All Forum Posts by: Travis Beehler

I bought 2 rentals right before the Ferguson shooting, and was eating up the news like crazy trying to figure out if they were in danger.

I'm not scared off of buying on the outskirts of town, as I fully trust my property manager to steer me in the right direction.

I took my wife out on a very nice date, paid for it with my rental income, and bought my property manager a $200 bottle of scotch.

 In purely educational terms, I'd say over $100k.  My portfolio is the size that it is (less than a million, but doing very well), because of the advice I've gotten on here, and the questions that have gotten answered.

Cashed out my 401k with about $30k in it.  Paid a HUGE amount of taxes on it, but really did my homework, and turned it into something.  Market jumps like crazy, refinance, buy 2 more properties, sell the first property that I refinanced, and bought 4 more properties.  Went from $250 a month net profit to $2,000 a month net profit.  With that much cash flowing in, it becomes easier and easier to get your next deals.

Forgot to add that the $250 a month is after property management.

 Oh no, you're absolutely right, and I should have explained further.  When I do get the profits in, I don't spend any of it.  It just sits in my account, waiting for repairs and the like.  When I'm ready to buy the next property, I leave X amount in the account for repairs, vacancies, etc, and use the rest.  I was speaking strictly from the "well that wipes out all the cash flow for the next two years" way of looking at it.

I've been doing real estate investing for about 4 years now, and when people ask me about it, one of the first things they mention is how hard it must be, how they are too old, or some other excuse why they don't pursue this if it interests them.

So, I thought I'd share my personal experiences and hopefully inspire some people out there to take the leap:

In 2008, my wife at the time hit me with a bombshell.  She wanted a divorce.  Sure, we fought like any other couple, but this was out of left field.  So, I kept hearing horror stories about people who went bankrupt, went to live with their parents, etc, after a divorce, and I swore that wouldn't happen to me.

So, I kept the house and we split the debt.  I was making $2,600 a month net with a $1,750 a month mortgage and $10,000 in credit card debt.

As you can imagine, I was in a panic.  I didn't want to face bankruptcy simply because my marriage fell apart.  A friend of mine told me to offer to settle with the credit card company for $5k and tell them I wasn't going to pay them a dime more.  His point was I already had a house and a car, so I didn't "need my credit rating".  I am a pretty honorable guy, and believe in paying my debts.  Plus, I had the feeling my credit rating might come in handy later on.

Fast forward to 2011.  My area is smack in the middle of the recession from 2008-2009.  Housing prices have bottomed out.  Houses that were $200k 3 years ago were now selling for $140k.  I managed to find a place that was listed for $140k and got it for $110k.  I put my 20% down + a few thousand for misc. things like a fresh coat of paint.

Tenant moves in 3 months later.  I'm making $250 a month profit.  YAY!

Fast forward to April 2014.  Tenant is perfect.  Taking care of property, paying in full and on time every month, etc.  Market rebounds, I decide to cash out finance and buy my next property.

Because the market has rebounded, EVERYTHING is out of my price range.  What to do?  I listen to a podcast on here and the guy being interviewed has properties all over the US.  The interviewers ask him if he's comfortable with that.  He says yes.  They ask about driving by your properties to make sure all is well.  He asks when was the last time you drove by your properties that you have locally?  That is the question that inspired me to look outside my area.

I've only driven by my property when I wanted to show off for a girl.  :)

So, through TONS of research, I find a city that has decently priced houses ($40k-$70k), that rent for around $800-$1000 a month.  I think there must be some mistake.  Anyone who can do basic math can tell you that you could buy the place and have it be literally HALF price of what rent is.  But, I looked around, and there are several cities that are like this.

Fast forward, I bought a small $40k house that rents for $795 a month.  Put a few bucks into it for some minor upgrades (all less than $1k total), and things are humming along nicely.  I happen to have some money left over from my refinance of my first place, and I bought a third place a few miles from the second.  This deal was a bit more complicated and I probably shouldn't have done it.  The $40k property was making me around 35% cash on cash return, but this one was on a flood plain, and I didn't pay attention to that fact.  Bank required me to get flood insurance.  That, coupled with the fact I overestimated the rents, meant I was making a "meager" 10%.  Still VERY good!

Fast forward further, I decided to sell my first property.  After my cash out refi, I was makign a profit of $44 instead of $250.  Got hit with a $900 repair, and that wiped out almost 2 years worth of profits.  Did a quick spreadsheet of sell vs. keep, and found that I could buy 4 houses in my new city and make a profit of around $1,500 a month across those if I sold.

So I sold, and those properties were closed on the 31st of last month.

Now, I took calculated risks, saved my money like crazy, denied myself fun items like an upgraded computer and a few toys, and did TONS of homework.  Asked people questions, found holes in my strategy and corrected, found trustworthy people to work with (property manager and bank).  

I could have taken the easy way out.  I could have bought toys I wanted, complained about flat wages in America, or made up some other lame excuse as to why I wasn't wealthy.

I started this at the ripe old age of 37.  I overcame the brink of bankruptcy, divorce, self greed, and more to get where I am, and there's no reason why you can't get to where you want to be either.

There's a reason why they call America: Land of Opportunity.  They don't call America: Land of Free Stuff.  You have to make that leap, but I promise you, that if you pay attention, make calculated risks, you'll be just as successful as anyone on here.

If they are quality tenants, then keep it at $2,750.  You want them to move out happy, because that means less headaches for you.  I normally raise the rent only when absolutely necessary on a good tenant, and I explain my reasons why.  If nothing has changed on my end, and they are a good tenant, I leave them alone.

If they are changing things on you without letting you know in advance, and you're having issues with them in other areas, move that rental to the other PM.  Having a quality PM is worth every penny.  Their job is to run the day to day operations for you.  If you aren't happy with them, get rid of them.

Make a mental note, and when her lease is up, don't renew it.  If she's making a big stink over something like this, chalk it up to a lesson learned, don't mention a thing, then 30 days, or whatever your law says, before her lease is up, tell her you're not renewing.