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

    @Monique Driver yes you can start that way; but make sure you have your numbers right. You also need to know for sure that you can rent it high enough to create good cash flow even after the Refi on the house. And if you do that, you may turn your 20k into 35 or 40k if your numbers are right.  I am literally doing this same thing with my partners right now. Bc all of our purchases and rehabs had left us a little cash poor, we found a distressed buyer. bought the house and did the full rehab and purchase for just under 20k, then we found a qualified renter that moves in April 1, for 675/month. I will then put a nice business plan together using BP's rental calculator, and show the bank why it is safe for them to give me 35k in a mortgage against the house. This will kind of "create" 15k more than I originally had in the purchase, and then the tenants pay down the mortgage, and the property cash flows. But, these types of deals aren't easy to find! 

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

    @Michael Beeman thank you!! This is really helpful. Our goal is a multi family right away w the condo refi but just not confident that we can do much w 20k that’s why we were thinking of using the 20k towards a single family to create even more cash first for a downpayment on a duplex. Thank you for your reply! I’m going to keep educating myself before diving in. 

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

    @Monique Driver  Good idea. Get as much education as u can. And practice analyzing deals, that helps a lot!!

  • Senior Network Engineer · Castle Rock, CO · Member since 2018 · 53 posts · 30 votes
    8y
    Originally posted by @Michael Beeman:

    @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. 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. 

     Right on man! Thanks for the well wishes. 

    So I showed my wife your story and we were very impressed. We were discussing and then she said, what's even more impressive is that you had 7 kids to take care of. Then I said no, I think you meant you are from a family of seven kids (ie seven siblings.) Anyhow, can you help settle this little debate. Hahaha.  Of course it doesn't diminish your accomplishment one bit whether you have seven or none. Well, maybe a little in my wifes mind. LOL

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

    No my wife and i have sevin kids..  3 from my first marraige (I have custody) 3 from my wife's first marraige (she has custody) and we have our youngest together!!  Our youngest will b 5 in June, our oldest will be 15 in May..  It's interesting lol.. But they mow our property's yards, they've pulled weeds, helped paint.. They're right their w us, when they're not in school lol

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

    @Michael Beeman

    @Michael Beeman Wife feels vindicated. Never will I doubt her again. LOL. She looked at me, "See! We can do it too!" We got 4 boys under 11. Keep on inspiring man! :)

  • Phillip LanierPro Member
    Uvalde, TX · Member since 2016 · 141 posts · 45 votes
    8y

    This made my day.  Congratulations!!!

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

    Thank You @Phillip Lanier!!  Hope we inspired you.

  • John Van UytvenPro Member
    Property Manager · Oconee, IL · Member since 2014 · 536 posts · 202 votes
    8y

    @Michael Beeman

    Great story, glad things are going well for you.

  • Investor · Leander, TX · Member since 2016 · 105 posts · 40 votes
    8y

    Fantastic story, @Michael Beeman. This is the way to go. BRRRR is my favorite too. Thanks for sharing.

    Are you guys copnsidering moving into multi-family space? 

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

    @Nirmal Khanderia   Thank You. We are in the multi-family space currently. We only own 2  Single Family Houses, and we only own those because they were distressed seller opportunities that we purchased w cash and they included an opportunity for immediate equity (that we could grab with a Refi). Which we applied to the purchase of more Multi-Family units.  I just put an 8 unit under contract today. So by the time of our 1 year anniversary of our first tenant (June 1 2018), we should be sitting at 46 cash-flowing units. 

  • Casey, IL · Member since 2017 · 175 posts · 308 votes
    8y
  • Real Estate Agent · Astoria, NY · Member since 2016 · 60 posts · 55 votes
    8y
    Originally posted by @Michael Beeman:

    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!!

    What an amazing story. So inspirational and so pertinent to my own goals! My mother and I are currently in conversations about partnering with each other on an investment business, and possibly bringing in my sister (who is also an attorney). I'm an agent, so I have the knowledge on property analysis and sourcing deals, my mother is a retired manager of large departments at a large university, and has recently renovated her condo, so she has experience with budget and project management, and working with designers and contractors. Between the three of us, I think we'll have a lot of the necessary skills to execute a BRRRR strategy. Seeing stories like yours just adds fuel to our fire.

