All Forum Posts by: John Morgan

I self manage 29 SFR and do all my taxes on turbo tax. It's definitely not rocket science to do. lol

@Keno Powers

Been there, done that. I got maybe $150 out of my tenant I had to kick out because she couldn’t afford rent there. She paid me like $50 every other month after constantly reminding her. I finally told her to forget it and relieved her from the 3k she owed me in damages and late rent. It’s not worth chasing people around for a buck in my opinion. Move on and try to screen better next time.

@Nick Cooper

I’ve bought 17 or 18 rental houses with 20% down. I’ve bought a few with 25-30% down as well. But those didn’t cash flow as good so I threw more $ down or my lender gave me a much better interest rate with a bigger down payment.

@Ben Cochran

My first two investments 8 years ago were paid off. I did everything I could to get them paid off and was proud of myself at the time. I was also a Dave Ramsey guy at the time and thought debt was bad. Lol. Then I read Rich Dad, poor dad which completely changed my mindset. I learned that good debt will make me wealthy MUCH faster. And the power of leverage will bring me generational wealth in about 10 years. So I took my two paid off rentals and harvested the equity to scale up and increase my cash flow. Since then I've bought 14 houses from doing 4 cash out refis. I basically got these homes for free without using any out of pocket cash to scale up. I've used all the rental cashflow since I started investing to buy more and more houses, or to pay off 401k loans and 0% interest for a year credit card loans to scale up. I'm a fan of using that equity built up just sitting there doing nothing. My cash flow with those two paid off properties was only around $1500/month combined. Now it's 19k/month and I haven't used much of my own money out of pocket to scale up since I learned to leverage and tap into equity to scale up. I owe 2 million with all these mortgages, but the properties are worth 5.1 million and rising. And my tenants are paying off my mortgages while paying me good monthly cashflow. I currently have 29 SFR now and glad I decided to use the equity sitting there doing nothing for me 7 or 8 years ago vs having only two paid off homes cash flowing me much less.

I've got a few houses I rent by the room. I've only done an appraisal on one of them which I added two bedrooms to. The appraiser didn't count them as bedrooms. lol. But my DSCR lender and commercial lender used the individual rent for each room since the appraisers market rent wasn't very high.

@Jennifer Fernéz

I started investing about 9 years ago when I was 44 years old with only 25k in savings. I found a rental I liked and paid 130k cash for it. I had no idea what I was doing. lol. But I've turned that one rental into more and more SFR by recycling the equity to scale up without using much of my own money. My cashflow now is about 19k/month profit off the rentals and it all started with finding a way to come up with 130k cash when I made a drunk offer (over email) to the listing agent on that first house. I was able to do a HELOC on my primary and tap into some of my Roth IRA $ (tax free) to come up with the 130k since all I had to my name was 25k in savings. Since then I've done a cash out refi on that rental to buy several more. I've actually done 4 cash out refis to buy 14 more SFR with zero money out of pocket by harvesting the equity in my houses that appreciated over time. So my advice to you to is to find something in your budget you can pay cash for now. Then do a cash out refi on that property later on to maybe buy 2 or 3 more rentals with 20% down on each. Then keep repeating this every 3-5 years. I've bought 5 houses from 401k loans too. So there might be ways for you to find more money to combine with your 80k to pay cash for a decent cash flowing SFR. And I've bought 4 or 5 houses from 0% interest for a year credit card loans so don't rule out those offers to combine with your 80k to buy something. Good luck!

Quote from @Hector Espinosa:

Quote from @John Morgan:

I would invest every penny I had in SFR in growing areas if I started out today. I'd find a way to come up with the 20% downpayment and do whatever it took to go find the next deal. I waited til I was 44 years old to invest in RE and have been buying and holding SFR for almost 10 years now. My only regret was not doing this when I was younger. I could have found the money I bet, but I was scared to be a landlord. Now I own and self manage 29 SFR and find it to be easy. Lol

Any particular reason picking SFR over small multi-family (Duplex, Triplex, Quadruplex)?  I just turned 44 years old two days ago and I hope I can have at least 29 units in 10 years as you do now :) 

Do you have your properties in your local market or out-of-state? 

Regards,
Hector

I like single family vs multi for a few reasons. And I started investing about 9 years ago at your age (44). Single family is less drama compared to MF. Turnovers with MF average every 17 months. No thanks. Turnovers cost a lot of money. With my 29 SFR, I rarely ever have turnovers. People stay for years which saves me turnover costs and all the headaches. I can sell my single family easily to a buyer who’s an investor or regular home buyer. MF can only be sold to an investor and it’s based off its performance. I self manage my 29 single family homes which is easy since I don’t have many turnovers or deal with tenant drama like those who do with MF. And SF appreciates much better in my area which is a bonus too. I have 18 properties in my local area and 11 out of state. I don’t do any work on them so it doesn’t matter if they’re 20 min from my house our 15 hours away. I hire it all out. I don’t want RE to be a part time job so I text handymen to go fix things when they break. 

Quote from @Kyle Kline:

Quote from @John Morgan:

I got slammed with cap ex issues my first 3 years of investing. Luckily I had war fund saved up for the HVACs, roofs and foundation repairs I needed. Now with 29 SFR, I don't need much in emergency $ because the rentals generate 19k/month profit. So if an hvac or roof needs to be replaced tomorrow, it's not a big deal. I'll just use some of my monthly mailbox money to pay for the expense. But when your monthly profits are less than $2000, then I'd make sure to have some reserves, because Murphy will come when you're least expecting it.

Thank you! So you had saved your own personal money to prior to purchasing the property to use as your emergency fund?

At first, I would throw all my mailbox $ into savings for cap ex things. So that’s how I paid for a new hvac, roof or foundation repair. Then I got thin with money for a few years because I was using up all my savings to buy more and more houses. So I used 0% interest for a year credit cards to pay for cap ex things that popped up or a rehab etc. Then I’d pay those loans off within a year with my cashflow. Then I decided to use five 401k loans for up to 50k to buy five houses. Then would pay those loans off within 3 or 4 years and repeat. I’ve used lines of credits from banks to pay for cap ex things too when my savings was zero. After you get 5 or 6 properties, the cashflow adds up and makes it easier to deal with the unknowns that will happen. 

Quote from @Arn Cenedella:

@John Morgan

Nice approach. Good work,

Just curious, how much equity do you have in your 29 SFR rentals?

Arn

I have about 60% equity in my 29 rentals. Owe 2 million with 5 million in value combined. But I started 9 years ago and appreciation has been good to me in the Dallas area. 

I would invest every penny I had in SFR in growing areas if I started out today. I'd find a way to come up with the 20% downpayment and do whatever it took to go find the next deal. I waited til I was 44 years old to invest in RE and have been buying and holding SFR for almost 10 years now. My only regret was not doing this when I was younger. I could have found the money I bet, but I was scared to be a landlord. Now I own and self manage 29 SFR and find it to be easy. Lol