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

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

Casey, IL · Member since 2017 · 175 posts · 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!!

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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 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.

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  • BOISE, ID · Member since 2014 · 77 posts · 45 votes
    8y

    Most impressive and inspiring! From chopping up firewood to creating consistently cash-flowing assets, thats an awesome story. 

  • New to Real Estate · Highland Park, IL · Member since 2016 · 65 posts · 20 votes
    8y
    @Micheal Beeman @John Hagen This is incredible! Congratulations on such a fast, full, and great start! Keep setting those goals even higher because with what you've achieved already, I'm betting you could accomplish almost any RE goal eventually. I can't wait to hear your interviews. As a fellow IL resident, I might have to swing by your town on one of my drives to Indiana or Champaign some day just to admire how you're revitalizing old properties! And it's a safe bet that there are probably additional opportunities like that waiting out there in the rural midwest. I'd guess the older landlords in the more densely populated areas get asked to sell much more frequently than the older landlords in rural areas. So, by giving them that chance to sell at this time, and with your rehab and financing activity, you've probably generated so much win-win action with every move you've made, it is undoubtedly part of what has helped you have so much success! Since you got so much done so quickly, I'm curious what one book or which types of podcast guests (or specific ones) really helped you / inspired you most to develop your own business plan / roadmap so quickly?
  • Rental Property Investor · Broken Arrow, OK · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    @Michael Beeman Love it man!!  Keep grinding!! 

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

    I would love to share our bankers info but it would do no good. When I said local bank I meant it. We were turned down by them for a loan an amazingly undervalued and cashflowing property in Vincennes IN because it was "too far away" it was a 45 minute drive from the branch office.

  • Kapolei, HI · Member since 2017 · 1 post · 2 votes
    8y
    Originally posted by @Michael Beeman:

    @Michael J. 

    "We put 20% down on the purchase, use our own money/crew for the rehab, then we go back to the bank for the cash out refi."

    I'm new at this stuff, but here is the basic list I have from your story.

    1) Collect capital for initial down payment

    2) Find a property

    3) Find a bank willing to loan to an entity

    4) Put 20% down and create a new loan from the bank

    5) Renovate the property from C class to B class

    6) Rent the property

    7) Go back to the bank and cash out refinance

    8) Make the tenant pay for the new cash out refinance loan

    9) Take the money from the refinance to purchase another property

    Suggestions, details, or thoughts?

  • Vernon Hills, IL · Member since 2018 · 2 posts · 1 vote
    8y
    Amazing job!!! - Vernon Hills, Il :)
  • Casey, IL · Member since 2017 · 175 posts · 308 votes
    8y

    @Jeff Kelly I'll say the first book I recommend to all my friends that keep freakin out over how much we have been able to do in such a short time is . . Richest Man in Babylon, then I recommend Rich Dad Poor Dad, that is to change the mindset, Then I'll move onto encouraging them to read @Brandon Turner Book on Real Estate Property Investing. . Now, The reason I choose Brandon's book after I've given them the mindset change with the first two is because I feel like it has a ton of information for the new investor, so you could start with houses, or multi-family and it's all built into that book. Strategies on exactly how to manage properties, on how to purchase properties with as little money as you can.. Just everything.. After that I recommend lots of podcasts of people that have done it. I recommend the Joe Fairless Daily Best Ever Real Estate show. I recommend going back and listening to every BP podcast (I've literally done it). I recommend Joe's Best Ever book.   oh, and btw absolutely shoot me an email a day or two before you come through Casey IL (right off I-70), and I'll be happy to show you around, and show you some great before and after pics, our youtube walk thru vids, and our properties..  

    @Wes Woodhouse  Thank You, I really was out there splitting firewood with headphones in learning at the same time as I was working. I kind of made it a Win-Win!  Except when I had to run the chainsaw, then it was too loud to hear anything lol

    @William B.Thank You!!  And Congratulations on ur first purchase!  It was a little less than a year ago for us, and I know how incredibly excited I was to be signing those papers, and handed the keys!! 

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

    @Michelle Tsarfis  Thank You!!  It's been a wild ride. I was just on the phone with a banker yesterday afternoon, and I think I may have struck a deal on an 8 unit building off of an estate they have..  If I can get that approved, that would put us at 31 units, with 15 under contract that should all close within the next 45 days.

    @Keoni W Guillermo  That is the basic concept.. If you're completely new.. read Richest Man in Babylon, then read Rich Dad Poor Dad, and immediately follow it up with Brandon Turner's book on Real Estate Investing!!  The three of those in a row, should really get your feet grounded!

  • Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
    8y

    Great story @Michael Beeman. Cheers to you and your Daily Grind Extraction Techniques!

  • Rental Property Investor · Boulder, CO · Member since 2017 · 36 posts · 36 votes
    8y

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

     Like

  • New York, NY · Member since 2018 · 40 posts · 15 votes
    8y
    Thank you for sharing you story, and you give me motivation to start what I need to do.
  • Real Estate Agent · Ashburn, VA · Member since 2016 · 107 posts · 31 votes
    8y

    Your success is a great inspiration. I always use my low income/lack of free capital as an excuse for not getting started in the real estate business. But you went bankrupt and about a year later you're financially free. That's incredible! Keep it up!

