from newbie to 5 SFR properties in 1 year

Real Estate Deal Analysis & Advice
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from newbie to 5 SFR properties in 1 year

Jimmy Martz
Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes

Hello BP, 

After listening to podcast 167 with Kevin Wood, I am posting of my successes for my first year of investing.  I've been reluctant to post because my family has raised me right which means you don't talk about money and you definitely don't brag about it...  Some of you will relate, I'm sure.  

Deal 1   3/1.5/2, 1152 sq ft. built in 1982 in Mustang OK school district.  pd 61k, put 26k into rehab/closing costs/etc.  All in at 87k.  Appraised at 115k.  did a cash-out refinance for 92k.  Currently rented for $1150/month

Deal 2   3/2/2, 2250 Sq ft, built in 1983 in NW OKC.  pd 85k , put 30k into rebab, etc.  All in at 115k.  Appraised for 160k.  did a cash out refinance for 120k.  Currently rented for 1,300/month.  

Deal 3 3/1.5/2 1087 Sq ft, built in 1972 in Yukon Oklahoma, pd 78k, put 11k into rehab, etc. All in at 89k. Appraised for 100k :-( My CMA would have had it around 110k but this happens sometimes. I did overpay for this one; got a little over-confident... It rents for 1,000/month

Deal 4   4/1.5/2 1700 Sq. ft, built in 1966 in Yukon Ok, pd 82,500.  Put $0 into this one because it was move in ready- moved my family into it.  It appraised for 124k in the same condition that I bought it.  We financed it for the purchase price and put it on a fixed 30 year note for 700/month mortgage for us(escrowed insurance & taxes included).   I put a few grand into our previous house and made it a rental for $925 a month(below market but we were marketing it in December so we dropped it a bit to get a good renter).  At some point, the house we moved into will be a rental as well so that will be even better as we see it through as a long play.  

Deal 5   3/1.5/2 1172 sq ft, built 1966 in Yukon OK. Pd 71,500.  Put in 19k.  All-in at 90k  & It appraised for 107k.  Not great but not awful.  We are leaving about 4k into this deal after everything is said and done.  Rented for $950/month.

With any luck, I can get at least 5 more SFR's this year. I have also been researching the in's and out's of multi-family investing and hope to get into that market as soon at the right opportunity presents itself. I am definitely open for advice if anybody thinks I might need to re-evaluate my strategies or has any wisdom to share.

Lastly, many thanks to the BP community, Josh & Brandon for this great resource!  

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Most Popular Reply

James MasottiPro Member
Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
9y

@Jimmy Martz - Congrats on diving in head first. A few questions for the good of the group

  1. Were all of these deals found on the MLS by chance?
  2. Sounds like you used your own funds to purchase and rehab as well, or was there financing involved for the cash out?
  3. How long did the renovations on each one take to complete?
  4. Did you do the renovations yourself or did you use a contractor?
  5. If contracted did you sub out all the jobs yourself or did you hire a GC?
  6. If you did sub out the work, or use a GC, where did you find them? Newbie's are always asking about where to find good contractors, so it would be great if you can share how you did this.
Podcast Guest on Show #312
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  • Lee Haskins
    Rental Property Investor · Oklahoma City, OK · Member since 2016 · 41 posts · 28 votes
    9y

    Congratulations Jimmy!

    Inspiring to say the least, especially for a new investor like myself. I have set my goal for one house every three months this year.

    We're you doing 1 deal at a time or did you have multiple houses being renovated at once?

    Keep up the hard work.

    0Reply
  • Tiffany S.
    Investor · Portsmouth, VA · Member since 2016 · 289 posts · 107 votes
    9y

    Looks good for a newbie @Jimmy Martz How did you go about financing for purchase and rehab?

    0Reply
  • Max Shaw
    Investor · Fayetteville, AR · Member since 2014 · 24 posts · 21 votes
    9y

    Impressive. Congrats, those all look like great deals. You are well on your way.

    What is your end game? Do you have a day job you are trying to replace or is it just added income for you?

    I always like seeing what people are doing in the "forgotten" states here in the middle of the country.

    0Reply
  • JD MartinBusiness Member
    Moderator
    Rock Star Extraordinaire · Northeast, TN · Member since 2015 · 10k+ posts · 16k+ votes
    9y

    You are on your way, and it sounds like you have the equation figure out - congrats!

    Podcast Guest on Show #243
    Skyline Properties
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    0Reply
  • DJ Cummins
    Rental Property Investor · Bethalto, IL · Member since 2014 · 319 posts · 103 votes
    9y

    Congrats on a great first year @Jimmy Martz

    What are your plans/goals for this year and beyond?

