Investor Spotlight: 20 Doors in 2 Years with Tom Shallcross

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In two years, BiggerPockets Pro member Tom Shallcross accumulated a 20-plus-unit portfolio. He’s also doing a handful of flips each year… while maintaining his W-2 job. His goal? Developing a smart investment strategy that increases his net worth—and provides security for his family.

Before real estate, I served as vice president of sales for a technology consultancy. I’ve been able to maintain my W-2 job while accumulating a 20-plus unit portfolio over a two-year period—and performing four to eight high-end flips per year.

Real estate investing has opened my eyes to a whole new way to leverage money, increase my net worth, and work in a team environment. I can’t think of another part of my life—except maybe high school football or some actual sport—where your team has such a direct impact on your outcome.

Preferred investing strategy: Buy and hold and fix and flip

Starting funds: $200,000

First deal: Private lending on a small single-family home

Deals to date: 35

Most important part of a deal: It’s not an either/or, but if you make me pick one important element, I choose equity spread. “How can I increase my net worth?” is the question I’m constantly asking.

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The Beginning

I was originally a passive investor for a local flipper. After seeing some of his profits, I wanted to get more active. My research led me to BiggerPockets—which helped me focus on building a small rental portfolio.

I have four kids, and I don’t ever want to have time or money be an obstacle to the life I want to live with them. The money from real estate is important and great, but it’s basically just a tool to create time, experience, and well-being.

Since 2018, I’ve scaled very quickly and accumulated over 20 doors, all leveraging the BRRRR method. We are also on pace to exit seven successful flips in 2020. I’ve been able to do this while maintaining a full-time job and being a present father for my four kids because I’ve developed smart systems. My partner also helps me gain back time.

My Current Plans

My team continues to do four to eight higher-end flips per year, and I now have two virtual assistants working under me to make calls and handle administrative tasks.

While we will continue to flip on the North Side of Chicago, I am no longer interested in single-family home rentals. Instead, I’m looking to scale up into multifamily properties in specific areas. Mark Ainley and I have also started The Straight Up Chicago Investor Podcast. If you enjoy the BiggerPockets podcasts, consider checking us out: We’ve shared several guests. It helps increase my local exposure, too.

How I Evaluate Properties

For flips, I’m always looking at minimum profit numbers. If my minimums are met, I use the 75% rule for both purchase and rehab—for example, a $300,000 purchase requiring $150,000 in rehab needs to sell for $600,000.

I don’t follow the 70% rule because I include the purchase and rehab. Also, these are higher-end properties, so I can still make a good profit at 75%. I also know the area and my process, which mitigates risk.

For rentals, I compare market value, my equity spread and ability to pull out cash, cash flow, and, lastly, the internal rate of return for a conservative, five-year projection.

On an intangible note, I ask, “Is this deal better than 70% of the deals I’ve done?” I also ask, “Will I be happy with this deal in 10 years?”

Deal Diary: A tiny Qualified Opportunity Fund in Chicago

When Tom purchased this three-unit in Chicago’s historic Pullman neighborhood, he leveraged unrealized capital gains from a previous sale to create one of the smallest Qualified Opportunity Funds out there. The key to success—and a 35% IRR? A strong team and decisive action.

Learn how Tom pulled off this impressive deal at BPInsights—available for BiggerPockets Pro members only. Upgrade your account today.

Red Flags

• Area, area, area—a bad area is the biggest red flag.
• Resale “gotchas” are another major red flag. By this, I mean: Can I finish the basement? Is there no garage? Is it on a busy street? Or any number of little one-off gotchas.
• What are the potential rehab pitfalls or ways the budget can run over? I always ask how much this rehab is like any similar projects we’ve done, so I feel more confident in the rehab scope.
• Potential Chicago permit issues can be a red flag. I almost always walk away if we have to add square footage, because it’s such a pain to deal with the city.

How BiggerPockets Helped Me

A Google search led me to the BiggerPockets Forums, and I quickly discovered the podcasts. The number of ways BiggerPockets has helped me is too long to list, but here are a few:

• I bought one of my first rentals off the old marketplace. That rental introduced me to an area where I now own six properties in a one-mile radius.
• Groups, connections, wholesalers, lenders, my current project manager… you name it, I found it here.
• Great advice from the Forums has guided me in so many intangible ways.
• Confidence in my own voice: I’ve realized I can provide value to others.

Advice for Fellow Investors

One of my favorite quotes is by John Assaraf: “If you’re interested, you’ll do what’s convenient. If you’re committed, you’ll do whatever it takes.”

Real estate is sexy, and so many people are attracted to it—but very few are willing to roll up their sleeves, get punched in the mouth, and keep coming back for more. You will be scared, you will tangle with adversity, and you better be ready to counter any of adversity’s punches with your own haymaker.

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.