0-38 units in 10 months using the BRRR strategy effectively

0-38 units in 10 months using the BRRR strategy effectively

Casey, IL 路 Member since 2017 路 175 posts 路 308 votes

This is a brief overview of how I went from a family business employee (with 7 children), only earning 60k/yr, filing bankruptcy in early 2016, to someone who will be completely financially free 18 months after I purchased my 1st property May 15 2017.

I began my Real Estate Study in late 2015, I mostly read books. All the Rich Dad books (but they are full of motivation and mindset, but don't have any actual substance), I read and listened to many podcasts, while driving for my regular job, or while working on my "side gig" where I cut, split, and delivered firewood after work hours. The idea of financial independence when you are working that hard, is incredibly inspiring. So I listened, learned, and saved money. I saved money as much as I could out of my paycheck and saved all of my proceeds from my firewood sales. I found some great podcasts, Joe fairless has a good one, along with Rod Khalief, and BP had a great one. I found it eventually then realized BP had this great website. I found the BRRR method and I was hooked. I live in Rural Illinois and while few podcasts cover rural investing, the principles remain the same. So I began talking about it with friends and family, and when it became apparent that I knew what I was talking about. I had 2 people that wanted to start the biz with me. They both invested $20k each for 1/4 of the business and I kept 1/2 (400 shares) and 1 non-paying, voting share (so that I remained in control, of the final decisions). So now I "owed" my new business 28k dollars, but we had enough to get started.

We purchased a vacant 6 unit building that needed 4 units completely remodeled, and a large old house that we planned to convert into a Triplex. Even though we floundered for almost 6 weeks with a contractor that did horrible damage, We finally found the right guy, ended up finishing 25k over budget and tied up over half of our initial 52k we had to invest, with no way to BRRR out of that messup. Fron there on out, I found much better deals, a SFH that I bought at auction for 12k, it appraised for 40k, we refinanced it, put a 25k lien against it, and it rents for 650/month, pays it's mortgage, and cashflows. Plus we created 13k out of thin air. We also did this with one other house, and a 10 unit building. Altho the 10 unit refi is coming up in May/June. There were growing pains in learning how to use systems (we use "Rentec Direct"). There were growing pains in how to manage tenants, But, all in all, we've been very aggressive when we find a deal. I and my partner @John Hagen have learned a lot, been a little surprised by the speed of what we were able to do. I can say this, you can't do it alone. 

I built a great team. That started with my partner @John Hagen, but continued with my wife who works tirelessly for our rehab crew, which is also headed by our maintenance man, and he's been amazing. My mom (who is the other investor that owns 1/4 of the business) is more of a silent partner, but she has done some small loans from time to time to our business to help it get thru cash crunches that come with growing and rehabbing nearly every dilapidated unit we buy. But I am extremely proud of this team. We currently own 29 multi-family units and 2 SFH's (95% occupancy). We have 7 more multi-family under contract for April, and we are steaming forward. I am proof that even tho u may be middle class and have a lot of things going against you. You CAN DO THIS!!!!

*I "Dave Ramsey'd my budget, and "Robert Kiyosaki'd my investment mind.  You can too!!

82Reply
280 views

Most Popular Reply

Jay HinrichsBusiness Member
Real Estate Consultant 路 Summerlin, NV 路 Member since 2014 路 45k+ posts 路 66k+ votes
8y

@Michael Beeman  not to get totally off topic but what I see you did that is the key is you raised capital first.. we see so many we start with your post  I have no money I have this problem that problem. How do I make money at real estate because this is what I want to do as it will set me up and etc etc .

Well the first thing you do is figure out how to get capital.. either investors or work harder or your parents or inherit it or something.. but at some point NO money and real estate simply does not go together..  even if your doing the wholesale gig you need tools you need marketing you need a car etc etc it takes something.. NOT I am broke please help me.

