Investor · Columbus, MT · Member since 2013 · 1k+ posts · 1k+ votes
Well I'm old now :( turned 30 today, As I look back over the past 5 years I am grateful for the success that has happened in my life and wanted to share a word of encouragement for those who are just getting started.
I started by house hacking a duplex while only making 35k per year from my day Job. 5 years later we have now done over 10 deals and have 500k+ in net worth and great cash flow from our properties!
Bigger Pockets was THE resource that we used to grow. Thanks to all you people who helped me grow on my journey!
Oh and I hit 1000 posts!
If you are out there and wondering if real-estate is a good path, I hope this can be an encouragement for you! Use Bigger pockets and take lots of action!
@Joshua D., thank you for the kind words. I came through your town this spring and bought an axle from a trailer salesman. I did look around and talked to a realtor there. I learned about the mine as well. I did look at a duplex, but the ratios were too far out of kilter and of course it is too far away. It seems like the feedback suggested your weather does not get the same benefit as the Billings area for inversions that keep it warmer. It can be hard finding opportunity and growing your portfolio in smaller areas. You have to keep your ear to the ground and jump when the opportunity arises. My weak spot is in getting the properties fixed up. I used to have a handyman who did it for me, then a small business began doing some of my repairs. One has now retired and the other has so much business that I can never get him anymore. Doing work myself can be fun, but it is so slow due to the demands of the day job. I currently have 3 that need to be rehabbed in order to rent them. That is a pretty big negative to take out of cash flow. As one of the units I bought came with furniture I am seriously considering a go at temporary rentals like the AIR B&B model. Best of luck.
@Jerry W. dang! Next time your up this way we need to connect! Would you be interested in sharing your story sometime at our billings investment group?
Amazing! All the best to you and your family. So much to be grateful for and so many opportunities once you change your mindset from one of scarcity to one of abundance.
Joshua D. Happy birthday and congrats! I'm curious with your live in flips, how long did you live in each property for, what types of construction did you do, and how long did it take? We are thinking of doing a live in flip but we have a 5 month old. Trying to figure out the best way to do this. Currently we are house hacking. Thanks!
Congrats! That is very awesome. Even though you like to play computer games I am sure you put in a ton of work along the way.
Quick question about leveraging...you said "conservative leveraging" in one of your posts. This is the area I am trying to figure out right now. Currently I have 1 property and will be closing on 2 more in August, I need to figure out that leveraging factor and where is the safest place to be when it comes to that. Any advice?
I hope God continues to bless you and your family!
Awesome! Congrats @Joshua D. . I turned 22 about a month ago and got my first duplex earlier this year, I'm shooting for being set when I have my 30th birthday so it's encouraging to see people that were able to do it without making 100k a year! Keep on doing you and inspiring those that are looking up the mountain.
Well, way to go on the current house hack! That's the way to do it!
We stayed in each for exactly 2 years for tax purposes. Rehab was kitchens, bathrooms, carpet, floorings, paint, and all exterior paint and roof. We are in our 3rd one one now.
We have a 14 month old and a 2 month old so I get the challenge. It's not easy, but even in a construction zone we are living better than 75% of the world. Perspective helps. However, this last house we bought and did all the interior rehab before moving in. That way my wife stays married to me :)
If you are willing to sacrifice and blitz when it's time to blitz. You can go far.
Congratulations! This is very encouraging to read, I just recently turned 29 years old and am on track to being in a similar position within the next few years. Did you find that the majority of your net worth came from market appreciation or from forced appreciation?
Thanks Adam! I wish there was a simple answer to the "over leverage" question. As I have mentioned before we have foucused on the BRRRR plan and that allows us to have plenty of built in equity to keep us safe from market corrections.
On the cashflow side of things we have kinda a weird way of running numbers but it works for us. We say that the property has to rent for double of whatever PITI is on the morgtage. So if the whole payment is $550 it needs to rent for $1,100 a month.
When it comes down to it, you just have to take the jump. As I said earlier, the hardest deal was house 3 cuz it was scary taking on a 3rd morgtage.
@Steve K. We are planning to pay down debt Long term. But In the short term we are using debt to get as many properties as we can. Our goal is to have 10 free and clear SFR cuz of their ease of management. We are almost to the place where we own 10 then we will do our best to pay them off.
I am kinda lazy at times. I like to play computer games WAY to much (league of Legends!) . I sometimes wonder where i could be if i really applied myself.
So, Josh, thanks for the reply.
...after learning how to successfully make 100%(?) cash on cash profit on a fix/flip and 15 to 25%(?) cash on cash returns on your fix/hold investments, you plan to start "reinvesting" your cash flow to make ~4.5% APR (by paying down the mortgages? Why not keep it going a little longer?
