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.
@Brie Schmidt This is truly inspiring for someone that would like to be at a similar level in the next 3 years. I just obtained a portfolio of rentals to manage and have some of my own. I obtained my real estate license last year to help in my real estate endevours. To see where you started from and what you have achieved in just a few short years, proves that with unbelievable focus you can train your mind to do anything. I wish you all the best on the much needed vacation. I tend to wonder why I have a full time job and allow REI to consume all of my other waking hours, but hearing your story reminds me there is a means to an end as well as a brighter future with freedom and financial independence.
Brie Schmidt Congrats in the goal hitting! It is truly a bold goal to reach, and I know how much work it took you to get there, I had a similar experience for our family owned business when I ran it. Congrats on the new in-house PM, next in line will be a contractor license or an in-house handyman who has a license for that kind of volume, or probably an on-call maintenance, or dual employer handyman to keep losses down (little more expensive than in-house). There are a lot out there who needs work, that will save you a lot of repair cost in the long run.
Good luck and thanks for posting.
@Anil Samuel - I did REI on the side for about 3 years before I left my job. I also made sure that the bank knew I was leaving and that it would not effect my ability to grow. If it had, I would have stayed working, even though my passion was REI.
@Manolo D. - Our situation with our PM is kinda unique. As of tomorrow, he is leaving his job to work for us full time (he has been working for us for almost a year while being a teacher). His wife runs her family's portfolio of about 50 units in the area too. Her Mom was a teacher and started buying investment properties in the 70's and now that she is retired her daughter manages it, she and her brother also own property and they have a good family friend that is an investor too. So between all of us I think there are like 200 units all in the same 2 zip codes. So our workers are workers for his wife's family and they all go back and forth between everyone and have had an established relationship for years. We would not have been able to do this all without that established team, because there is always something going on.
Congrats - such a fantastic accomplishment! I'm glad you're giving yourself (and your finances!) a reprieve and are taking a bit of a break to enjoy the freedom you've worked so hard for. Keep it up, and keep the updates coming!
What a great story...Congrats! Your story is very inspiring and its been great to follow a fellow Chicagoan's success! I got deal #1 done 3 months ago....need to catch up :)
Awesome, love following and watching you meet your goal. We just bought our first 2 duplexes (12th and 13th unit) last month. This is 5 this year and it has definitely pushed me to limits. Previously we were only buying single families and 1-2 a year. Now looking into larger units as we just starting using the commercial financing as well. It is exciting reading about your journey helps the process :) Good luck and enjoy your vacation I will have to talk my husband into one after these last purchases.
Hey @Brie Schmidt, you sure have been busy. It was clear at the meetup in SF that you were rockin at a new level, but wow. Awesome to see how quickly you've turned the corner. My wife and I continue to be very inspired by your successes. We are on track to hit 10k gross rental income here in the next couple months. This motivates me to keep on pushing and see what we can do in the second half of the year.
Congrats. Well done. I am new to BP and I'm already hooked into expanding my portfolio. I also do not go over 70% LTV and as long as I have net positive cash flow I can weather the storms.
Hi Brie, congratulations on making your goal! I have often considered the area North of Chicago but find it doesn't meet my profit criteria - and often the 1% guideline (not rule).
Currently your gross rental rate is almost $600 per door, but what is your net per door? Can you break this down by state or even city? Many people boast about the gross rents but it doesn't mean they are make a profit, and I wanted to understand from your perspective how much your net really comes out to be and if it is profitable to be in the upper Midwest?
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