From 0 to 8 Rentals in Just 4 Months!
Hi all -
I've been a long time lurker on BP and am happy to say I've listened to every Podcast and read as many posts as I can. My passion for real estate started with rehabbing because I love turning old run down properties into updated homes that families can enjoy. I did a few rehabs back around 2002 as a hobby and then took a long hiatus from real estate.
This year I decided I wanted to get serious about investing. I hired a mentor in January to teach me how to wholesale off the MLS and quickly did two wholesale deals. I can definitely say that I don't love wholesaling but appreciate all those out there who do.
In April of this year, I was about to wholesale my third deal for a nifty $10k profit when my mentor recommended that I start building a rental portfolio. So I purchased the house for $56k and it currently rents for $1k a month. I quickly found a second house with very similar numbers a month later.
I continued to build relationships with realtors and was approached with a six house deal for $320k. All the houses have been completely remodeled and have tile throughout along with updated kitchen and bathrooms. The investor who owned them was moving to another city and didn't have the stomach to be a long distance landlord. I just closed on those six houses which each rent for $1k a month each to bring my total to eight houses.
Next month I'll be closing on my 9th house which is bringing me very close to my goal of buying 10 rentals this year. All houses are in Class C subdivisions and I purchased with 20% down loans.
Thanks to everyone who helped answer my questions along the way and to the BP folks who share knowledge and continue to motivate through podcasts and articles. I hope this motivates others to follow their dreams.
Happy Investing!
Ehab
jt hmm why so negative, people do things for there own reasons. I think there is more to the story to,but this is probably a case of making a long story short.
Talk about inspiring!!! Congrats!
"I am in the process of buying my 9th rental for $52k and it currently rents for $1100 a month. The tenant has been there since 2012 and wants to stay. I estimate it will cash flow $700 a month so when I calculate the return I will get on my 20% down payment it will be over 50% a year."
Your estimated costs are calculating out at around 36% all in for class C properties. Sellers will say any BS to sell a property. Once it's closed do not look for them to help or be found any longer with any issues.
These areas might not even be class C but class D. Section 8 tenants do have issues and can move out. If they have lived there awhile plan on very extensive repairs to get rent ready again.
Acquiring properties is the easy part. Having them make money and keep costs low over an extended period of time you own them is hard to do. Especially with rougher areas and difficult tenants. Unless class C properties were brought down to the studs and everything was rebuilt new with all mechanicals then 36% annual expected costs seems way off base.
Theory is being new and trying something to see what happens. Experience is already having tried something and seeing what happened with real world experience and returns dealing with a particular asset class.
Personally I hope you do amazing with the properties and have great success. These days I do not look at any class C properties or areas. Do not want that drama. Hopefully you built in about a 12% or higher property management fee even if you are self managing today. At some point you might want to hand over PM as you grow and PM companies that will do a good job charge much higher in those types of areas due to all of the issues associated with those properties and tenants.
I hear these stories on BP all the time of acquiring these properties over the years and then nothing 1 to 2 years later from the posters. It either means they became real busy and successful or they have incurred nightmares over time with the properties and do not want to talk about it.
The advice someone gave on here about quantity over quality is true. We have a term called portfolio averaging in the business. This means across all of your investments what are you doing across the board etc. You could have 20 properties and some of them are losing money, some breaking even, and some making money to have a net neutral affect.
Better is to have properties that work and do great. I would rather have 10 that were amazing then 18 and the other 8 were causing lot's of extra work and headache.
All the best.
Ehab, thanks for sharing and excellent job. You are adding to my Success Drive. Have a great day. Don
Congratulations on "seeing the light" and having the discipline and drive to build an impressive rental portfolio so quickly. With a price to rent ratio of close to 2%, it sounds like you are not simply scooping up whatever happens to fall in your lap, but are making wise investment decisions. Similar to the path that you took, my wife and I are currently educating ourselves in the world of flipping and wholesaling with plans to use the experience as a means of "active income" to fund the acquisition of buy-and-hold properties acting as vehicles for the coveted "passive income". A few questions from someone looking to follow the same road to financial freedom: Do you plan to stick to SFRs or would you like to pursue larger multi-families? Why? If you could go back and do it all over again, do you think that your goal of 10 acquisitions in a year was appropriate or would you have done things faster or slower? Congrats again on your success
@Nick Giordano I definitely plan on graduating to multi-family some time in the future. The main reason will simply be to accelerate building my portfolio and getting to that income that I'm looking for.
