From 1 to 54 units this year so far.

From 1 to 54 units this year so far.

Dubuque, IA · Member since 2016 · 34 posts · 109 votes
I just thought I would share because I'm pretty excited really! Being rather intrigued with real estate since I was 20 or so I have finally acquired some property. Circa 2005-2006 I built a couple of spec houses and made a few bucks not really knowing much. Real estate kind of went by the way side as I was working different jobs and building my electrical business. Last year I was working at a home that was in rough shape when the neighbor told me it was for sale. I ended up making an offer and getting the house. We remodeled it and am now renting it. Purchase price was 55k. We stuck about 5k in it plus my own labor and are getting $850/month rent. Last fall we got the line on 2-12 plexes side by side, and 2 more 6 plex units. The 2-6 plex units were dragging the return down to 2%. We took the 2-12 plex units with an 11% return after agreed on a price and the rest is history. Shortly thereafter we purchased another duplex with a garage and shortly after that another duplex. Just when we thought that was it for the year having a goal of 50 units that I was leary of hitting, our broker called and said, hey I know where there are 12 more units that you can pick up for a reasonable price you just need to make an offer on them. He told us what he initially wanted and we made an offer around $100,000 less and the seller accepted. We also asked to do this as a land contract with 20% down 4.5 percent interest which he also accepted. At this point I thought to myself, that's it for the year and low and behold the phone rang. The same guy that we bought the first 24 from that wouldn't move on the price of the other 12 had decided to take 130k off of the asking price from one year earlier. I said let's do it and that leaves us at 53 to date this year and 54 total!
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Laveen, AZ · Member since 2016 · 584 posts · 528 votes
9y

I'm disappointed at the criticism offered by some of you that didn't take the time to thoroughly read the man's post. Even as a newbie I could see it was 850 on first property and 30k was not his quoted profit.  There are green investors like myself that thrive off any educational experience we can get especially when it's  FREE.  Richard didn't have to share such personal detailed information next to his first and last name with location included.  If you think someone is feeding you nonsense to "look cool" please just ignore it. At best ask for clarification.  But don't hate on somebody that is helping the rest of us, I would hate for seasoned investors to refrain from sharing knowledge.  

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  • Laveen, AZ · Member since 2016 · 584 posts · 528 votes
    9y

    I'm disappointed at the criticism offered by some of you that didn't take the time to thoroughly read the man's post. Even as a newbie I could see it was 850 on first property and 30k was not his quoted profit.  There are green investors like myself that thrive off any educational experience we can get especially when it's  FREE.  Richard didn't have to share such personal detailed information next to his first and last name with location included.  If you think someone is feeding you nonsense to "look cool" please just ignore it. At best ask for clarification.  But don't hate on somebody that is helping the rest of us, I would hate for seasoned investors to refrain from sharing knowledge.  

  • Rental Property Investor · Ventura, CA · Member since 2016 · 62 posts · 34 votes
    9y
    Just fabulous! Many many congrats.
  • Investor / Syndicator · Austin, TX · Member since 2015 · 366 posts · 220 votes
    9y

    @Richard Biechler Way to go!

  • Lawrence, KS · Member since 2015 · 33 posts · 15 votes
    9y
    Congrats Richard! Very well done and truly inspiring.........
  • Investor · Fayetteville, AR · Member since 2016 · 53 posts · 14 votes
    9y
    Congratulations! Super inspirational!
  • Specialist · San Antonio, TX · Member since 2012 · 462 posts · 294 votes
    9y

    LOVE IT!

  • Rental Property Investor · SF Bay Area · Member since 2016 · 234 posts · 103 votes
    9y
    Richard Biechler good job man, happy for your success!! By the way, what criterias do you have for your deals to push forward for it? e.g. Price, age of house, property location,etc. thanks in advance!
  • Los Angeles, CA · Member since 2017 · 3 posts · 1 vote
    9y

    You are killing it! I have studied so much I could totally do this in Iowa or somewhere with much less competition and better cashflow. Stuck in Los Angeles for now stacking that paper so when the bubble pops I will start snatching. Congrats on your success. Are you going to sell the electrical business now?

  • Real Estate Agent · Belmar, NJ · Member since 2017 · 370 posts · 200 votes
    9y

    @Rodney Sums Thanks for speaking the truth.

