$200k in six months - long distance RE challenge

$200k in six months - long distance RE challenge

Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes

I day traded currency futures in a past life and always kept an online journal to keep me accountable, share what I was doing with the community and have a little bit of fun.  

Even 10+ years later, I enjoy reading back over it, reliving the sweaty palm wins, the heart sinking losses and more importantly, seeing the evolution of my mentality and how I dealt with the highs and lows of risk, wins and losses.

With that said, I've set a challenge for myself to make $200k in equity over a six month period, June-Dec 2018, investing in a market that I know well but am not physically located in.

Details are below - enjoy.


Goals


1) Buy (5) single family properties in 2018 and get them refinanced into long term mortgages

2) Purchase under market and achieve a minimum of $40k in equity per property after all repairs are completed

3) Cashflow $250-400/mo after expenses & debt service per property

Funding

1) A single line of credit established on an existing single family property

2) Private money from existing private money lenders that I've worked with over the years

3) New lines of credit that I'm currently in the process of setting up on existing properties - probably will not be established until late August

Background

I work in oil & gas and I’m currently on assignment in Mexico and will be here for another 10 months. The area I’m focused on is Southeast Texas, where I know the market, rents are strong and rising, housing supply is limited and there is major industrial capital expenditure committed to the area over the next 10 years.

I'm an experienced investor, having built my portfolio almost entirely while abroad and avoiding turnkey companies.  I focus on building quality teams, finding decent opportunities and most certainly over-communicating. 

The Team

1) Project coordinator – my boots on the ground. This is our first project together but we’ve built a relationship over the last few months and he’s an active investor in the area. 

2) Various contractors, some that I’ve worked with before, others only via reference. Despite not being in a HCOL, contractor prices tend to be higher in Southeast Texas due to labor demand in the area. A high school graduate that wants to work 60-70 hours a week can make $80k+ and those with further aspirations can make much more in supervision. So trying to find a decent contractor at a reasonable rate is difficult. Hurricane Harvey has further compounded this problem as rates have skyrocketed.

3)  Agent - young, hungry, willing to write a lot of offers.

Let's get started!

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Sean H.Pro Member
Flipper/Rehabber · Pittsburgh, PA · Member since 2010 · 224 posts · 75 votes
8y

Great job so far. It looks like you may have set your goal a little low if you have two deals and over 60% of the way to your goal and it's not even August!

How are you compensating your boots on the ground? 

See this reply in the discussion

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  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    I'm concluding the challenge at this time.  Huge thanks to BP and everyone that posted in this thread with questions, advice and encouragement.  I've learned a lot over the last 10ish months and it's been a heck of a lot of fun.

    Updated summary of this challenge, including some forecast data points.

    Property #1 Equity Earned: $83,000 Monthly Cashflow: $250

    Property #2 Equity Earned: $42,000 Monthly Cashflow: $375

    Property #3 Equity Earned: $42,000 Monthly Cashflow: $400

    Property #4 Equity Earned: $94,000 Monthly Cashflow: $200

    Property #5 Equity Earned: (forecast $77,000) Monthly Cashflow: (forecast $800)

    Property #6 Equity Earned: $10,000 Monthly Cashflow: (forecast $850) *Increase in monthly cashflow due to not refinancing this property, it's paid off. Decrease in equity earned due to blown estimate/massive scope growth.

    Property #7 Equity Earned: $38,000 Monthly Cashflow: $650

    Equity Earned vs Goal (including forecast): $386,000/$200,000

    Monthly Cashflow Earned vs Goal (including forecast): $3525/$1625

  • Rental Property Investor · Houston, TX · Member since 2018 · 174 posts · 100 votes
    7y

    Man you killed it. Congrats and thanks for sharing. 

  • Member since 2018 · 8 posts · 2 votes
    7y

    I've been following this almost from day 1. Pure inspiration! Bravo and thanks for sharing the journey

  • Burlington, MA · Member since 2017 · 61 posts · 16 votes
    7y

    @Sam B.  Very motivational post and way to capture all of these details for each investment.  I agree with all the other comments that this is a great way to keep yourself motivated and on track towards your goals.  Way to meet and surpass them!  

    As a an aspiring real estate investor who is still figuring out my goals and how I want to accomplish them, posts like this one are very nice to follow.  Helps me understand and see that we all can hit our goals through hard work and dedication. 

    How much time do you think you spent finding each opportunity and managing it through to completion?  Reason I ask is I am leaning towards out of state investing and want to understand the work it takes to accomplish something like this.  

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    Way to go Sam. I’d be hard pressed to spend much time in paydown mode with your success so far. 

    I forget, do you have houses somewhere else, or was this your first adventure in to rental houses?

  • Real Estate Agent · St Petersburg, FL · Member since 2014 · 117 posts · 38 votes
    7y

    This has been the most educational, motivating, selfless thread I have come across on BP. Thank you @Sam B.

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Ryan Johnson I appreciate that.

    Thanks @Kobi Gur it's been a lot of fun sharing the ups and downs of the challenge.

    @William Kim  Thank you, I'm glad this thread has provided some inspiration.  I'm not exactly sure on my personal time spent, between looking online, buying supplies on homedepot, endless e-mails, texts and phone calls.  I would imagine it was an average of 30hrs per project. Easy rehabs like the first couple closer to 15hrs, painful rehabs like #6 more like 50+ hrs per project.

    I think out of state investing can be very powerful but I would also encourage anyone that is within driving distance, even if its 3-4 hours away, to pursue opportunities like that first, especially if you're doing your first couple of deals.

