28 deals in 3 years?! How?!?!?

Question

On podcast 78, they talked about how she bought 28 doors in 3 years. I am having enough trouble saving up enough money for one downpayment. I am just wondering how on earth you can save enough money for a down payment, as well as enough reserve for EACH property in case something major went wrong, all within such a short time frame. I know it is real tough to do that in my area (Northeast New Jersey), but we have ties in Buffalo, NY, so we are looking to start up there.

Am I alone?!

Farshad

Midland Park

Bergen County, NJ

Am I alone?!

Farshad

Midland Park

Bergen County, NJ

Casey Cuppy · Answer

@Aaron Montague great advice. I always tell all of my clients to write down their goals. We would all love to buy 20 or 30 properties in a few years but as they say "Rome wasn't built in a day." It takes time and patience. I love the ambition and hustle.  Just write down your goals, make a plan, and keep working towards those goals.

I am currently reading "The Way of the Seal" By Mark Divine and it is a great read involving business and planning as well as personal development.

Anthony Gayden · Answer

@Farshad Mansouri  I think the real thing you need to ask yourself is do you really need to move at that fast of a pace?

I have never believed that I needed to buy as many properties in as short a time period as possible in order to be successful. That is very flawed thinking. My plan has been to purchase 1 property per year, then use the income from that property along with whatever else I was already saving, to help me save for the down payment on the next property.

When you look at people who expanded very quickly, often you are looking at people who are using a lot of leverage. For some people it works out well, for others, it can be ruinous.

Ask yourself, would you rather have one property, that gives you $500 a month in cash flow, or five properties that give you only $100 a month in cash flow. I know it isn't as easy bragging that you own one or two rental properties, while the other guy is saying that he owns 10, but I could care less about bragging rights, this is about money.

Jonathan Twombly · Answer

If you are in Northern NJ, I would look into Albany, NY.  It's a lot closer than Buffalo, and it has a lot going for it.  State government, which will never go away; hospital hub; education hub, with the state university schools there; and the new nano tech hub nearby.  Albany actually began to increase its population again, according to the most recent census, after decades of decline.  I don't think that Buffalo has halted its population decline yet.  The state of New York is trying to make Albany the Austin for nano tech.  Whether that works or not remains to be seen, but there is concerted governmental effort and private investment to make something happen there.  And, the best thing is that properties are affordable there.  You can buy in nice neighborhoods for less than $200,000 -- duplexes and triplexes.  There is a fair amount of gentrification going on in parts of Albany as well, since a lot of it looks just like Brooklyn.  There are really bad parts to avoid as well. but once you go up and look around, you'll quickly figure out what's what.  Also, I know people who have made a lot of money in Troy real estate.  It's rougher than Albany, but the entry price is good.  And, it's much closer to northern New Jersey.

Mike H. · Answer

Well. Here is how I got to 29 rental properties (all SFHs) in about 7 years.

Opened up a HELOC from my primary residence of 43k.

Then use that money as my reserves to qualify for hard money loans and the conventional refi's out of the hard money loans after the homes were rehabbed and rented.

As long as you can find the deals so you're all in at 70% LTV, then you should be able to limit your out of pocket quite a bit. Basically, you are only coming out of pocket the lender's points.

It helped, that when I first started, I was able to stay at 60 to 65% LTV (started buying right when I saw the market crashing). That let me roll in the lender's points on the loans as well. I was literally doing no money down deals.

I also switched jobs about 2 years ago and was able to pull out a chunk of 55k from my 401k.   I leveraged that money to go on a run of 12 houses in the last 15 months - 10 of those in the last 8 months. I paid a little more than I normally would on a couple of those deals just to add some really nice houses and continue to grow.

But there was nothing special about what I did. And I did not have a big chunk of money to start with. So if someone like me can do it, anybody can. Just need that first piece of equity from your primary residence and then you need to really cherry pick the deals to the nth degree.    Going over the rehab budget was not an option.

At some point, the rental income starts coming in though and then it becomes a self-fulfilling business. Thats when things get really fun......

Like anything else. Start small and pick a pace you're comfortable with (1 a year, 2 year, etc). You'll be surprised how easy things get over time to grow that. I was at 3 houses a year like clockwork for 3 years. And then I went on this crazy run to pick up 10 houses in 7 to 8 months.

Aaron Montague · Answer

@Farshad Mansouri

This is the quandary most new investors face.  How do I get all of the money I need to do everything I want?

The first thing you need to do is write down what you want to do.  Real Estate is a percentage game.  10% Cash on Cash return on ten 10k deals is the same as 10% CoC on one 100k deal.  Do you want to own SFH? Would you prefer large apartment buildings (100+ doors)?

Or are you just trying to get started somewhere?  Buffalo is cheap and you have connections there, it is a good place to start looking.  What kind of money are you going to have to spend to get into your desired building type and area?

Once you have a good idea on how you are going to get into the market, you'll have a solid idea on what it is going to cost you to buy.  25% down is a good place to start.  I generally like to have $5500 in reserves at all times in case a furnace breaks.

Closing costs on conventional financing is going to run ~$5000.  Buying a 100k place in Buffalo is going to cost you about $35,000 in cash.  25k down, 5k closing and 5k for reserve.  Now you need to find out how you are going to get that money.

This is where it gets fun.  But I'd start with finding your target buildings and areas before you get into different types of financing.

Bruce L. · Answer

we do help a oversea clients to manage couple of his investment properties. however, this deal was referred via a friend.

On the opposite of the equation, how would you go find the right people to manage your properties? is there any must have attributes? anything needs attention in particular?

What about looking for good deals on properties. Being remote, first thing is how do you find the right real estate agent, can you trust everything you see on pictures? do you find the properties first? or you find your team first?

Michael Sherwood · Answer

@Helen Kolton

Honestly, having a dependable property manager and real estate agent is key. In many cases you can profitably invest in another market when you are not in when you 'hire' the right people. We help many out of town investors do this. One of the most important thing we provide to our clients is knowing what areas to invest and what areas not to. We can also help determine the best fit for someone based on their risk profile. Is rate of return important ? are you willing to take risks? well the locations we would suggest would be different for someone that is more conservative. I hope that helps.

Mike

Helen Kolton · Answer

Hi everyone, great posts.

I live in NJ and the market is tough...i like Buffalo but do not know anything about it. How do you invest in the out of town market?  I have no time to research nor go there myself and get to know the area.  Please advise.  Thank you

@Michael Sherwood

@Aaron Montague

Tyler Smiarowski · Answer

Here are some of the ways I have bought my properties:

Buy  on Contract

Get a 1st mortgage and have seller carry a 2nd

Develop relationships with portfolio lenders in your area

Buy a multi unit building and live in 1 of the units.

Below is what I currently own, not alot but plugging along:

- 6 rentals (23 units) total about $11,539 out of pocket to obtain ownership

- 1 flip currenlty I am working on (zero out of pocket, closed on the home and the portfolio lender loaned me 10k at closing, they based the loan amount on ARV..so since I bought at a good price I had no out of pocket expenses...pretty cool. ) Paid 53k...ARV is 100k..so they loaned me 63k at closing.

- 1 Personal residence...actually got a check for $900 at closing.

Ana Nomys · Answer

@Farshad Mansouri

Hope you had a chance to watch last nights webinar.... Great info.   There are many ways to fund deals with little or no cash. Are they easy ? No!  Does it require a lot of education and determination? Yes! .... BP is about education and sharing in my opinion. Successful REI is about taking a step forward everyday. Education is definitely a step in the right direction...

28 deals in 3 years?! How?!?!?

Most Popular Reply