  • Military Officer · Pensacola area, FL · Member since 2017 · 35 posts · 14 votes
    9y

    Question, new guy here:

    "20% down 4.25% interest 5 year lock 20 year amortization"

    First, had to google amortization. That's just a big word for 20 year mortgage/loan term. Got that now.

    Next, 4.25% interest 5 year lock. That sounds like fixed interest at 4.25% for 5 years and then you will be subject to interest rate hikes. Basically an ARM. Anyone in the know here willing to explain what it actually is, or point me in the direction of a thread on here that explains it? Thank you in advance, great website and community here from what I have seen thus far.

    -Will

  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    9y

    It sounds like you had a great plan and executed it perfectly.

  • Rental Property Investor · Pass Christian, MS · Member since 2016 · 8 posts · 7 votes
    9y
    Wow that's amazing man 54 units in a year impressive!
  • Notes Investor · San Diego, CA · Member since 2012 · 109 posts · 51 votes
    9y

    @ Will Wiggin - ""20% down 4.25% interest 5 year lock 20 year amortization"

    You got it! The few keys thing to emphasize here is  (1) The loan is amortized over 20 years at 4.25% (fixed) so the monthly payment is low - hint, cash flow at the gate  (2) The loan balance (or the balloon payment) is due at the end of the 5-year period.  Thus, before or close to the 5-year period you either refinance the property or sell it.  

    Remember "You make money when you BUY"

    This is a good strategy for buying properties since you don't spend all your capital (20% down vs. most sellers want all cash up front) and negotiate the terms that are favorable to you, the buyer.  Hint, when negotiating with the sellers - if they locked on the price then you get the terms! 

    @Richard Biechler - Congrats!

    Cheers,

  • Dubuque, IA · Member since 2016 · 34 posts · 109 votes
    9y

    @Dylan Parks, you gotta just get out there, start looking at units. Even if you know they wont work, run the numbers, get a good feel of how you want to run you numbers. You will have a better understanding what works and what doesnt. Dont dwell on a property, if you offer and cant make the numbers work, move on, there are more units out there. Read books. Listen to Grant Cardone's real estate investing on mondays or his podcasts, he gives free information. Find a real estate group in your area and if there isnt one, create one! Hope this helps!

  • Dubuque, IA · Member since 2016 · 34 posts · 109 votes
    9y

    @Rodney Sums, thanks for the words! I appreciate it. Im just telling my story and hopefully it inspires people.

  • Dubuque, IA · Member since 2016 · 34 posts · 109 votes
    9y

    @Fernando E., we mainly look at cash on cash returns, property location, and condition of unit. We like turn key so if our return is a little lower because of it we are ok with it. We like the better areas of town, not necessarily the best but we dont like the bad areas.

  • Dubuque, IA · Member since 2016 · 34 posts · 109 votes
    9y

    @Herman Virgen, keep stacking, the bubble will burst! I am keeping the electrical business, its my bread and butter for now until I get upwards of 1000 units but who knows I may keep it then too!

  • Dubuque, IA · Member since 2016 · 34 posts · 109 votes
    9y

    @Bac Nguyen, well said, thanks!

  • Kennesaw, GA · Member since 2017 · 3 posts · 1 vote
    9y

    @Richard Biechler I am brand new here and this is one of the first threads I saw. It was really encouraging. Thanks

  • Military Officer · Pensacola area, FL · Member since 2017 · 35 posts · 14 votes
    9y
    Originally posted by @Bac Nguyen:

    @ Will Wiggin - ""20% down 4.25% interest 5 year lock 20 year amortization"

    You got it! The few keys thing to emphasize here is  (1) The loan is amortized over 20 years at 4.25% (fixed) so the monthly payment is low - hint, cash flow at the gate  (2) The loan balance (or the balloon payment) is due at the end of the 5-year period.  Thus, before or close to the 5-year period you either refinance the property or sell it.  

    Remember "You make money when you BUY"

    This is a good strategy for buying properties since you don't spend all your capital (20% down vs. most sellers want all cash up front) and negotiate the terms that are favorable to you, the buyer.  Hint, when negotiating with the sellers - if they locked on the price then you get the terms! 

    @Richard Biechler - Congrats!