In retrospect I would not do a whole lot of things differently. There were certainly things that I did that I didn't enjoy (i.e. wholesaling) but that was helpful in learning how to find and negotiate deals. I think there will be some things along the way that you may not particularly like but as long as you remind yourself that these are temporary steps along the way to bigger and better things, you'll maintain your motivation and perspective.
Ten rentals is aggressive but that was also my intention. I wanted a goal that I thought would be difficult to reach and I honestly didn't think I would get there but I'm glad I am proving myself wrong.
I know people debate low income housing and perhaps my strategy will change in the future, but I always keep an exit strategy in mind. Worst case scenario, I hate it and I end up outsourcing the whole thing to a property management company. The bottom line...I will succeed no matter what and I believe that's the mindset you have to have.
Thanks,
Ehab
I can appreciate your attitude that small steps are a means to an end rather than the end itself and are necessary in order achieve the ultimate goal. Our ultimate goal is to build a portfolio of rental properties that will provide the passive income needed to allow my wife and I to live our lives on our terms, However, we understand the holistic approach to real estate investing and thus are focusing on learning the strategies that require more work (flipping and wholesaling) so that when any opportunity should arise we are comfortable exploring any and all options.
I think it is awesome that you were able to set such a lofty goal for yourself and achieve it. I love the mentality that if you shoot for the stars and come up short, you have still accomplished quite a feat. Even better if you reach them! Your "I will succeed no matter what" is admirable and something that I feel as well.
With regards to low-income housing: Do you have any Section 8 tenants or have you explored that option at all? This is something that I would like to learn more about as a possible strategy used to fill larger multi-family properties.
Great job Ehab! Im in Houston also and plan on having the same success.
Great success story man but, be careful, we are always a few dead beat tenants away from Bankruptcy. I just had to sale a property subject to the existing mortgage, and may have to do a few more. With the Mortgage payment, insurance, and tax, I was paying my tenant each month to stay there. was trying to get 1K per month but, in the class C area, had to settle for $850 a month just covering expense, with no cash flow. Just got, 10K down payment on owner finance deal and I'm carrying the balance for the buyer at a monthly note to cover payments. I would have been looking a a foreclosure without this buyer
Originally posted by @Ehab Shoukry:
Hi all -
I've been a long time lurker on BP and am happy to say I've listened to every Podcast and read as many posts as I can. My passion for real estate started with rehabbing because I love turning old run down properties into updated homes that families can enjoy. I did a few rehabs back around 2002 as a hobby and then took a long hiatus from real estate.
This year I decided I wanted to get serious about investing. I hired a mentor in January to teach me how to wholesale off the MLS and quickly did two wholesale deals. I can definitely say that I don't love wholesaling but appreciate all those out there who do.
In April of this year, I was about to wholesale my third deal for a nifty $10k profit when my mentor recommended that I start building a rental portfolio. So I purchased the house for $56k and it currently rents for $1k a month. I quickly found a second house with very similar numbers a month later.
I continued to build relationships with realtors and was approached with a six house deal for $320k. All the houses have been completely remodeled and have tile throughout along with updated kitchen and bathrooms. The investor who owned them was moving to another city and didn't have the stomach to be a long distance landlord. I just closed on those six houses which each rent for $1k a month each to bring my total to eight houses.
Next month I'll be closing on my 9th house which is bringing me very close to my goal of buying 10 rentals this year. All houses are in Class C subdivisions and I purchased with 20% down loans.
Thanks to everyone who helped answer my questions along the way and to the BP folks who share knowledge and continue to motivate through podcasts and articles. I hope this motivates others to follow their dreams.
Happy Investing!
Ehab
Congratulations on the success! Your story is great motivation.
Ehab,
Great work, keep it up! Thank you for sharing your experience!
impressive Ehab! can't wait to see you in person