[I only ask, because I struggle with this concept at home. For 36 yrs of marriage, particularly when we were young and had a 12.25% APR mortgage and later an 8% mortgage, we were sold on the idea of paying off the primary residence quickly (8-12% interest was safer than trying for the same in mutual funds, and came with the "security" of trying to own the house without a mortgage.....along with the Biblical principal of debt-free living). Now, I've changed my mind....why do I want to pay off a 2.625% APR when the money could grow our retirement savings more quickly in another property?....buy my wife hasn't shifted her risk aversion to debt, like I have.]
For me the short answer is hassle factor. If I had the choice between 40 units that make $7000 a month with debt or.... 10 units that make $7,000 a month without debt. I would take the 10 units. I know their would be better appreciation and debt pay down with the first portfolio but for us realestate it is just a means to an end. To have cashflow.
Course I have waffled back and forth on this issue several times over the last 5 years. More debt? Less debt? If the market gets over saturated with new landlords (thanks to BP) and we end up with large rent drops. I'll wish my properties were paid for. However if (more likely) it sit flat or grows, I'll sure wish I would have leveraged to the hilt...
I get the rate of return argument, and I struggle with it myself. The concept of arbitrage is genius and that is truly why I have wealth today, but not sure I want to live with it forever. I don't want to always be as actively involved in realestate like I am today. Just want it to be a place where I park wealth and let it earn a good rate of return.
Thanks for your awesome questions. You make me think hard!
Do you guys like all debt or just asset backed debt?
We do have kids. 14 month old and a 2 month old. My wife is a stay at home mom and an awesome property manager. In the earliy years before kids we did the rehabs together and had a ball. Now its a bit more on me for the rehab, but she still dose the design and lots with acquisition and sales (works with the realitor) as well handles all the paperwork.
I would be broke without her. And that cannot be overstated.
@Joshua D. , ...you're right, we are in the arbitrage business. Seeing extra value in residential real estate that the retail homeowner doesn't see, or can't act on.
I don't like consumer debt. I pay cash for cars (and older cars, than I could otherwise afford). I never pay a dime of credit card interest.(I take advantage of airline miles, payoff the balance every month). Got about $5,000 in free vacation miles last year by putting a lot of toilets/light fixtures on the credit card.
I used to volunteer at my church to teach families to live on a budget and get out of debt. Authors like Ron Blue and Larry Burkett. However, since getting interested in part-time real estate investing 5 years ago, I'm very comfortable with the debt on a rental property. When I learned of the "BRRRR" method from a Denver investor 18 months ago (he wasn't on BP and didn't call it BRRRR) I thought it was genius and began buying rentals, as well as a fix/flip or spec home build each year since. I don't have enough rentals to retire at age 55.....need to BRRRR some more.
I'm also in the Denver market, where a quality rental is at 0.7% of purchase price (not the ideal 2% espoused on BP), but I love the 10% annual appreciation we've been enjoying. Thus, I'd rather have 4x the property under control wherein I own the appreciation, than 1x debt free. However, as I project what retirement looks like, I can't seem to convince my bride the merits of leaving that 2.625% APR primary mortgage alone.....she wants to accelerate it in the name of security. Someone on another thread yesterday posted that this is a "false sense of financial security"....that you can be secure and still have leveraged rental investments. So....I continue to wrestle with this one.
Congrats!! Caught the fire and excitement at 46 and am turning 52 in August. In the six years since I bought my first investment property on $80,000 combined family W2 and now will have soon to be 6 million in RE, 2.7 million in Equity and $120,000 cash flow per yearand soon to be $170,000 cash flow per year in the next 3 months, due to repositioning deals beginning to throw off cash flow after increasing rents and reducing expenses.
You can do it Ellie!! I have 1031 exchanged my single family for true Multifamily apartment complexes. I have 6 apartment complexes and soon to be 7 apartment complexes and 86 current front doors, soon to be $109 front doors.
If you reach for the stars, you may not catch one, but most certainly you will grab a handful of clouds!! I am currently reading Grant Cardone's Be Obsessed or Be Average book and am obsessed with having 1000 front doors, 50 million in RE, 15 Million in Net worth, and $750,000-$1,000,000.00 in cash flow every year. That is about 10X where I am right now, modeled after Grant Cardone's 10X rule.
Go for it Ellie!! Be obsessed or be average. 10X that $500,000. Everyday, write down $5,000,000 in RE, $120,000 in Cash flow and over $2,500,000 in net worth. Think it, believe it, achieve it!!!