    Cheers,

    So, the terms are set with a monthly payment calculated as if you were paying 4.25% on the principle spread over 20 years and at year 5 that is triggered to go up. So you refi or sell to get out of that initial deal and keep you cash flowing yes? Still requires the 20% down as an investment loan, right? So what are the advantages, and why are sellers more apt to accept it? Or is it a function of lenders bc they know that year 5 they will drive up the APR%?

  • Notes Investor · San Diego, CA · Member since 2012 · 109 posts · 51 votes
    9y

    @ Will Wiggins - I believed this deal and terms are from private seller - like Seller/Owner Financing as tradition bank don't do this type of loan.

    So, the term is "20% down 4.25% interest 5 year lock 20 year amortization". You have most of them right. Except, at the end of 5-year you have to cash the lender out, period. Either by refinance or sell the property. Again, hopefully during the 5-year period, the tenants help to pay down the principle and the property appreciate which is win-win for you. Typically, you can refinance the property with another lender and pay off the original lender.

    Also, this is not ARM (Adjustable Rate Mortgage) - instead it's a fixed rate interest. As if it's an ARM you pay way too much at 4.25% interest :)

    Yes, you have to come up with at least 20% for the down payment - the seller needs to see you are serious and have skin in the game. BTW, the 20% down is the norm - you need to have money to make money.

    You probably heard from the "gurus" whom pitching their training with no money down , use OPM (Other People Money). Sorry, when you just start out with no experience, etc., like myself, my family not even lend me $100 bucks leave alone convince someone else that you hardly know to invest with you. Maybe, later on, when you have a few properties under your belt.

    In short, you might not get away with the 20% down. But, most people often ignore "the key is get the "terms" that favorable to you, the buyer.

    Cheers,

  • Grant ShipmanPro Member
    Rental Property Investor · Estes Park, CO · Member since 2017 · 282 posts · 1k+ votes
    9y

    Great work!  I grew up in Iowa and graduated from North Scott.  I hope to invest in Eastern Iowa at some point- it's great to hear it's going so well.  Thanks for sharing! 

  • Real Estate Broker · Seattle, WA · Member since 2017 · 139 posts · 82 votes
    9y

    amazing.  Congrats 

  • Houston, TX · Member since 2017 · 1 post · 0 votes
    9y

    Congratulations on your success! Thanks for being an inspiration to the BP community.

  • Military Officer · Pensacola area, FL · Member since 2017 · 35 posts · 14 votes
    9y
    Originally posted by @Bac Nguyen:

    @ Will Wiggins - I believed this deal and terms are from private seller - like Seller/Owner Financing as tradition bank don't do this type of loan.

    So, the term is "20% down 4.25% interest 5 year lock 20 year amortization". You have most of them right. Except, at the end of 5-year you have to cash the lender out, period. Either by refinance or sell the property. Again, hopefully during the 5-year period, the tenants help to pay down the principle and the property appreciate which is win-win for you. Typically, you can refinance the property with another lender and pay off the original lender.

    Also, this is not ARM (Adjustable Rate Mortgage) - instead it's a fixed rate interest. As if it's an ARM you pay way too much at 4.25% interest :)

    Yes, you have to come up with at least 20% for the down payment - the seller needs to see you are serious and have skin in the game. BTW, the 20% down is the norm - you need to have money to make money.

    You probably heard from the "gurus" whom pitching their training with no money down , use OPM (Other People Money). Sorry, when you just start out with no experience, etc., like myself, my family not even lend me $100 bucks leave alone convince someone else that you hardly know to invest with you. Maybe, later on, when you have a few properties under your belt.

    In short, you might not get away with the 20% down. But, most people often ignore "the key is get the "terms" that favorable to you, the buyer.

    Cheers,

    Copy! Now I get it. The mortgage payments monthly are commensurate with what a 20year loan at 4.25% WOULD be and then at year 5 you have to cash out the Seller. That makes perfect sense. I was led to believe it would be an ARM issue because I thought the 5 year lock was in reference to just the APR%, but now I see it is to the whole deal and your "lock" is on the percentage and the loan as a whole. Sounds like a great tactic when non-traditional means are not an option for you. AKA- DTI is off and most big name banks won't lend to you though you know your books are solid and you just need time to shore up some other assets in your portfolio. I truly appreciate you taking the time to school me up on this. I will have piles more questions going forward so look for me on the boards, but from what I see here, there is always a community member willing to answer newbie questions so that is great. Thanks guys!

    -Will

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