In September of 2012, I officially moved from Australia to the US in pursuit of my dream of becoming a successful full time property investor.
I touched down in Missouri and over the course of the next six months I was very busy exploring the different opportunities that the Kansas City market had to offer. This was the same time that I fell in love with a particular block on College Ave.
How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties
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The Block I Wanted to Buy
The block consisted of 25 two bedroom, one bathroom homes. These simple properties were obviously constructed by the same builder and the only thing that set them apart from one another was the exterior paint. The houses sitting on the west side of College Ave.
had the back of their lots facing a park that included a bike trail as well as a basketball court. Although the street was not located in the best part of Kansas City, I still considered it very manageable and rated it as a C class neighborhood.
I pictured myself buying and holding the entire block of these cookie-cutter homes and going door to door on the 1st of the each month to collect the rents, all in one clean sweep.
Although I was very busy working on other projects and had most of my personal funds tied up elsewhere. The opportunity to purchase my first property on College Ave came when a local wholesaler presented the deal to me.
My First House There
I decided that it was worth the shot and reached out to my good friend and fellow investor from Europe. I offered him a joint venture as I knew that he always wanted to enter the US Real Estate market.
The wholesale property was very run down and needed a complete internal and external overhaul. The only two things in decent condition on this home where the roof and the foundation.
The property was offered at $15,000, which in my opinion was a reasonable price for the area and the condition it was in, yet wanting to make sure that there was a large enough margin of safety, I decided to test the waters with a low ball offer of $5,000. As you can imagine– the offer was not accepted.
After a few weeks, the wholesalers closing date was approaching and he was under pressure to perform and offload the deal. We exchanged two phone calls with me advising him that the best I can do is throw another $500 towards the property.
To my surprise he came back and said, “We have a deal, if you can close tomorrow”.
I closed the next day and had full intentions of completing the renovation within a couple of weeks. Unfortunately, this did not come to fruition as I had higher priority commitments on other projects that I was a partner in. I also considered it to be unfair and selfish to take the renovation crews from these deals and send them to work on my personal investment.
A lengthy three months had gone by and the “Ugly House” was still sitting vacant and un-renovated. My friend and joint venture partner had another potential deal in the works and inquired if I could sell the property.
I agreed, as my circumstances had also changed and I had bigger dreams in mind other than owning the block on College Ave. We mutually decided that the best way to move forward would be to sell the property for whatever we can get as long as it was above the price we paid.
What Ended Up Happening
I have never in my Real Estate career attempted to sell an un-renovated property, and this was definitely the first.
At the same time I wanted to sell this property, all of the marketing efforts conducted by our group were targeted only for investors that were interested in buying renovated turnkey rentals. By listing the property through our usual marketing channels and offering to existing investors, would be contradicting our brand and company values.
In my opinion, Real Estate is a numbers game and I strongly believe that if you work those numbers everyday, doors will open and you will eventually get what you want. My personal assistant and myself had no other choice but to relentlessly list this “Ugly House” on Craigslist, Postlets, Facebook groups, LinkedIn, and…. We even tried selling it to my Mum (haha).
After six weeks of being ridiculed and laughed at by other investors for advertising such an “Ugly House” and after reducing the initial listing price of $12,000. We received a call from a gentleman responding to one of our Craigslist ads, saying that he knows the area well and has seen the price reduction. He wanted to know if someone could meet him at the property right away, as he called us while standing right in front of the house.
At first I was very skeptical as ten days prior, I had a gentleman’s agreement with an individual that guaranteed to close on the property immediately, but to my misfortune, he proved to be non genuine and the deal fell through.
I decided to question the prospect buyer if he indeed was genuine and how quickly could he perform. He told me that he grew up in a street around the corner, and that his mothers long term wish was for him to become a full time Real Estate investor.
You can’t go against a mothers will I guess ?
I drove to the property and let him in, after a brief two minute walk through… He said, “I’ll take it!”.
As the saying goes “One man’s trash is another man’s gold”.
I tried to respond but was lost for words. It took me a good ten seconds to recall my trusted title companies name and contact details. After providing the details to the buyer, he immediately called the title company and arranged a time for closing the very next day at 10 a.m. Once again, to my surprise the investor showed up at closing with a certified check for $10,000 and the deal was done within ten minutes.
This was by far the most unusual buyer/deal that I have ever been involved in. But on the flip side ended up being one of my most smoothest and quickest transactions.
Put your head down, and don’t pay to much attention to the negativity that others throw your way. Work hard, work smart and be persistent when committing to the numbers.
Your time will come.