Path to financial freedom

[Robert Gibbons]

Hi all, I am looking for stories and motivation on how you become financially independent through scaling your real estate business. I personally own a few rentals, some short and long term. I am still working a 9-5 and am having difficulty scaling my real estate portfolio

Thank you

[Albert Bui]

Quote from @Robert Gibbons:

Hi all, I am looking for stories and motivation on how you become financially independent through scaling your real estate business. I personally own a few rentals, some short and long term. I am still working a 9-5 and am having difficulty scaling my real estate portfolio

Thank you

 The journey is not just for "our clients," the story is mine as well and I realized early on to scale you need either to start out with lots of capital which I didnt have, a very high active/earned job/income (I did have decent income), or create lots of value in the projects I partook in.

Since option 1 was out of the question. I began saving for my 25% down for fourplexes and decided it was the route I was going to take till I could master 2-4 unit properties (less chance of vacancy when you have multiple units versus 1 unit value add projects).

It wasnt till the 7-8th 2-4 unit property where I realized I was ready to use commercial financing and deal with 5+ unit multi-family. Like all pod casters and guru's say, I wish I would have done it sooner (gone to 5+ MFR). It is true I believe but one must overcome their personal fears to make this leap and for me it took me till that 7-8th property to make the leap.

The basic game plan is to create 133% value over cost basis (acquisition cost + rehab) so that means you gotta find a deal where all in you're at 75% of future value or said inversely you're 133% value over your project at 100% cost. Why did I want this? Because I knew at this point most lenders would take out my cost portion of the project through a refinance loan (cash out or rate term).

This was before BRRR was popular in 2013-2014 so I just called this an "infinite return," deal because in theory if I could get all my original capital out of the deal through a post rehab refinance I would have an infinite return (income /zero capital left in the deal = infinite).

My other guideline was that after my refinance I would need to cashflow a specific amount as well to ensure I dont end up with a project that slows me down or reduces my momentum. So typically I would required 200 per unit of post refinance cashflow  (fourplex = 4 X 200 = min 800 cashflow or more the better of course).

These days the guidelines have changed a bit to adjust for the ever evolving market.

Hope those two guidelines or underwriting criteria help you in your journey.

@Matthew Kwan

@Carlos Valencia