    0Reply
  • Rod Joseph
    Rental Property Investor · Alpharetta, Georgia (GA) · Member since 2016 · 145 posts · 68 votes
    9y

    How did you source your deals? MLS? / Direct Mail? / Referrals?

    0Reply
  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    9y

    @Jimmy Martz - Congrats on diving in head first. A few questions for the good of the group

    1. Were all of these deals found on the MLS by chance?
    2. Sounds like you used your own funds to purchase and rehab as well, or was there financing involved for the cash out?
    3. How long did the renovations on each one take to complete?
    4. Did you do the renovations yourself or did you use a contractor?
    5. If contracted did you sub out all the jobs yourself or did you hire a GC?
    6. If you did sub out the work, or use a GC, where did you find them? Newbie's are always asking about where to find good contractors, so it would be great if you can share how you did this.
    Podcast Guest on Show #312
    2Reply
  • Jimmy Martz
    OP
    Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes
    9y

    @Lee Haskins  I was doing deal 1 and 2 at roughly the same time. -bought 3 weeks apart.    Same situation with 3 & 4.  I offered on deal 4 the day after I closed on deal 3.  Deal 5 was a few months later.  The funny thing is that after you already have a house under contract, it makes it much easier to put out lower offer prices because there isn't the self-inflicted pressures to find a deal at that point.  

    @Tiffany S. I used a HELOC on my primary residence to make cash purchases & financed the rehabs.

    @Max Shaw  My end game is to provide income and build something that I can be proud of.  We all play this game called life.  I just want to be good at it.  I'm a teacher(band director) and I love my job.  I'm not necessarily interested in leaving the teaching profession but I am for damn sure not going to sit around and wait for people to vote to give me a raise...  I'll give myself that raise :-)

    @DJ Cummins  Long term plans are tough but I plan on continuing to invest.  I would like to enter the multi-family arena when the right opportunity comes along.  In the meantime, if I can buy a house every other month and continue to follow a formula that is working in the meantime, that works too.  

    @Rod Joseph  Deal 1- county courtsteps.  Deal 2- a lead through direct marketing(bandit signs) 

    Deal 3-MLS, Deal 4- bought through a local auction company, Deal 5- Probate property brought to me by the realtor who sold me deal #3

    @James Masotti

    1 & 2 -Answered above

    3. Deal 1 took about 10 weeks because of 2 things.   

        -I had to learn how to get work done efficiently and manage sub contractors.

        -I was dead set on not failing so I did lots of work myself because I absolutely HAD to make sure my numbers were awesome in order to convince my wife that I wasn't going to bankrupt us.  I'm sure some of you will relate to that one.  

    Deal 2 took about 10 weeks as well.  Numerous problems that I had to work through.  When you're new, it seem to take twice as long to trouble shoot problems.  Just part of the learning curve I suppose

    Deal 3 took 5 weeks from the closing date until I had a lease agreement signed.  Little higher on the learning curve.  

    Deal 4- +- a week but this was our previous residence so there wasn't much that needed to be done.  This issue was trying to find a renter in December which I now realize is a tough time to find good tenants.  

    Deal 5  took 6 weeks from closing day to having a lease signed.  

    4,5, and 6- We started out doing as much work ourselves as we could which sucks but it taught some good lessons. We use sub contractors for all the skilled work(electrical, plumbing, etc). I have never hired a GC. The further along we went, the less labor we(my wife and I) did ourselves. We didn't do much labor on the last 2 other than some of the make-ready stuff. Hiring sub contractors is tough. I have found some good people through references from other investors that I have met on BP or at the local REIA meetings. I also get references from the contractors themselves. A good plumber is likely to know a good handyman or electrician. You get the idea. I have also hired plenty of bad sub contractors that I will not use again. I now hire out subs to do 1 or 2 small jobs to try them out & see the quality of their work, reliability, etc. before I will give them the opportunity for a big job. I also require my sub contractors to sign a contract that will hold them accountable to a completion date and deduct payment daily if they don't meet the deadlines if it is something that will take more than a day or two.

    5Reply
  • James MasottiPro Member
    Rental Property Investor · Washington Township, NJ · Member since 2015 · 1k+ posts · 976 votes
    9y
    Originally posted by @Jimmy Martz:

    @Lee Haskins  I was doing deal 1 and 2 at roughly the same time. -bought 3 weeks apart.    Same situation with 3 & 4.  I offered on deal 4 the day after I closed on deal 3.  Deal 5 was a few months later.  The funny thing is that after you already have a house under contract, it makes it much easier to put out lower offer prices because there isn't the self-inflicted pressures to find a deal at that point.  

