How I Created an Additional $7,000/Mo. Cash Flow in 4 Years!

How I Created an Additional $7,000/Mo. Cash Flow in 4 Years!

Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
Writing this to encourage, not brag! In 2001, I started flipping and did maybe 25 or so. It was tiresome, while also coaching two basketball teams, and maintaining my sales manager W2 position! I switched jobs in the 2009 economy fold, and probably messed up as I did not do any RE investing for 7 years, other than investing as a minority partner into a 72 unit college property using our HELOC for $202,500 as our portion of down payment. In 2016, I met with my son and financial advisor, and he informed me that we needed to hustle to replace income if I ever planned on retiring. So, in the last 4 years this is what I have accomplished; 1) flipped around 12 properties 2) bought into 5 plex in Lebanon 50/50 with my son for $375,000, rehabbed some and increased rents to market. 3) bought into 8 plex in Forest Grove 50/50 with my son for $642,000, rehabbed all 8 units and at market rents. 4) sold 5 plex in Lebanon by owner for $545,000 and invested into Crowdstreet Opportunity Zone in Atlanta, Ga. 5) bought fixer 4 plex in Albany, Or rehabbed, and rented at market 6) bought 2 fixer 4 plex's near Western Oregon college campus, rehabbed, and rent at market. 7) started hair salon, pretty much failed, and got rid of it 3 years later. 8) refinanced 8 plex and pulled out $100,000 on my portion to pay off debt. 9) Majority partner refinanced 72 unit building and received $145,000 I used towards debt. I accumulated lots of debt during this 4 year period, using my HELOC for down payments and rehab work to get to market rents. I now have worked hard to pay off the entire $421,000 HELOC, so my personal home is now FREE and clear of any debt. I was cash flowing $8000 a month from this work the last 4 years of creation, but down to $7000 as we sold our Lebanon property, but I avoided CAP gains this year with the opportunity zone, which is a 10 year hold. I am tired, but this can be done IF you put your mind to it! So, I now average $13,000-14000 a month positive cash flow, after Capex and monthly repairs. That number also includes $3000 or so a month from stock dividends on an account worth around $800,000. I am 52 1/2 and after 30 years in the same industry, trying to figure out what I want to do. My career, I have to work Saturdays, and with a new 9 month old grand daughter, I am less than thrilled to have off Fridays and Sundays. I ask myself, "how much is enough?" Maybe its a mid life crisis question, but it is real folks. I am currently looking for a decent flip but the well seems to be dry. I am thinking maybe more one good buy and hold might be smart before I hang up my W2 job. I wanted to share my story because nothing is easy out there. I am have been grinding since 2001, but taking off 7 years, and probably the years I should have NOT taken off! Even in a hot RE market, I have worked hard to find off market deals, and worked hard to get sellers to carry the contract. Some say I am LUCKY, but that probably true. I like to say I am BLESSED. But, I define LUCK as Labor Under Correct Knowledge. My advice is to always be grinding, and do not look for excuses. I had no family support or money, I just started with reading books long before there were any HGTV shows out there. I sit here on a slow work day on a Saturday I despise, so I wanted to encourage you to reach your dreams, and also find a number that would actually make you happy. Money cannot buy happiness, but I am looking for my FREEDOM number, but health ins concerns always clog my mind. Curious of your thoughts and your story, no matter how big or small.
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Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
6y

I appreciate this post because I’m feeling a bit discouraged  today after deal hunting / grinding with not much to show for it Atleast for the day anyhow . I think the barrier to entry is a mental one in this business .it is difficult especially with limited capital and fierce competition with deep pockets . 

It’s certainly the most difficult thing I’ve ever pursued in my 42 years and there are very defeating days like you eluded to . I find that I need to remind myself I’m blessed to have all these assets and skills etc.. but that’s hard to do at times when it seems like everything goes wrong at once and your banging your head on the wall out of frustration . 

I think you have to love it ..be obsessed about it to become a success in this field because it’s so hard and requires daily motivation /self talk because any sane person would give up ! Who would put up with this crap and devote their time money and resources to get kicked in the gonads for years on end ! 
You need “why “power ..not “will “power to stay in the game long enough to see your dreams come to fruition and accounts start to multiply . This is a get rich slow business that’s for sure . Congrats on your success and I’m looking forward to seeing you post that you are not plugging away on Saturday’s any longer! 