See this reply in the discussion

108 Replies

Jump to latestLatest
  • Investor 路 St. Cloud, MN 路 Member since 2016 路 42 posts 路 40 votes
    8y

    @Michael Beeman Thank you for the insight! Thats a good idea to have tours online and get an application first... I have to admit, we have been "old school" so far and show the unit ourselves before receiving anything from the potential renter. Do you have your own website then or do you have them email the application from Zillow or something of the sort? 

    We are ready to buy an apartment building and I've really been trying to research if we should buy in the city we usually do, or in a nearby town for much less. Your comment definitely gave me something to think about and some research to do on areas we are considering. Thank you!

  • Investor 路 Bonita Springs, FL 路 Member since 2015 路 54 posts 路 12 votes
    8y

    Great job Michael! This is so encouraging. I have just started my journey with a triplex and am already looking to buy another triplex and duplex. Your story is motivating and I wish you the best as you go forward. Keep us updated.

  • Developer 路 Houston, TX 路 Member since 2014 路 91 posts 路 17 votes
    8y
    That鈥檚 awesome. Congratulations!
  • Cary, NC 路 Member since 2018 路 20 posts 路 7 votes
    8y
  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y

    @Monica Morff we have our own website through Rentec Direct. The website allows us to take application online as well as post our YouTube walk through videos right on each unit listing. all of our marketing is online and rentec put our listings out on most of the major rental sites. in all of our facebook ads we link our website.

  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y

    @Gurpreet Bhinder we didn't have much of a problem at all for two main reasons, we formed an LLP and used a local bank. The LLP listed all 3 partners so the banked looked at us as a whole. We used a local bank who knew us and the situations and made a personal judgment that we were a safe bet.

  • Cary, NC 路 Member since 2018 路 20 posts 路 7 votes
    8y

    @John Hagen excellent! and LLP financing im guessing is ok? I have another post where I mentioned that the NC local lenders shy away from financing LLCs unless they are doing commercial loans. I am super inspired by your posts. Excuse the newbie questions, but would love to learn from folks like yourself who have walked this path.

  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y

    @Gurpreet Bhinder the bank we used is lending us all we want, but we have shopped elsewhere and other banks have flat turned us down or offered bad rates. We found a young aggressive loan officer who saw our vision and sees he can make a boat load of commission off of us. As Michaels OP says we are only 10 months down the path, we caught some breaks and are still learning ourselves.

  • Cary, NC 路 Member since 2018 路 20 posts 路 7 votes
    8y

    @John Hagen pls let the bank know there are others like me who can get them more commission 馃槉 would love the referral if you can. 

  • Minneapolis, MN 路 Member since 2017 路 353 posts 路 223 votes
    8y

    Congrats guys!  you have come a long way in 10 months.  Honestly, I am surprised a bank has been willing to do this much business with you as a start up partnership with no previous experience.  Most do not want to work with new businesses and would not even consider moving this fast in this type of situation.  

    Who hosts the webpage you use to post your videos and which online payment provider do yo use?

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor 路 Kansas City, MO 路 Member since 2014 路 10k+ posts 路 5k+ votes
    8y

    That is awesome @Michael Beeman! Congrats and keep up the good work!

  • Rental Property Investor 路 Oakley, CA 路 Member since 2016 路 9 posts 路 2 votes
    8y
    Truly inspirational!
  • Clovis, CA 路 Member since 2017 路 18 posts 路 9 votes
    8y
    Wow you have accomplished so much!! Determination to do better has brought you success. Your story is inspiring. Thank you for sharing.
  • Flipper/Rehabber 路 Minneapolis, MN 路 Member since 2016 路 1k+ posts 路 1k+ votes
    8y

    How rural are you talking, are you talking a 4 plex purchase for $100k, 10 unit for $250K?

    Don't understand how you walked into all these deals with enough cash down to purchase them and afford the rehab....  Is you local banker giving you hard money purchase loans which include the rehab costs? 

  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y

    We put the videos on YouTube and payment throughout the website with rentec

  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y
    @John Woodrich:

    We are being approached with deals from baby boomers wanting to cash out retire. We buy at 1990 prices and brrrr at 2018 prices. We are picking up places at $10k a door and refi at $20k a door. Easy to have cash on hand when we do that.

