One Year Later - 10 units and full time investor

One Year Later - 10 units and full time investor

Jacksonville, FL · Member since 2016 · 76 posts · 130 votes

It was about this time last year that I discovered Bigger Pockets and found what I was looking for - a way to escape the boring, restrictive 9-5 life while doing something enjoyable and generating wealth. I caught the real estate investing bug and started listening to podcasts and reading articles for hours a day.

I kept hearing experienced investors say to jump in, so I did just that a few months later. By August, I had closed on a quad and was officially a real estate investor. Around that time, I partnered with a friend who was also interested in REI. By my 24th birthday at the beginning of this year, we collectively owned 10 units / 4 properties. We've done a house hack condo, a BRRRR triplex, and duplex and quad rentals.

This has given me the freedom to go into real estate investing full time while my business partner is sticking it out at his job to help us qualify for mortgages. This month, we've put a live-in flip and a BRRRR quad under contract, and we have another duplex in verbal negotiations that looks very promising.

It's easy to get frustrated when progress seems slow, but rewarding when I can look back at my first year in real estate and see we made it to double digit doors while earning enough to go into real estate investing full time. I can't thank BP enough for the advice and wealth of information. We are currently looking for connections in Jacksonville, FL, Greenville, SC, and southern Delaware to grow our business if anyone is interested. Thanks BP!

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Jerry W.Pro Member
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Investor · Thermopolis, WY · Member since 2012 · 4k+ posts · 4k+ votes
9y

Congratulations @Ethan Lee.  You have done very well.  I have been investing part time for almost 20 years and have not been able to leave the day job yet.

@Sam T., welcome to BP. BRRR is a buy, rehab, rent, refinance, repeat. it allows you to keep pulling money out to do rehabs over again. House hack means to live in a property while you rehab it. Often it is your primary residence to take advantage of the no capital gains from the sale of your primary residence for 2 of the last 5 years, but not always. you might start reading up in the education section above, it is loaded with tons of great information. Good luck.

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  • Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    @Kurtis R. Thanks! My partner has been a big part of my success and now will be a big help in getting loans. We knew we were a good fit because he makes great money for his age, while we knew I would be able to focus on growing our business full time. I just now left a job so we will see how much that impacts getting loans. We are searching for good portfolio lenders who will use a portion of our rental income when calculating our debt to income ratio, which isn't the easiest since we've bought all of our properties within the last year. 

    I would recommend finding a partner who is willing to be very transparent about his/her finances and equally focused on the goal of building a rental portfolio. My partner and I are open books - we're constantly updating our combined debt to income ratio so we know how we look to banks. We're both committed to frugal lifestyles and having zero consumer debt like car payments or credit card payments. I would definitely recommend transparency when looking for a partner to team up with for mortgages.

    We divide income evenly and we're both focused on putting any disposable income towards more properties, so we haven't run in to any issues there. I would find someone whose goals align with yours extremely well.

  • Investor · Saint Louis, MO · Member since 2016 · 970 posts · 1k+ votes
    9y

    Congrats again and keep on doing what you are doing :)

  • Real Estate Agent · Stoneham, MA · Member since 2016 · 20 posts · 26 votes
    9y

    @LaMonica Evans be careful about your first investment. Depending on what your goals are in REI if you were to FHA a SFH for your first investment it would narrow your lending options on future deals. You can only carry one FHA at a time and if you ever wanted to try and put down less than 20-25% down it would be a struggle convincing underwriters that you are moving from your SFH into a duplex or more for your primary residence. If you plan on using Hard Money ignore me completely...

  • Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    9y
    Originally posted by @Ethan Lee:

    @Maxwell Lee thank you! I look forward to connecting soon - I think I saw that you'll be at a Jax meeting in February that was being planned over the forums? I'm excited to be here and to get plugged in. Do you recommend any local banks that work well with investors? Starting to call around but not having great luck with banks that count recent rental income in the DTI and allow more than 4 mortgages.

