped me so much along the way.
I am looking forward to this much needed vacation and returning in June fully recharged and ready to go!
@Derek Carroll- About half our portfolio is in Chicago with traditional residential financing. We were able to cash out on some of our appreciation to buy the rest with 80% LTV commercial loans. We borrowed $100k from my brother to push us past the goal line and now we will be pulling more equity out of Chicago to pay him back.
@Steve Perkins- It has been beyond my wildest dreams, I honestly barely recognize myself and didn't know I had it in me to do all this.
I'm sure you are using BP's guidelines about cash flow and you are careful about not pulling too much cash out on your appreciation. As with my business partner ventures, my own rental properties are never leveraged too the max even if the current net rental income can cover the new loan. One never knows what may occur to cause net rental income to suddenly drop for a while. So many "investors" do not consider that scenario as they were pulling cash out of all the built up equity. In almost 30 years of ups and downs of real estate I have not had any forced loss of real estate because all the loans were easily covered by even dropping rental income. Rental income does not always go up each year. Keep you wildest dreams from turning into nightmares.
Fantastic you hit your goal but....................I see all these congrats is that a good thing or bad? Only you know. More info is needed. What level of debt do you now have......whats the net on this. I guess what I am saying is if I had $1,000,000 per month coming in on 3000 properties that I had loans on and netted $10,000 out of that I would consider that a nightmare of leverage and by definition a "house of cards".
Back to you...if your happy that's all that matters...Right :-)
Our P&I is $7,400 a month - so we would need 75% of our units vacant to not be able to make a mortgage payment (currently 0 are vacant except 2 of the units we bought last week and I anticipate leases on those this weekend). It is scary having over a million dollars of debt but our total portfolio is at a 60% LTV based on appraisals done in the past year.
Hi @Brie Schmidt - I have to say that in my opinion you would be a great candidate for another appearance on the podcast so we can hear more about what's happened during the last year. Anyone else who agrees should add a vote to Brie's original post.
Congrats and in just 4 years. What a wonderful accomplishment hope to be joining you guys soon we give our selves 5years.This gives us hope and lots of motivation
Brie Schmidt to make sure I understand, you are grossing $35k/month, but that's before all expenses and mortgages are paid, correct?
Any sense of what you are netting (actually taking home) per month?
That is exactly my goal, but I was thinking 12 years to get there, so your 4 years blows me away!! I am SO listening to your pod cast ASAP! Congrats to you!!
So awesome!! Congrats. I've followed your story and learned a lot. Wish you guys the best and I agree all the reading and advice is amazing but at some point have to step back and gather your thoughts. I'm doing the same now. Closed on a 21 unit this week and have a 3 family under contract. Couldn't have done any of of this without. Bigger pockets Just wanted to say thanks
Brie Schmidt to make sure I understand, you are grossing $35k/month, but that's before all expenses and mortgages are paid, correct?
Any sense of what you are netting (actually taking home) per month?
It is still a little early to tell for sure. Our Chicago properties which we have had for awhile run at about 25% expenses but these are newly rehabbed properties in A/B areas. Milwaukee has had a lot of start up costs getting buildings and units up to our standards. I estimate we will be running at 55% expenses but according to the seller's schedule E's that were provided to us when we bought they were running at about 40% expenses. If we use the 55% we should be netting around $10k a month.
The properties we bought last July are already ramped up and operating at about 40% - All but one of the December properties are ramped up and at about 40% and we are still working on getting the ones from March and May up and running
How did you structure the deal with borrowing from your brother?
I have a family member who would do the same, but they need some convincing.
It was structured very informally. My brother and I are pretty close so there is nothing in writing. I did send him the analysis of our current portfolio and what we were expecting to buy so he could see the numbers and understand what I do.
So awesome!! Congrats. I've followed your story and learned a lot. Wish you guys the best and I agree all the reading and advice is amazing but at some point have to step back and gather your thoughts. I'm doing the same now. Closed on a 21 unit this week and have a 3 family under contract. Couldn't have done any of of this without. Bigger pockets Just wanted to say thanks
Congrats to you! I too had to step away last year and focus on trusting my gut.
How did you structure the deal with borrowing from your brother?
I have a family member who would do the same, but they need some convincing.
It was structured very informally. My brother and I are pretty close so there is nothing in writing. I did send him the analysis of our current portfolio and what we were expecting to buy so he could see the numbers and understand what I do.
You may want to discuss this with your accountant. If you ever get audited a simple signed loan agreement would probably make your life much easier. IMHO, a signed agreement is required in all partnerships even when it is between two close siblings, because it helps prevents misunderstandings. In other words what you think you agreed to may not be what your brother thinks he agreed to, add in memories fade with age then your inviting some very avoidable issues.
@Brie Schmidt Congratulations! We moved from CA to Joliet (outside of Chicago) last Dec. (family obligations) , Do you know of any investment groups in the area? I'm working on a rehab in Will County. Have properties in S. Illinois and one in CA. Looking for contacts, investors to get the ball moving here. Slow start.
@Brie Schmidt, it takes guts to quit your job and pursue a full-time career of real estate investing. So well done!!
I am sure for you it hasn't been all sunshine and rainbows, I also quit my CPA job in 2011 to buy large apartment complexes and know probably what you went through to hit your goals.
There are many challenges and obstacles to navigate the choppy waters of real estate investing.