  • Casey, IL 路 Member since 2017 路 175 posts 路 308 votes
    8y

    @John Woodrich  No, the deal is we had a few deals early on where we built a lot of equity.. We maintained regular rent deposits, have never been a day late on a payment, and we shopped banks to find the one that would work with us. We have been turned down at other banks. But, shopping around for a bit like @John Hagen said has paid off!!   

    Thank You @Terri Ring  I just received an email from Rod Khalief's multi-family podcast asking me to be on, and I have a scheduled interview on the Joe Fairless podcast from when he asked me a few weeks age. Idk when it will air, but I know my interview is Tuesday at noon. And our very own @Mindy Jensen shot me a message about possibly doing the BP podcast..

    @Jonathan Hernandez Thank You.. I've been so busy I don't get on here much, But I wanted to stop in and say YESS it can be done!!

    @Andrew Syrios We plan on keeping it up and Rocking it to 100+ units by 2019, and quitting the day jobs for the full time Real Estate world!!

    @James W. we use a simple youtube page for posting video walk thrus, this is a new development that I discovered off another podcast and have LOVED.. Simple, Free, and works like a charm. Someone inquires, I send a youtube video walk thru and a link to our website. And tell them we don't do physical walk thrus without applications processed. We LOVE it!!  I have shown 1 vacancy that didn't commit right away. Most are committed before they see the place.  

  • Flipper/Rehabber 路 Minneapolis, MN 路 Member since 2016 路 1k+ posts 路 1k+ votes
    8y
    Originally posted by @John Hagen:
    @John Woodrich:

    We are being approached with deals from baby boomers wanting to cash out retire. We buy at 1990 prices and brrrr at 2018 prices. We are picking up places at $10k a door and refi at $20k a door. Easy to have cash on hand when we do that.

    $10k per door which is vary cheap * 38 doors would mean you cycled through $380k of cash in 10 months....  I am trying to figure out how I can take this to work for my business.  Wish we had places around here where we could put $10k in and collect $500 per door.

    Banks around here, regardless of experience, are not completing cash out refi loans this quick.  The banker you found and your ability to buy prices cheaper than the cost of the dirt they are sitting on seem to be your competitive advantage.  I will definitely have to explore different areas and look for another banker.

  • Mattoon, IL 路 Member since 2017 路 42 posts 路 27 votes
    8y

    With out question we have caught some very lucky breaks not least among them is finding an aggressive banker and a contractor who views our relationship as a partnership. We also lucked into the right timing of boomers looking to sell.

  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor 路 Kansas City, MO 路 Member since 2014 路 10k+ posts 路 5k+ votes
    8y

    @Michael Beeman good call. Day jobs are made to be quit.

  • Mike RobbPro Member
    Realtor 路 Ventura County, CA 路 Member since 2016 路 58 posts 路 28 votes
    8y
    I love the Dave and Robert quote! I've always agreed with Dave's budget principals but Robert's investing! it's a perfect blend. Great work and thanks for the motivation.
  • Rental Property Investor 路 Niles, MI 路 Member since 2018 路 21 posts 路 5 votes
    8y
    Keep up the great work your message was very inspiring..
  • Real Estate Investor 路 Chicago, IL 路 Member since 2014 路 42 posts 路 9 votes
    8y

    @Michael Beeman @John Hagen  Great Job! Would you be willing to share the Bank and Banker you are working with ?

  • Modiin, Israel 路 Member since 2017 路 35 posts 路 4 votes
    8y

    @Michael Beeman You are awesome. Congrats to you!

  • Contractor 路 PNW 路 Member since 2017 路 58 posts 路 48 votes
    8y

    Michael B. Great job grinding it out to your goal of of REI! Wish you nothing but success; with a team and your continued effort you will continue to do well. I will look for your podcast interview. Thanks for sharing your story, it is great to hear of others making it happen. I am in the middle of closing out my first investment property deal.

Join the conversationCreate a free account to reply, vote on answers and follow this thread.