    @Bruce C.  Thanks Bruce and thanks for following along.  I hope all is going well with your investments in Texas, I just bumped your thread.  Your latest rehab came out real nice.

    Correct, I do have a separate single family rental portfolio in Ohio.  I started buying in Ohio in 2013 while I was working in a remote area of Northern British Columbia.

    @Alexi Schreier  Thanks for the kind words, I really appreciate that!

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    @Sam B.

    Granted it has only been about a year on your first property in this thread, but how would you rate Ohio rentals vs Texas as far as profitability?  What’d you learn from your first go-round that you applied to this one?

  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    7y

    @Sam B.  Amazing job.  Thank you for sharing your journey.

  • Lender · San Francisco Bay Area · Member since 2019 · 4 posts · 1 vote
    7y

    Great work and thanks for sharing. I'm about 4 days new and its inspiring to read your story. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Bruce C.  My experience in Ohio is limited to one city.  Of course, you can find just about any sort of investment in Ohio, just as you can in Texas ($30k section 8 houses, $700k middle-upper class houses and everything in between).

    Ohio offered me a chance to cut my teeth on properties with numbers I could grasp at the time -  a $50k purchase with a $15k rehab that sometimes went over budget to $20k.  I was able to gain the confidence and understanding of the rehab process with less scary numbers.

    Long term though, I don't want my entire portfolio to be houses that on paper look great (all-in for $60k, renting for $1150/mo) but in reality, still suffer from roof replacements, HVAC systems, expensive capex that needs to be covered.

    I think the Texas market (again, the market I'm investing in), plays a middle ground. I can still get the cashflow & equity capture but my rents are much higher so that CAPEX expenditure doesn't evaporate six months of cashflow.

    From the first go around, I think I proved that I could get both cashflow and equity but I needed to do it on a larger scale.  Hope this helps.  You convince the wife yet on that next deal?? :)

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Theresa Harris  Thank you, much appreciated, it's been fun.

    Thanks @Franklin Miles good luck on your journey.

  • Specialist · Denton, TX · Member since 2018 · 126 posts · 84 votes
    7y

    @Sam B. Thanks for sharing your story.  It looks like you have inspired a ton of people by spreading your success around. 

    I wish you the best of success in your journey!

  • Real Estate Investor · San Francisco, CA · Member since 2014 · 104 posts · 21 votes
    7y

    @Sam B. Just read the this entire thread.  What a journey!  Thank you for sharing.  You have inspired many people including myself.  Can't wait to read about your next challenge ;)

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    @Sam B.  thanks for the info. I haven’t even really looked much outside of my Galveston to Baytown to downtown Houston triangle yet, other than one trip up to Dayton. At this point, I want to be close enough to drive up quickly in case of emergency.  

    I have her convinced to put in an offer, but not quite as aggressive as I’d like. Probably won’t get it, but at least if we do it will be an even better deal!

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @James Call  Thanks a lot James, much appreciated.

    @Edwin L.  Thank you, I'm glad you enjoyed the thread (and got through the entire thing).

    @Bruce C.  Sounds good, keep me posted and good luck with the offer!

  • Rental Property Investor · Steamboat Springs, CO · Member since 2014 · 278 posts · 100 votes
    7y

    This is a very inspiring post. Thank you!

  • Member since 2019 · 26 posts · 13 votes
    7y

    @Sam B.  -- really great thread. Kudos on your success and look forward to reading (in detail) about your next one

  • Long Island, NY · Member since 2014 · 17 posts · 4 votes
    7y

    @Sam B. - great work! Great motivation of what can be accomplished in a short span of time if you have the right teams/systems in place as an OOS investor. 

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    Thanks @Derek Diamond

    Thanks @Chris Koch much appreciated.

    Thanks @Mohit Rehan

  • Real Estate Investor · San Francisco, CA · Member since 2014 · 104 posts · 21 votes
    7y

    @Sam B.  What cities were your properties in, if you don't mind saying. Thanks!

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    @Sam B.

    Well, we did put that offer in. Looks like it ended up getting quite a bit of attention and quite a few bidders. We weren’t the winners unfortunately. 

    Any maintenance or tenant nightmares so far with this group of rentals?  

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Edwin L.  Greater Beaumont, TX area.

    @Bruce C.  How's it going Bruce?  Sorry to hear the offer didn't work out.  Onto the next. Airbnb still going well? 

    No maintenance or tenant nightmares.  Property #2 is breaking their lease early, job is sending him back to California.  Not a huge issue and it will be a quick turnaround. 

    Property #4 has extended their lease, which is good.

    I decided against refinancing property #6, which is great for cashflow but makes my reserves tight.  So just trying to build those back up and not spend too much money.

  • Seabrook/Galveston · Member since 2018 · 274 posts · 178 votes
    7y

    @Sam B.

    AirBnB is going well, but we had our first hiccup. Cleaning crew messed up and didn’t add our cleaning to their calendar, so tenant showed up to a messy house and went downhill from there. Ended up costing me $350-400. I’ll update my thread so as to not bog yours down  

    It is nice when the passive income is actually passive.  One turnover does sound pretty easy enough.  Your renovations looked thorough enough that you probably don’t need to expect too many big items in the near future   

    You itching yet to buy another house?

  • Rental Property Investor · Houston, TX · Member since 2013 · 476 posts · 294 votes
    7y

    @Bruce C.  Sounds good, I bumped your thread.  Not itching to buy yet, still enjoying relatively calm and consistent cashflow.

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