    @Tiffany S. I used a HELOC on my primary residence to make cash purchases & financed the rehabs.

    @Max Shaw  My end game is to provide income and build something that I can be proud of.  We all play this game called life.  I just want to be good at it.  I'm a teacher(band director) and I love my job.  I'm not necessarily interested in leaving the teaching profession but I am for damn sure not going to sit around and wait for people to vote to give me a raise...  I'll give myself that raise :-)

    @DJ Cummins  Long term plans are tough but I plan on continuing to invest.  I would like to enter the multi-family arena when the right opportunity comes along.  In the meantime, if I can buy a house every other month and continue to follow a formula that is working in the meantime, that works too.  

    @Rod Joseph  Deal 1- county courtsteps.  Deal 2- a lead through direct marketing(bandit signs) 

    Deal 3-MLS, Deal 4- bought through a local auction company, Deal 5- Probate property brought to me by the realtor who sold me deal #3

    @James Masotti

    1 & 2 -Answered above

    3. Deal 1 took about 10 weeks because of 2 things.   

        -I had to learn how to get work done efficiently and manage sub contractors.

        -I was dead set on not failing so I did lots of work myself because I absolutely HAD to make sure my numbers were awesome in order to convince my wife that I wasn't going to bankrupt us.  I'm sure some of you will relate to that one.  

    Deal 2 took about 10 weeks as well.  Numerous problems that I had to work through.  When you're new, it seem to take twice as long to trouble shoot problems.  Just part of the learning curve I suppose

    Deal 3 took 5 weeks from the closing date until I had a lease agreement signed.  Little higher on the learning curve.  

    Deal 4- +- a week but this was our previous residence so there wasn't much that needed to be done.  This issue was trying to find a renter in December which I now realize is a tough time to find good tenants.  

    Deal 5  took 6 weeks from closing day to having a lease signed.  

    4,5, and 6- We started out doing as much work ourselves as we could which sucks but it taught some good lessons. We use sub contractors for all the skilled work(electrical, plumbing, etc). I have never hired a GC. The further along we went, the less labor we(my wife and I) did ourselves. We didn't do much labor on the last 2 other than some of the make-ready stuff. Hiring sub contractors is tough. I have found some good people through references from other investors that I have met on BP or at the local REIA meetings. I also get references from the contractors themselves. A good plumber is likely to know a good handyman or electrician. You get the idea. I have also hired plenty of bad sub contractors that I will not use again. I now hire out subs to do 1 or 2 small jobs to try them out & see the quality of their work, reliability, etc. before I will give them the opportunity for a big job. I also require my sub contractors to sign a contract that will hold them accountable to a completion date and deduct payment daily if they don't meet the deadlines if it is something that will take more than a day or two.

     Thanks for taking the time to write out a detailed reply! All really great stuff you called out here. Also awesome that you're a teacher and doing this too. I'm really surprised that more teachers don't. My wife's family has a ton of band directors (sister-in-law, brother-in-law, father-in-law, uncle-in-law) so I can imagine everything you've got on your plate there too.

    Wishing you all the best and continued success for sure! If only I could get my properties to rent that fast...hoping this year is better than last year though.

    Podcast Guest on Show #312
    1Reply
  • Jon Nolen
    Investor · Oklahoma City, OK · Member since 2015 · 43 posts · 13 votes
    9y

    Congratulations @Jimmy Martz.  It's great to see another investor here in the OKC area doing well.  Hopefully we'll meet at one of the Meet-Ups around here sometime!

    0Reply
  • Joe Moore
    Rental Property Investor · Los Angeles, CA · Member since 2010 · 804 posts · 230 votes
    9y

    Great job.  Keep it up.

    1Reply
  • Account Closed
    Investor · Chagrin Falls, OH · Member since 2016 · 70 posts · 30 votes
    9y

    Thanks for sharing your story!!  I just bought my first rental and I am curious as to how long it took for you to cash out refinance on these properties??

    0Reply
  • Justin Ratzlaff
    Piedmont, OK · Member since 2016 · 3 posts · 0 votes
    9y

    @Jimmy Martz, first congrats on all the success so far!  That is really awesome and inspiring.  I, along with a partner, are looking to get into the rental property market so it is exciting to see someone local with so much success.

    Secondly, how are you evaluating the deals?  It looks as though you are buying most of these with enough equity to rehab and cash-out refinance.  Is there a formula you follow?