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

    @Daniel Akerman  Thank you! Yes it is possible to do, and to keep going and growing. I put an 8 unit building under contract since this posting. After doing an interview on Rod Khalief's podcast earlier this week I'm currently researching some larger syndications that I will put together this summer/fall. But currently we have 31 units, with 15 under contract and we are in negotiations with an owner that has 6 more. By the end of year 1 we believe we will be at 50+ with a goal of 200+ at the end of year 2. It started with earbuds in my ear, while working a side hustle to get it going. Now it's a full team of people pushing towards an ultimate goal of Financial Independence. 

  • Mattoon, IL · Member since 2017 · 9 posts · 3 votes
    8y

    Michael- interested the know what local bank you are using. I too started investing in the Mattoon/Charleston market almost a year ago. I have gone from 0 to 29 units in this period doing similar actions. I always speak with several banks when I do my financing and would be interested in what bank you typically use. Thanks 

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

    @J. Lee I have been using First Bank out of Marshall Illinois. But, they are currently being bought out by First Mid. Which is based up there in your area. I'm told that First Mid should work with us, just like First Bank has. Have you had luck in the Charleston area? I've avoided that area due to the shrinking student base at EIU and high vacancy rates that I see on most opportunities in Charleston. I have looked at the Mattoon market, but we just put a Terre Haute 8 unit under contract. With another SFH and duplex I found from a local distressed seller, we now have 38 units, with 11 more under contract.

  • Mattoon, IL · Member since 2017 · 9 posts · 3 votes
    8y

    Michael- Thanks for the info. I have used First Mid but sometimes more stringent than alternative options I have seen. I have had luck in Charleston. While most others stay away from it, I see opportunity. At the prices available, it justifies the vacancy rate. For example, I acquired an 18 unit complex for about 150k. I put new roof, paint and cosmetic upgrades and expect to be full by fall. Units rent on average for 400 but have a few now rented for 600. 

    I have 4 more units under contract and anticipate similar extraordinary returns. 

    Much of the opportunity is in Charleston but I would prefer to also buy in Mattoon as it has a growing community.

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

    @J. Lee  hey, that's awesome. There is a lot of opportunity when you can do things that others aren't willing or able to do. We have had a lot of luck around us, so it's not likely that I will be competing with you on that Charleston market lol. Hey, if you would like to get together and have coffee sometime, shoot me an email, and we will make it happen.

  • Mattoon, IL · Member since 2017 · 9 posts · 3 votes
    8y

    Michael- sounds good. Would be interested in meeting sometime. I would be particularly interested in any insight you could provide on finding good local contractors. I am actually an attorney with financial background so finding the deals, structuring, and organizational structure/paperwork is the easy part on my end. I struggle with finding the right contractors.

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

    I have a really good one!  But, I have kept him super busy, and have even brought him in on some deals just to insure that he can build passive income, and because he deserved the option. I do however know of some decent contractors, that charge a fair price.

  • Real Estate Agent · Jacksonville, FL · Member since 2016 · 406 posts · 163 votes
    8y

    Hey @Monique Driver, 

    It has been very difficult to find deals that make sense for what you're trying to do in Jacksonville on the market or through wholesalers. 

    For this to work realistically I would say you'll need to do a lot of marketing yourself. 

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

    I know many have asked for me to post when I was on a podcast sharing my story. Well I was on Rod Khlief's Multi-family podcast this week, and I'd love to have you guys check it out. It's up on Itunes and Sound Cloud. Or you can message me and I'll get you the link.  @John Van Uytven  @Nirmal Khanderia  @Phillip Lanier  @Gerard J.  @Monique Driver

  • John Van UytvenPro Member
    Property Manager · Oconee, IL · Member since 2014 · 536 posts · 202 votes
    8y

    @Michael Beeman Send me a link

    @J. Lee I use Land of Lincoln Credit Union, I dont think there is a branch super close to you. But they lend within 100 miles of their branches.

  • Senior Network Engineer · Castle Rock, CO · Member since 2018 · 53 posts · 30 votes
    8y
    Originally posted by @Michael Beeman:

    I know many have asked for me to post when I was on a podcast sharing my story. Well I was on Rod Khlief's Multi-family podcast this week, and I'd love to have you guys check it out. It's up on Itunes and Sound Cloud. Or you can message me and I'll get you the link.  @John Van Uytven  @Nirmal Khanderia  @Phillip Lanier  @Gerard J.  @Monique Driver

     Sweet. thanks for the heads up. I found the youtube episode. Ep #221 right?

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

    @Gerard J.  Yes Sir. Episode 221

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