All Forum Posts by: Abraham Anderson

Sorry to everyone for the late replies. I will try to check back on here more frequently.

I would like to say that I didn't post this to brag. I would prefer to be anonymous. I posted my story in the hopes that it will be inspirational to other young investors. 

@Gino Barbaro thank you sir, and I look forward to attending your Multifamily Mastery presentation in November!

@Mike Roy, about 3 months before closing, I had an inspection done & the previous owner fixed all the deferred maintenance, so the property is turn-key. There was only 1 vacant unit at closing & it's already been rented. I put down $130K and the other 10% was in the form of a lien on an office building I own.

@Chase Griffin if I can do it, so can you. Don't let people put you down because of your age.

@Tonya Weathers My freedom number was less than $2K, so I'm thrilled at getting $3K on this deal. I'm not done yet! I love my job and will continue to save & look for the next deal.

@Melissa Harris Good luck!

@Mark Allen, the $3K is conservative, and it's before I do anything to increase the NOI. The big one will be getting rents up to market. The previous owner hadn't raised them in years.

@Cody L. Yes, I calculated 19.66% cash on cash return.

@Michael Swan Thank you! I just listened to your BP podcast, well done sir!

@Victor S. I was out selling more insurance, and celebrating a bit, haha.

@Robert Hudson I received zero financing from my parents, or anyone else for that matter. It was personal savings & instutitional debt.

@Adam Zdunek Nice to meet another insurance agent on here. Feel free to shoot me a PM.

@Alex Olmo As soon as possible! I'm using my (now) lack of cash as more motivation to work harder than ever & continue saving for the next deal.

@Jason Payne I grew up in Cleveland (TN), and I have lots of clients in Chattanooga, cheers.

@Bj Ayoleke Find a deal and run the numbers, be conservative, if it makes sense, jump in. Don't let fear hold you back.

@Charles A. My bad for taking so long to respond. Feel free to ask any questions that I haven't answered above.

@Catherine Angle Good luck! I answered the financing questions above, if you want to know any specifics, feel free to shoot me a PM or post on here.

Wow! I did not expect this big of a response, I'm really glad that my story has been inspiring to some people & thank you all for the well wishes! This will be a long post but I'll try to answer all the questions:

@Avi Gard The cap rate is 8.29%. My advice for finding financing is talk to local banks, as they are much easier to work with than national instutitions. I talked to 4 banks before I found one I liked.

@Caleb Heimsoth I got a 4.99% interest rate on a 7 year term, 25 year amortization. The property appraised for a bit more than the purchase price.

@Arianne L. Thank you! The unit composition is: four 1bd/1bth, eight 2bd/1.5bth, and eight 2bd/1.5bth.

@Reynold Orozco, I put down $130K, plus a lein on an office building I own free & clear which is worth $180K. Closing costs were a beast at 26K. A lot of that was taxes (title transfer), and the bank appraisal, etc.

@Anssi Viljanen, yes! The rents are way below market. My PM texted me today that they just rented out the only vacant unit @ $750/month, up from $600. In 12-18 months once they raise the remaining rents to market, that's going to be another $36,000/year, at an 8 cap the property value will increase $288,000!

@Nathan G. The down payment was a combination of savings & the equity in an office building I own. This isn't my "first" deal, at age 18 I built & sold 4 town homes (sold last year), so I had that on my track record. Plus a combination of my insurance income, good credit (700+), and the cash/equity.

@Patrick Chamberlin Good question! By seeing a whole lot of people ;). I averaged 3-5 appointments a day, 6 days a week.

@Jordan Coates "Keep buying and selling" that's the plan, buying more real estate and selling more insurance ;^).

@Brian Adams Thank you for the advice! When starting out, I heard over and over "the bigger the deal, the easier it gets", which motivated me to shoot for 20+ commercial, rather than smaller residential properties.

@Malick Guindo, Several things led me to choose this property. Firstly, the financials had to line up. I wanted at least an 8% cap rate, and cashflowing $100+ per door, per month. I live 10 minutes from the complex, so I knew it was a good area.

@Lee L. I'm not done yet! I plan to keep selling insurance as I look out for my next deal. I use the term "retired" as in I have enough income now to cover my expenses without having to work.

@James Jones Primarily East TN. I see you're from Murfreesboro, I have insurance clients in that area. Going forward I am open to deals in other parts of TN. I don't think I'm ready yet to go out of state.

@Don Gouge Haha, thank you. That's why I hired a property manager. As much fun as Real estate is, my time is better focused on sales.

