So you’ve studied BiggerPockets articles late into the night, joined your local real estate club, analyzed numbers, found that just right property, and closed the deal. Now you’re officially a real estate investor. Congrats!
…but now what?
If you’re wondering how to keep that momentum going, to continue scaling your business, to take the steps from “property owner” to “empire builder,” you’ll want to hear what investor Brandon Schlichter has to say.
In two short years, he’s been able to buy and rehab a total of 13 properties, consisting of 18 units in his area, largely using the BRRRR strategy (Buy, Rehab, Rent, Refinance, Repeat) Brandon Turner describes in length here.
He’s quit his day job managing websites to become a full time investor. Today, with $550k invested, he sees a total of $6,250 in monthly cash flow — but he doesn’t plan on sitting back and enjoying his fast-reached success anytime soon. With the ambitious goal of acquiring 50 units by the end of the year, Brandon is still busy adding doors…
Which is why we’re grateful he took the time to sit down with us and talk a little bit about starting out, scaling his business, finding great deals, and self-managing properties.
Any questions for Brandon not covered in this interview? Be sure to leave them in the comments section below!
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One of the biggest struggles that many new investors have is in coming up with the money to purchase their first real estate properties. Well, BiggerPockets can help with that too. The Book on Investing in Real Estate with No (and Low) Money Down can give you the tools you need to get started in real estate, even if you don’t have tons of cash lying around.
A Conversation With Buy & Hold Investor Brandon Schlichter
In many ways, Brandon’s start in real estate was part of a natural progression. Growing up in a family that lived paycheck to paycheck, he craved the freedom that a stable financial situation could provide.
“When I turned 18 my dad had a heart attack and I started to work at a warehouse to help my mom out financially,” he recalls. “After 3 years I got my license as an agent and started working with all types of people — businessmen, middle class, people who really couldn’t afford to own a house. I quickly realized that people who were wealthy had a different mindset and I decided I wanted to be more like them.”
With that realization, he followed a path that led him to convince investors to partner with him to buy, rehab and rent properties in Central Ohio starting in 2013. This partnership’s focus is to look for underpriced property that needs rehab work — oftentimes property overlooked by other investors who don’t want to deal with rehabs or want easier deals. Brandon develops plans to bring the property’s condition to a marketable level and make sure the deal makes sense to bring on.
“On average we’ve spent $30,000 per unit with a resulting market value of $47,000 per unit. Our average cash return rate is also quite good and we are hitting most of our earning goals,” he says.
Scaling a Real Estate Business
At this point, I have to ask: How have you been able to scale your business so quickly?
“It’s easy to grow a business when you have people throwing money at you,” he replies, (half) joking. “On a more serious note, prior to meeting investors, I had spent 2008-2013 building an iron-clad investment plan when the time came. For me, building a good picture of the process not only helped me plan, but made it easier for investors to realize I wasn’t just some guy off the street begging for their hard earned money.”
Brandon’s emphasis on methodical planning, patience and reputation-building reemerge throughout our conversation, and it becomes evident that while his journey may appear to be a quick, even easy, rise to success, it has been preluded by years of dedication to learning, networking and old fashioned hard work. When asked what advice he’d give to newbies, he states:
“Make the decision that no matter what happens in the next 1, 3, 5, 10 years that you’re gonna get it done. Real estate isn’t a get-rich-quick scheme, it’s a get-rich-slow-but-almost-guaranteed scheme. As an agent I’ve worked with many amazing individuals who received property from parents and grandparents.”
He continues, “At some point, a prior generation made a sacrifice to put money into a property that would build value that they may never see. This was truly long-term planning and their children or grandchildren reaped amazing rewards. If you as a potential investor can calm yourself down and get to the point you’re thinking long-term, I think that your success is almost assured.”
Finding Great Deals
So what about the specifics? How do you find the great deals out there to get your foot in the door? Brandon isn’t sure if there’s any specific method to finding great deals. Rather, he emphasizes that it’s more about getting out and trying every possible method — and being consistent and dedicated to making it work.
“Last year I bought other people’s flips, REOs, un-listed REOs, foreclosure auctions, FSBOs and estate deals,” he recounts. “The returns were all great, but I also made many offers and even had sellers get furious with me when I made a low-ball offer. Eventually something you do will stick and you’ll make money.”
Has Brandon run into any issues using the trusty BRRRR method? He cites problems with bank lending during the “refinancing” step as a major hurdle to further building his business. Virtually all banks have wanted to see 2 years of cash flow, while Brandon and his partners only have about a 1.5 year track record.
“I want to keep my rehab team busy so I might just bite the bullet and get some hard money loans to buy more properties this year,” he explains. “I’m seeing some decent local appreciation, so getting in right now might be more advantageous even with high interest loans.”
While Brandon doesn’t work on his own rehabs, he collaborates in close association with his rehab team and feels comfortable hiring the jobs out because he’s finally found people he knows he can trust. Once past that first hurdle of finding the right folks for the job, he’s a big believer in outsourcing the work that’s not the best use of his time.
“A few years back I read BP member MikeOH’s book One Minute to Rental Property Riches. It was a really great book, but it always struck me as odd that he (and many like him) did a good deal of the renovation and ongoing maintenance,” he says. “I’m much more of a fan of doing what you’re good at, and for me it’s running spreadsheets and forecasting income and expenses. Not unclogging toilets and walking on roofs.”
So if not unclogging toilets, how does Brandon spend his days? Heavily analyzing properties? Dealing with a flood of tenant complaints? You might be surprised. When I asked what a day in the life of Brandon Schlichter looked like, he replied:
“Don’t tell my wife, but I really don’t do much of anything. Around the first of the month, I’m pretty busy collecting rents, but after the first few days the rest of the month is spent sitting in front of a computer doing research on funding and other options. Sadly a lot of my time is spent playing the ‘hurry up and wait’ game with regard to banks, thus why I’ve said to some BP members that I think I can manage 100 or so properties myself. My average hours-per-property spent in management is extraordinarily low. The real time expense was all done years ago when I was showing houses to clients and learning how real estate all worked.”
When he finds himself with a free afternoon — of which there are quite a few, he adds — you can probably find him at the park playing with his kids. Not bad.
Remembering to Give Back
So where does his journey go from here? When I asked Brandon where he’d like to be ten years from today, he assured me that he’ll still be climbing the slow-and-steady real estate hill, building a bigger and better portfolio.
“I read a story about a man who formed a REIT and eventually turned it into a non-profit that used rental earnings to help troubled youth in really bad neighborhoods,” he explained. “I’d love to have that kind of setup one day where my rental business is completely outsourced and I’m able to use my time, knowledge and cash to help people to change.”
Well, it’s not hard to wish him the best of luck on that one!
What would you like to hear Brandon elaborate on? Which parts of his discussion struck a chord with you?
Leave your comments below!