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

    @Nick Thomas  That's what I love to hear!! I want to inspire others to get off the sideline, and see their problem, and fix it!! Heck, I'm nothing special, I talked about Real Estate for a few years while I was on the sideline! But I finally figured it out and ran head first into it!! You can too!!

    *Dave Ramsey your budget, and Robert Kiyosaki your investment mind!

  • Investor · Nashua, NH · Member since 2017 · 23 posts · 13 votes
    8y

    @Michael Beeman - Really inspiring story, always great to hear plans working out!

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

    @Kate Gagnon  Thank You!! I hope it inspires a lot of people. I will be on the Joe Fairless daily podcast in a few weeks. And I have an email from Rod Khalief's Multi-Family podcast, as well as an invitation from @Mindy Jensen to apply for being on the BP podcast!! So maybe I will have the chance to kind of tell the full story. 

  • Passaic, NJ · Member since 2017 · 65 posts · 42 votes
    8y
    Wow that’s amazing! I hear people saying all the time that now is not the time to get in the game because we’re gonna have a serious correction. I believe there’s never a time when it’s impossible to make money...that being said though, how have you been finding your deals?
  • Southington, CT · Member since 2017 · 25 posts · 3 votes
    8y
    Very inspiring thank you!
  • Casey, IL · Member since 2017 · 175 posts · 308 votes
    8y

    @Elliot Vann Of my deals, I think all but one have been off-market. 1 from a FSBO sign, 3 from a local broker that's been in business locally for 10+ years and she just seems to know everyone and she knows when just about anything is up for sale. 2 were from a connection with a friend who know of a business owner that owned 8 vacant apartments that he wanted to get rid of.

    @Joseph Ambrose  Thank You. I hope my story can motivate others!

  • Investor · Nashua, NH · Member since 2017 · 23 posts · 13 votes
    8y

    @Michael Beeman I hope they do get you on the BP podacast, I think you're story would be incredible to hear.

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

    Thank You @Kate Gagnon

  • Urbana, IL · Member since 2012 · 1k+ posts · 425 votes
    8y

    @Michael Beeman and @John Hagen Way to knock it out of the park you two! Sounds like you've got a solid business model and approach that works. I'm absolutely fascinated by the investors in smaller markets because they fill a niche that others won't consider. I focus on mobile homes and parks so I can appreciate the difficulties of 'non-traditional' deals. I'd love to speak with both of you more in depth discussing some of the deals I've come across as well. More so, I'd like some more insight into the smaller markets and how you manage those deals. I had an hours long discussion with a fellow from Netwon IL about how they want to start a property management company and I'm not sure how to handle the smaller markets from that perspective - I would love any insight!

    Thanks for sharing you're great story and making a killing on all these properties!

  • Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes
    8y

    I always had a feeling you can crush it in rural areas, but personally after growing up in a rural area, I am not moving back.

  • Senior Network Engineer · Castle Rock, CO · Member since 2018 · 53 posts · 30 votes
    8y

    Love your story man! You have been added to my new "average-joe-i-wanna be" list. :-) 

    @Brandon Turner and @Joshua D., get this guy in your podcast please.

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

    @Gerard J.  Thank You man!!    I went ahead and filled out the guest spot on BP, I figured it would be something that they'll do now or later. @John Hagen and have plans to be at 150 units in another year, and they'll have to have me on, it was one of my goals when we started this venture! I wanted to be able to do something so incredible and inspiring that prople would get pumped listening to it! I will be doing interviews on Rod Khalief's Multi-Family podcast, and Joe Fairless Best Ever podcast next week.  Well I will be doing interviews on those podcasts, and then the shows will be aired on at a later date.  

    @Account Closed You don't have to live in these areas to invest in them. I know an investor that lives in a city of 100k+ that learns the rural towns and invests there. Bc his ROI's are incredibly higher. But Thank you for your compliment man!!

    I wish you both the best of luck!  

  • Seminole, FL · Member since 2018 · 4 posts · 3 votes
    8y

    Hi everyone, looking for some advice/ reassurance after reading all of the posts. My fiance and I have capital of our own but we want to go the BRRR route. We're getting ready to refi-cash out our condo. We're only looking at getting 20k from that per lender. From there we're thinking of buying/rehabbing a single family for 20k (maybe we use some of our own capital for the rehab), renting it and then refi-cashing out for a hopeful 40k to be able to put down on a multi-family unit. We're in FL and looking at buying between Jacksonville and Tampa/Saint Petersburg. I know it will all depend on the value of the property after we rehab it but does this sound realistic? To go from SFH to MFH? We own two condos - one is a part-time vacation rental/ primary res and the other is rented with good tenants. We don't want any more condos. Long term, we want multi-family units.

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