April 19, 2024
2BR, 2.5BA Condo - Former Primary
3BR, 2.5BA Home - Primary
1BR, 1BA Guest Studio, attached to Primary
2BR, 1BA SFR - MI
3BR, 1BA SFR - PA
5BR, 2BA MF (2 units) - PA

Let me preface this by saying there are far more impressive stories than mine. This isn't designed to be anything other than informative and/or inspirational to anyone on the fence about investing in real estate.

April 19, 2023 my wife and I officially moved into our current primary residence. A lot has happened since that time and I wanted to share my experience in case it helps anyone else. We self manage the STR, all other properties are managed by a property manager. The best advice I can give is pull the trigger on something that makes sense to you and learn from it. After that, be patient and repeat the process when you can.

The condo we moved out of got a remodel. New LVP flooring upstairs to replace all the carpet, new cabinets and countertops in the 2.5 bathrooms, new fiberglass shower in the guest bathroom, new walk in shower (tiled) in the master bathroom, next lights/sinks/faucets/toilets/etc in all bathrooms, new paint on kitchen cabinets, new pulls on kitchen cabinets, new ceiling fans throughout, and fresh paint throughout. This project took about 4 months to complete and we have had it rented out since the middle of Sept. $550 monthly cash flow after PITI+HOA.

Our primary residence has a guest house and we have that listed on AirBnB/VRBO. We allow single night stays since we are competing with hotel/motel rooms given our property is a 1BR/1BA (no kitchen or laundry). We averaged $1700/month in revenue over the first 6 months, 85% occupancy, and clean the unit ourselves.

In October, we closed on a SFH in MI. I have been attracted to this area of MI since I started exploring real estate and it seemed to provide an opportunity for us to get in the game with out of state rentals without spending a ton of coin. I connected with a realtor through Bigger Pockets and they helped me navigate the area based on what I was looking for. It took some time, about 5 months, to get it rented out, but the property is currently occupied. $150 monthly cash flow after PITI. We thought it would do between $300 & $400 per month, so that didn't go exactly as planned as we needed to drop the rental amount over time. Live and learn.

In November/December, we closed on two properties in PA to flip for extra cash. I connected with some folks from the area via Bigger Pockets to get started on this. There have been some setbacks, but we are still moving forward. For the first property, we pivoted to a fix and hold strategy and the property was completed this week and is currently listed for rent. We estimate $200 monthly cash flow after PITI. The refinance will get our down payment back, along with the current mortgage and renovation loan paid off. We had to put in more than expected, so we decided to keep the property and get our "profit" through appreciation over time rather than flipping it. The 2nd property is still being renovated so nothing to update/add on that one. We aren't going to purchase any new properties this year. The plan is to complete the 2nd property in PA, stabilize our finances and portfolio, pay down the HELOC, and build our cash balances back up.

The timeline and time frame to reach my goals has changed a bit over the first year. Initially, I wanted to scale quickly and get out of my W2 within 5 years. However, I learned quickly that this plan could put me in too much risk, or more than I want to take on. Going forward, my plan is to add 3 doors per year for 10 years. Once that is completed, I will determine if I want to refinance the properties at their 10 year mark and continue to grow my portfolio, or start paying off balances and increase my cash flow for retirement. I will likely keep growing the portfolio and partner with my kids on deals to accelerate their path to wealth and financial freedom as well.

I plan to continue targeting value add properties around the country for chances to grow my portfolio. My initial target was cash flow, now I am looking to build equity and "break even" on cash flow right now. As long as my total portfolio is cash flow positive and contributing to my ability to accumulate property, I'm happy. I imagine my goals or target properties will continue to evolve over time. At some point, I plan to list my entire current primary residence as an STR and move into another primary. That will likely accelerate my revenue fairly well and provide more opportunity to accumulate properties.

There are a few other people on BP I want to connect with on deals, so I am working on building my cash balances to make that happen. I’m in the buy, fix, and hold camp for my strategy right now. It hasn’t been perfect, but looking back, it has been worth it. Definitely some stress along the way and some conversations about how to move forward. But I know each year that passes will get us closer to where we want to be. My job has a guaranteed retirement benefit, my wife’s job does not. The eventual income from real estate will supplement our retirement and SS so we can do the things we want to do with our time.

The best part is our kids will be in a much better place financially due to this and it can change our family tree forever.

Funding:
HELOC on Condo
W2 Jobs
LightStream

Estimated Equity:
4/18/2023 - $165k
4/19/2024 - $207k

Estimated Value of Assets:
4/18/2023 - $232k
4/19/2024 - $1M

Nothing wildly impressive for equity growth, but if our portfolio property values average 3% growth annually, we are getting $30k in appreciation instead of $7k. So, our equity went up 25%, but our annual appreciation potential went up 428%.

I’ll do my best to answer any questions if you have any. Hopefully this gives someone the information or inspiration they need to make a decision and go for it. I can’t wait to see what years 5 and 10 look like!

Denis Ponder

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