@Matthew A. Current total rents are just under $13K/month. I budgeted in $4K/year for cleaning, $3K for repairs, $10K taxes, $8K PM, 5K vacancy, and so on. I was very conservative with these numbers. Regarding insurance income, your gf's brother in law was probably a captive agent, meaning he only sells for one company (NW Mutual), I'm independent, so I can represent multiple companies & get higher commissions based on production.

Yesterday (7/31) I closed on a $1.3M, 20 unit apartment deal that's going to net me a passive, positive cashflow of $3,000/month. This is after ALL expenses (PITI, PM fees, repairs, vacancy, capex fund, etc). My personal monthly expenses are just under half that amount, which means I'm financially free at the ripe old age of 21! I did this without a co-signer, & while working a full time career.

Backstory: I never went to college. The moment I turned 18, I began selling insurance. I worked non-stop & saved every penny, having zero social life. My first year of insurance sales, I earned over $100K. Real estate deal #1 for me was building a quadraplex which I ended up flipping, it took over 2 years & I barely broke even; that left a bad taste in my mouth. I almost gave up on real estate, but I found Biggerpockets, & other's success stories motivated me to keep trying. 

Here I would like to give a shoutout to Jake & Gino, their podcast (BP #182) was a huge inspiration to me, along with their book Wheelbarrow Profits. It got me focused on my chosen niche of multifamily apartment buildings. Another great (& recent) book for me was Set For Life by Scott Trench.

In December 2016, I got a 23 unit deal under contract in Gatlinburg, TN; unfortunately, it along with 2000 other buildings burned to the ground in the wildfires. It was very disheartening, but I kept moving forward; calling every multifamily realtor in the area, seeing loads of properties & submitting lots of offers. Keep in mind, I did all of this while working my full time insurance career.

In January, one of the realtors I'd met showed me a promising property, we submitted an offer but we couldn't come to terms. It went under contract with someone else, but it fell through. Later, it went off the market & my realtor got back in touch with the owner. After much back & forth, we got it under contract; a few months after that & we finally closed!

The biggest hurdle was being patient & finding a good deal, I'd rather have no deal than buy a bad one. Other obstacles were securing financing without a cosigner, and another was getting realtors to take me seriously at my young age. I won't forget one older realtor, who when he first met me at a 30+ unit property, asked "Is this a joke?". Later at lunch, he commented "I'm really impressed, when I was your age, I was just thinking about the next time I could get drunk!"

It's such a great feeling knowing that now I get to work because I want to, not because I have to. I'm not going to slow down, I will continue my insurance career & save money for the next multifamily purchase.

My advice would be, work hard, keep learning, save your money, and never give up!

I wanted to post an update. I ended up signing a 6 month agreement with a local PM. I negotiated them down to a really good rate. In 6 months I can either renew it, or then look at other options (including self managing).

Thanks again for all of your inputs!

You can search exclusively for Multifamily on Loopnet. On the homepage, click the drop down that says "All properties for sale" and choose "Multifamily", then type in a city or county and it will show all the multifamilys in that area.

East TN here, but this advice works anywhere in the US. I recommend talking to local banks, they are usually much more lenient on their underwriting criteria and can offer more favorable terms as opposed to larger institutions. 

I spoke with about 5 different banks before deciding on one. I am still new to RE investing, but I agree with all of the pros that real estate is all about relationships. Find a banker & build a relationship with them, and in the future, financing deals will become a lot easier.

Grant Cardone talks about not getting rid of your first stream of income. Like others have said, keep your dayjob and do real estate on the side.

Thanks everyone for your inputs so far.

@Andrew Johnson I see you have 36 units, have you ever self-managed? 

From what I have read, most of those self managing do it (+RE Investing) full time. For now I still want to focus on my insurance career which is why I'm leaning towards a PM.

I'm closing on 20 units at the end of the month. In preparation, I've read multiple books on property management (Including Brandon Turner's), and have listened to over 100 BP Podcast episodes, as well as browsing the forum.

That being said, I have a full time career as an insurance agent (life/health), I'm not sure if my time is better spent split between property management and my career, or if I should hire a local PM for 10%. If I do self manage, I would "only" handle the financial side (rent collection/turning units, legal), and outsource the repairs/maintenance/grass cutting.

What would you do in my situation?

@Linda D. I love that quote! One of the BP Podcast guests said something similar; "You wouldn't ask your dentist for advice on how to fix your car". The lesson is, don't expect your family/friends to give you good real estate advice (if they're not in it themselves).