Rather invest alone, without partner how did you scale quickly?

Question

I understand the need to joint venture. I understand the value in that. That being said id prefer to go solo. Something about bringing someone i dont really know scares me a bit. Difference in work ethic, personality differences, time differences etc. Even losing their money scares me even more.

Ive also watched some podcasts on here where guys grab 20+ properties within a couple years. If you're going solo, how do you scale quickly just using the bread and butter approach of buying and holding? Is BRRRR the biggest strategy? Flipping here and there? Ive probably answered my own question, but just wanted some varying opinions. Thanks.

Ranga Ramanathan · Answer

Hello Lee, this is a question I battle with all the time, I have the same concerns as you in having a partner.  BRRRR strategy takes its own time to scale up.  I typically go with MLS and try to find a deal that works so I don't buy 40% below market value.  I am not a big fan of investing in low cost areas, may work for lot of people and good for them. If i was open to low cost areas I can buy home for cash and invest to repair then rent and then leverage the equity to buy the next home and so on, but the typical home I am comfortable investing in is about ~200K and I don't have that kind of cash to play with so I have wait till I have enough money for down payment.  The problem with B+ areas with good school district and low crime is that it is hard to find run down homes that I can buy for cheap and generate equity.

I have considered C- areas (Mediocre schools, little bit crime prone few block away) where I can afford cash purchase but have rejected the idea as I am worried about the direction these areas will go in future. Here are few more options

1) find a market where you are comfortable with what your cash affordability can buy

2) Buy property as primary home for low down and you can make it an investment property after a years stay and buy a different primary home and keep it going till you can find a lender

3) Find a hard money lender if you are rally serious about scaling

4) Do personal sacrifice and save lot of cash to get started

What ever you do evaluate your risk and numbers and make sure you are comfortable with it, good luck

Jeff Filali · Answer

I felt the same way as you.  I prefer not to partner on deals for the exact same reasons.  The way I ramped up quickly was decided to focus primarily on rehab and flipping to build more capital.  Ended up purchasing 15 properties my first 12 months, rehabbed and flipped most, did a few wholesales to other rehabbers, and ended up holding a few to generate mailbox checks after they didn't sell fast for cash.  My goal is to continue this approach, flip 15-20 per year and start adding more buy & holds as I grow.  But to ramp up on your own, you need to grow your capital.  The fastest way to do that is rehab and flipping, or wholesaling to other rehabbers.

Ranga Ramanathan · Answer

@Lee Cruz Hello Lee, What I mean by that is since I go with MLS and buy conventional single family homes in B+ areas that are not distressed and seek conventional financing I cannot usually find a deal thru low ball offer in a good market.  As you already know usually lot of hardcore investors (I am more of a passive investor) go for distressed property in MLS or they identify them by direct mail or some other kind of marketing so that they can buy the property on the cheap and put some work in to get more equity. In most cases when I see some body scaling up rapidly they are playing in C and D type properties, again don't get me wrong more power to you if you can do this but since I am a passive investor I prefer trouble free properties in trouble free areas.

Jeff Filali · Answer

@Lee Cruz  One at a time at first, then after a few flips, increased to two at a time.  My first 6 months I only did 3 flips, then it really ramped up after that.  Now this year I'm trying to do 2-3 at a time.  If you haven't read my story before, I started with only $30K saved and used zero interest credit cards to help with rehab work and anything I could put on the cards.  I started with cheap properties that I could be all in including rehab for under $50K total. I flipped the same money over and over and over again and rolled all the profits back into more deals.  Today I currently have a little over $200K in equity in my investment properties, a few are currently for sale, one is being rehabbed, and have a few generating mailbox money.  The only mortgage I currently have is on my primary residence and I do still have around $25K on credit cards, which I will pay off before they start charging interest.  I had 18 months zero interest rate on several cards with decent credit lines.  So far I've avoided using hard money or bank loans, but that will probably change as I continue to ramp up the business and start adding buy & holds.

Lee Cruz · Answer

@Jeff Filali

Thanks for the reply Jeff. Im impressed with you  purchasing 15 properties your first year. Was all that working capital of your own or did you have hard money lenders? Did you go one at a time and is that how you purchased your 15?

@Ranga Ramanathan

Originally posted by @Ranga Ramanathan:

I typically go with MLS and try to find a deal that works so I don't buy 40% below market value.

--

hi Ranga, what did you mean by this? Im going with the MLS and the deals i find are over priced and im thinking of offering substantially low. Example i seen a property for 140k, but thinking of offering 100k. Is that what you meant?

Rather invest alone, without partner how did you scale quickly?

Most Popular Reply