    Thank you in advance,

    JR

    0Reply
  • Jimmy Martz
    OP
    Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes
    9y

    @Account Closed   I have always established a relationship with the mortgage banker before I go asking for a loan.  After I buy the properties, I rehab them and  get tenants to sign a lease agreement before I go to the bank for a cash-out refinance.  When I visit the bank, I have a packet that includes:

    -Before and after pic's  to show my quality of work

    -Project Numbers- to show that I can do a rehab on a budget & that I keep accurate records.

    -A signed lease agreement- to verify the income that the property is producing

    -Application paperwork from the tenants- to show that I am doing my due diligence on the property management side of the business. 

    So... to answer your question- it takes about 2 weeks from the time that I stop by with my packet and request an appraisal until the closing date.  Lots of extra information here but I think it all directly relates to the length of time that it takes.  My banker once told me that he likes his loans "boxed up with a pretty little bow", referring to the loans being easier to process when it is super easy to explain the validity of the deal to his underwriters. 

    0Reply
  • Jimmy Martz
    OP
    Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes
    9y

    @Justin Ratzlaff Formulas are easy but getting from the formula to the real-life expenses that you didn't know you had until you're knee-deep into the project is the real trick. Only experience and some good advice along the way can really teach this. I simply look for properties that I will be all in at 75% of ARV minus rehab/holding costs, etc.

    ex. 100k ARV house with 20k in rahab, holding costs, etc.

    Offer 55k (75k is the 75% of ARV and subtract 20k for the rehab, etc)

    0Reply
  • Asim Alam
    Professional · Tucker, GA · Member since 2017 · 138 posts · 29 votes
    9y

    Very nice, @Jimmy Martz

    I'm gearing up to do my first SFR flip this year, and this is the kind of post that keeps me excited!

    0Reply
  • Ryan Kennedy
    Oklahoma City, OK · Member since 2016 · 29 posts · 6 votes
    9y

    Hey @Jimmy Martz thanks again for all of the great details on your deals.  Can I ask a little more about financing?  I have the liquidity to buy houses for cash but plan to finance the repairs.

    1. Who have you been using to finance the repairs?  And do you mind sharing the terms?

    2. Were you able to cash-out refinance these properties without 6-months of seasoning?

    Thanks! 

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    9y

    @Jimmy Martz

    Great job.  That's the way it's done.  Congratulations.

    I like your quote about giving yourself a raise.  You're a real American success story!

    Stephanie

    1Reply
  • Jasmine Patel
    Los Angeles, CA · Member since 2016 · 17 posts · 8 votes
    9y

    Thank you for sharing your experience! I am inspired.

    0Reply
  • Jimmy Martz
    OP
    Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes
    9y

    @Ryan Kennedy 

    1. I financed the rehab from my HELOC. This allowed me to get the job done without having to deal with draws.

    However, I did have to use private money to finance 2 deals.  They financed 80% of the purchase price.  I paid 20% plus the rehab cost.  2 points and 10% interest were my terms. 

    2. I didn't have to wait for the 6 months of seasoning.  I found a local community bank that does portfolio loans that they keep in house so they didn't require this for me. 

    2Reply
  • Jimmy Martz
    OP
    Investor · Yukon, OK · Member since 2015 · 41 posts · 48 votes
    9y

    @Ryan Kennedy  One other thought.  You mentioned getting financing for the cost of the rehab.  Here's a tip- When you go to your local reia meetings, you will likely be looking to meet private money lenders.  My experience has been that you find many more investors than lenders at those events.  Instead of seeking out private lenders, get to know the investors and get references for who they use for their private money.  Seems simple but I think a bunch of people overlook the obvious sometimes. 

    3Reply
  • Julie Kaley
    Residential Real Estate Broker · Ripon, CA · Member since 2015 · 17 posts · 10 votes
    9y

    Great job!

    0Reply
  • Vanessa Castillo
    Investor · Los Angeles · Member since 2017 · 31 posts · 6 votes
    9y

    @Jimmy Martz thank you for the helpful post! I'm definitely considering trying this out and what you've done so far, in less than a year nonetheless, is definitely something to get excited about! I don't own a home now, but I'm curious. How far into owning your primary residence were you able to take that heloc out? Is there a time frame you have to meet before doing so I mean? 

    0Reply
  • Ro Maga
    Newark, NJ · Member since 2015 · 162 posts · 102 votes
    9y
    Jimmy Martz , you should be on the podcast! I'd love to listen to your story in more detail.
    1Reply
  • Kristopher HanksPro Member
    Rental Property Investor · Davenport, FL · Member since 2016 · 593 posts · 382 votes
    9y

    @Jimmy Martz Nicely done! I love hearing the success stories because they keep me going through my hardships with my rental properties. Makes me want to keep going because I see what is possible. 

    0Reply
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