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  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Mike Chira. Wow, well done. What made you $280k passively last year, as I wanna follow. Also, the car biz is what I have done the last 31 years, lol. Tighter margins and more internet pressures than ever before. Rehabbing and seeing through a car fix up is the same as house rehabbing, just a lot higher numbers. Go for it !

  • Member since 2019 · 17 posts · 6 votes
    6y

    @Todd Powell

    I'm selling on Amazon. I've been doing it for 5 years now... last year was the best by far. I have a VA that takes care of 95% of the work...It still takes me 3-5 hours/week for the rest... So that makes it not 100% passive, but to me after doing everything my self for over 4 years I feel like I don't have anything to do lol. Cars are my passion, I sell about 5-10/year.. I's just something that I enjoy doing but I wouldn't go all in. Yea, I agree... it's the same system...buy at a discounted price, clean it up a bit and sell it at retail.. except there are more money in houses and you can end up building real wealth...

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Mike Chira. Love your hussle Mike!!! Keep doing great things

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Karen F. I am sorry I missed your post until now. I love your story! What is ins exchange? And my fav dividend stocks are MO and XOM, both currently hammered with the 2000 point DOW drop. Wells Fargo makes sense as well for me.

    A question for you, can or do you qualify as a full time RE investor to save in taxes? Someone mentioned you have to put in so many hours to qualify, but your taxes drop significantly. I am curious as I think my savings will go up drastically when I leave my W2 which sucks out a ton of money. Again, thanks for your incredible input on this thread.

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Conrad Steinweg. I just saw your comments. Man, we are the same age! Yeah, some say I have taken risks, but honestly I have just bought one dollar bills for .60 cents. I have looked for tired buildings that need love and bring them back. I determined a while ago that I want to diversify but plan for my future, and certainly not depend on SSI or the government. RE makes sense for several reasons; property appreciation, depreciation, tenants pay down mortgage, cash flow, leaving assets for family, and overall tax benefits. I like the returns my RE has provided. My Cap Rates are high and not in the midwest or D markets, but I started with a below market purchase price. My advice is make the Jump on the right deal. You have the knowledge and have done the research. I started with reading RICH DAD POOR DAD, and I simply found a deal that I knew I could make some money. My first flip was a $27,000 profit, and I soon realized I could never make or save this kind of money from my W2 so fast. So, I basically worked 3 jobs; W2, flipping and eventually managing my buy and holds starting in 2007. Do not let FEAR grip and analysis of paralysis bind you! I think you need RE with your stocks to make retirement satisfy.

  • Member since 2019 · 2 posts · 2 votes
    6y

    @Todd Powell My 2 cents: If you filed as a real estate professional (REP) and did your own property management on at least a property or two under a C corp you can write off medical expenses and leverage unlimited losses from depreciation/compressed depreciation. As opposed to once you make around $150/$160k in your W2 you lose out on most of the depreciation opp's. I work in the health insurance space - more with large employers, but if there are ideas you want to bounce off me I am happy to chat :-)

    Often people think they need a 'rich' health plan when they really don't utilize it and are better off with a more bare bones plan and an HSA (those contributions are tax deductible). You could check out the public exchange in your state to see what those costs are for premiums as another option rather than going direct to the medical carriers

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Rachel Cordova. Thank you for you thoughtful input!

  • Investor · Dayton, OH · Member since 2015 · 74 posts · 21 votes
    6y

    @Todd Powell if you ever want to collaborate I deal with investments, assignments, flips and rentals in Dayton OH and surrounding areas.  Congrats on your past and continued success with finances and your family.

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Jay Thoms. I like to keep it closer to home. Thanks though

  • Investor · Dayton, OH · Member since 2015 · 74 posts · 21 votes
    6y

    @Todd Powell understandable.  Me too!

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Gerald Walker. All transparent and real 100

  • New to Real Estate · Rock Island, TN · Member since 2019 · 97 posts · 69 votes
    6y

    This is super helpful. Thanks so much!

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Nick Troutman. Yes sir !