    I do not really. We actually are not leveraged at all, save for mortgages that we carry from our time prior to being "professional" REI. Currently considering a portfolio loan on some of our properties, although I'm having a difficult time figuring out which properties are best to refi vs sell. And also at what LTV.

    Here's what I can share about my experiences talking to banks. It's strictly from one, rather limited, perspective. 

    Everbank can't help much. BOA even less. First Atlantic and Ameris Bank have been able to offer some competitive rates but they are still fairly strict about DTI. We have a HELOC on our multifamily primary residence at prime+.5 with Ameris. Community First Credit Union (where I've had personal accounts for over 20 years and business for 5 so they know me well) has met with me and seems to be very earnest in wanting to help creatively. However they just told us the other day that at the moment they feel like our business and income numbers won't work for them. (We had very low AGI the past two filings as we started bought many homes requiring major rehab). Basically everyone has told us to talk to them after we file 2016 taxes, which should look a lot different since we only purchased one home and sold 5 lol. So we'll see.

    My cousin's wife, who is based in Socal, is in the process of getting her license to underwrite in FL. Once she completes that I suspect she'll be able to help us out a lot. And I'd be happy to refer you too. 

  • Real Estate Investor · Miami, FL · Member since 2013 · 474 posts · 214 votes
    9y

    Oh and yes we are planning to be there in Feb!

  • Investor · Vancouver, WA · Member since 2016 · 1 post · 0 votes
    9y
    Originally posted by @Jerry W.:

    Congratulations @Ethan Lee.  You have done very well.  I have been investing part time for almost 20 years and have not been able to leave the day job yet.

    @Sam T., Often it is your primary residence to take advantage of the no capital gains from the sale of your primary residence for 2 of the last 5 years, but not always. 

    Hey, When you said "Often" do you mean that there are situations that you can not get hit with the Capital Gains taxes while not having the property as a primary residence for 2 of the 5 years?

  • Investor · Edison, NJ · Member since 2016 · 31 posts · 15 votes
    9y

    Congrats buddy! Great inspiration for all!

  • Professional · Tucker, GA · Member since 2017 · 138 posts · 29 votes
    9y

    @Ethan Lee: You're my newest hero! I am right now hopefully where you were last year.

  • Real Estate Broker · Saint Louis, MO · Member since 2015 · 10 posts · 5 votes
    9y

    @Patrick Collins You raise a really good point! Thanks for that tid bit. So in your opinion you suggest leveraging the FHA loan for purchasing a multi family first? This seems to make logical sense and if I plan to hold it for a substantial amount of time possibly until retirement and just cash flow then it works out.

  • Dave FosterBusiness Member
    Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes
    9y

    @Micah Harpel, I think they're referring to a 1031 exchange.  This is where you sell investment property and buy new investment property and because you use a specific process you can defer the gain into the new property.  You're primary residence exemption is tax free. A 1031 exchange is tax deferred but most investors will do this indefinitely.  It's pretty powerful.  

    The 1031 Investor5137 Reviews
  • Real Estate Broker · Saint Louis, MO · Member since 2015 · 10 posts · 5 votes
    9y

    Thanks for the insight, you just said what I was thinking. I feel like it'd be a really good starter investment for a minimal down payment and as long as the numbers add it, it could be a good cashflow option for holding.

    Do you have much experience with wholesaling or buying properties from wholesalers?

  • Pineville, NC · Member since 2016 · 15 posts · 5 votes
    9y

    @Ethan Lee Great job, like your story, Great motivation to keep me going. 

  • Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    @Maxwell Lee Great, waiting for a call back from Ameris and I'll give First Atlantic a call. Sounds like your cousin's wife will be a good asset. In case it can help you or anyone else searching, calling around today has so far left me with Atlantic Coast Bank, Angel Oak Home Loans, and Caliber Home Loans with programs designed for real estate investors. They have different requirements with minimum loan amounts, credit scores, whether or not they use DTI in their underwriting, etc. but they all seem like possibilities in the Jacksonville area.

  • Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    Thanks @Richard M. and @Henry Shungu! Keep plugging away @Asim Alam it wasn't a walk in the park but definitely not impossible either. The beginning is often the hardest and it snowballs from there.

  • Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    @LaMonica Evans I haven't personally done wholesaling yet, but I probably will in the future if/when we get into direct marketing and find deals when we don't have the funds lined up. We haven't bought from a wholesaler yet but we're on several lists and are constantly analyzing their deals, so I am hoping we will at some point this year.

  • Brooklyn, NY · Member since 2016 · 115 posts · 40 votes
    9y
    Ethan Lee great job! How did you secure financing on all those properties? I'm closing on a deal soon and am already thinking about the next one.
  • Flipper · Scranton, PA · Member since 2012 · 32 posts · 5 votes
    9y

    congrats! you are at the right age to start investing, I am also looking to phase out of my other business and go full time in real estate.  If I started in my mid 20s would of been much easier, now that I am in my 40s I would need around 80 units and possibly a few flips per year.  to quit my main line of work and go full time in real estate. I am only 1/3 way there and been doing it for 5 years so at the rate i am going it will take another 10 years to quit my job.

    keep it up, you are doing the right thing

  • Jacksonville, FL · Member since 2016 · 76 posts · 130 votes
    9y

    Thanks @Walmsley Gedeon! I saved money like crazy over the past 2 years to have funds for down payments, then so far we got conventional mortgages from banks. We also work with private lenders (so far family members) to fund projects that need repairs, then we'll refinance them with banks. We're working now to find portfolio lenders which should be a better fit with me not working a W2 job and our increasing DTI, although rates will probably be higher.

  • Brooklyn, NY · Member since 2016 · 115 posts · 40 votes
    9y
    Ethan Lee awesome! Good luck bro..
  • Colchester, VT · Member since 2014 · 3 posts · 1 vote
    9y
    Nice job Ethan Lee ! Posts like this keep the motivation going. Don't let this one be the last; updates always welcome!
  • Investor · Tampa, FL · Member since 2017 · 12 posts · 5 votes
    9y

    That's incredible, congrats! I am from Jacksonville living in Tampa, my family is still back there and I really think they have a good market for investing. Best of luck to you!

  • Kat WyningerPro Member
    Fort Smith, AR · Member since 2016 · 14 posts · 3 votes
    9y
    Congrats Ethan Lee ! Today was my first official day as a landlord :) - we closed yesterday on two sfh with seller financing. It will take me a little longer to get where you are- I have to repair my credit along the way, but very exciting nonetheless. Thank you for sharing the inspiration!
  • Rental Property Investor · South FL · Member since 2014 · 92 posts · 16 votes
    9y

    Congratulations @Ethan Lee that's impressive progress. 

  • Real Estate Agent · Souderton, PA · Member since 2016 · 591 posts · 414 votes
    9y
    LaMonica Evans it sounds like your RE broker doesn't know what they are talking about and you need to find a new one that will put YOUR interests first, and not their own. As an agent myself, I see too way many times agents giving bad advice in order to just make a commission. Furthermore too many agents don't have experience in anything but SFR and standard financing so they will say something like "oh a 203k loan is sooo hard to get". Or "it'll be sooo hard to sell a multi family compared to an SFR". To be honest before I knew anything about 203k loans I thought they were hard until I actually learned the process and helped a few clients utilize them and now knowing the truth anytime I hear otherwise I want to break something. Google a 203k loan of your not sure what they are, and I'm not necessarily recommending it's the best option for you, or anyone else for that matter, it's just an example of what agent will say regarding a certain loan or house when they don't have all the facts. My point is your broker probably has no experience selling multi family so therefor they are pushing you to an SFR as to not look dumb, or worse lose a deal because they don't know what to do and have to pass you off to someone with experience. OP, great job so far. Keep hustling. Love to hear stories like yours.
  • Investor · Milwaukee, WI · Member since 2014 · 69 posts · 13 votes
    9y
    Congrats .. so cool ... im full time 25 four units as an individual... any tips on how to use a friend working full time to partner on getting mortgages ? Its tough for me to qualify even with four units Joint mortgage ? Ethan Lee
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