  • Specialist · Tucson, AZ · Member since 2013 · 34 posts · 58 votes
    6y

    @Todd Powell... Have you ever thought of just getting your Real Estate License? That way, you'd ultimately be your own boss, and I know that with Keller Williams, they did offer insurance. A bit more costly than working for W2, and the company contributing, but happiness is the ultimate goal. That allows you more time for your grand baby!

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Monika Smith I try and buy off market deals that need work below market value. I dont think legally its as easy if a licensed Realtor. Further, I do not want to hold hands, show properties, list, and race to get my buyers offer accepted with 10 more in front of us. Just too many headaches for me. I love fixing and flipping, or managing my properties.

  • Investor · Saint Louis, MO · Member since 2016 · 43 posts · 5 votes
    6y

    Congratulation @Todd Powell, a true success story and inspiration.  I'm a investigator in St. Louis and own a 12 unit apartment building.  Compared to you, I have a journey to go lol.  

    I've might have missed it but my question to you is how are you able to tap into your HELOC for properties that you don't live in?

    I'm in the process for taping into my equity into one of my SF rentals but the bank only said they could refinance it or cash out finance it, 

  • Kerry BairdPro Member
    Rental Property Investor · Melbourne, FL · Member since 2011 · 3k+ posts · 2k+ votes
    6y

    @Beary Bowles, there are some banks that will do HELOCs on investment properties, though I cannot say that any do them on commercial properties.  That falls into commercial lending. See about a commercial line of credit from local (to the property) lenders. Try US Bank, TD Bank.

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Beary Bowles Good question. The HELOC was first acquired many years ago based on my primary residence equity, credit, DTI and started with $60,000 interest only with B of A. I then had MANY increases to the line and they never did a real appraisal but but just a desktop appraisal they called it. Also, I had two other HELOCS on my three triplex and 4 plex properties with B of A until 2009 hit and they shut down my non owner occupied HELOCS. I never missed a payment, but they made national decisions and hurt me. I know have a HELOC on my same house for $421,000 and also $225,000 on my 4 plex. The $421k is via Keybank and my 4 plex is with my local bank, Citizens Bank. It is rather hard to get banks to grant HELOCS on non owner properties anymore. I have used this to flip and also buy and hold properties as well. It gives me flexibility to use and pay as I use interest only and the rate is prime minus -.25% with a minimum floor of 3.99%. I was able on my primary to get a 90% LTV for a 15 year draw period.

    I love the product and now have ALL my bad HELOC debt paid off. It helped that I high awesome equity, a high W2 and wonderful credit to achieve these high limits. Hope that helps you a little !

  • Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes
    6y

    @Beary Bowles You can find a bank that does a line of credit (typically a local "portfolio lender") or do what is called a cash out refinance. Where you take the equity out and then use that equity for whatever you want. Yes, mortgage payments go up but if you use it wisely you can continue to make big gains (buy more units, pay off higher interest debt etc...) Hope this helps!

  • Member since 2020 · 137 posts · 158 votes
    6y

    @Todd Powell I like when people say “I’m tired”. This is absolutely worth it, but also takes so much effort. 

  • Wholesaler · North Hollywood, CA · Member since 2016 · 72 posts · 31 votes
    6y

    Wow Todd very inspiring. From your numbers, it looks like you are out of the rat race. Why are you still working?

  • Rental Property Investor · Member since 2019 · 45 posts · 15 votes
    6y

    Just saw this post. I know I’m late to the game on it. LOL I’m 52 years old and trying to Achieve a few goals that I have. This is so encouraging!

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Brent T Galbreath. Its NOT too late but its time to take action now. Too many people let fear grip them. Best of luck

  • Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
    6y

    @Ezichi Oha. Probably a little fear, as my W2 is really high and also health ins is crazy expensive. One year we had $25,000 out of pocket AFTER our monthly premiums monthly! I am working to flip and save cash reserves as I paid off massive debt but would feel better building some cash reserves. I am only 52 1/2 and wife is 50 so if we live a long time, we need a cushion. Trust me, I have goals and trying to get there. This virus is unknown and my unit are largely college units. If colleges keep shut down will be impossible to rent them.

  • Wholesaler · North Hollywood, CA · Member since 2016 · 72 posts · 31 votes
    6y

    @Todd powell I see what you are trying to do. Your Health Insurance is very expensive

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