From 0 to 5 properties in 11 months (really, it took 3 years)

[Matt Aquino]

I wanted to share my personal "getting started" story with the Bigger Pockets universe.  My intention with sharing is to help provide another point of perspective to those who are on the sideline hoping to jump into the game but don't yet know how. Also my intention is to connect and attract advice from others who have traveled the paths which I am hoping to bestow upon next. 

The headlines for these type of stories, always say things like "0 to 5 properties in 11 months". But in reality, at least for me, that 11 month "over night" start-up in REI took about 3 years of build-up.

At first the build-up was an intentional education period. Reading books and getting into the mindset. Listening to the bigger pockets podcast every single day during my commute to the office. Perfecting my spreadsheet and analysis. Getting to know the numbers, looking through other people's deals. 

Then the education became more specific .. what is my investment approach, getting my budget and cash in order, what markets and type of properties to target.  This phase involved a lot of conversations with friends of friends/family who were actively doing it as landlords. I was talking to anyone and everyone, just putting the word out there of what I'm trying to do.  And it attracted tons of advice and education. 

After about 6-8 months of pretty intense education, networking, and thinking about REI daily. I was ready to attack. I felt confident, educated, and well positioned mentally & financially to acquire a property.

I spent my 30 minutes a day looking for deals in my area (Northern NJ). MLS, zillow, auction.com.

But I couldn't find any deals to cash flow and/or fit the 1% rule.  I remembered the advice of many, "stick to your numbers, stay patient".  So I did, and months passed by.  Performed analysis on close to 75 properties which came close to cash flowing. Went to see and perform another level of diligence on about 20 of those. And probably made about 5-7 offers. Most of them were at least 10% under asking. But on about 3 of them I went aggressively after it and was outbid. 

Frustration started to settle in. I started to wonder how can I change my approach? I wondered.. do I need to find a better pipeline of off-market deals? that must be where all these investors/developers are snatching things up. Should I just start playing the volume game and making many many more offers? I didn't have the time and that felt like it'd lead me getting into a deal just for the sake of it. Do I have to go out-of-state? NJ is such an expensive housing market and almost never shows up on the list of top REI states. I continued networking and asked these questions of everyone.

I eventually decided to change the market I was searching in.  Thinking I would go out to PA where properties & taxes were much cheaper. I really wanted to be within a 2 hour drive to ensure I was intimately familiar with my first investment. I wanted to be able to meet the tenants, see the house, be there for inspection, do some basic maintenance work myself. 

As I expanded my search area and as part of my networking came across an agent and fellow investor who suggested looking in Northwest NJ. Where the 1% rule was found for duplexes listed on the MLS and the competition for properties was not anything near what I was experiencing in the areas 45 minutes outside NYC.

We took a trip and saw 5 properties.  And make strong offers on 3 of the 5.  And low and behold, ended up purchasing all three duplexes at once!!   And all three offers were accepted !!

Finally a break through, closing 3 properties at once for a newbie! (attorney thought I was crazy).  But it was the few years of trail-and-error before this that lead me to having the confidence and education to pull that off. 

I hired a property manager to help navigate the new world of being a landlord (with a full-time demanding job that is about 100 minute+ drive away from the properties).  The early months, it felt like something major was breaking every single month in one or multiple of the houses.  The duplexes are older (built in 1920's or earlier) and prior landlords treated them as the C grade type properties that they were.  Quite honestly, it still feels like there is far too much maintenance eating away at the cash flow.  Luckily the tenants have been good, mostly all paying on time, no turnover. So just have to get a handle on somehow slowing down the maintenance bills. 

Next up, I was a renter and decided we were going to purchase our primary residence.  I always wanted to house hack by getting a property which was a separate "mother-daughter" suite type of situation. Again patience was tested as this also took more than 18 months (actually started the process well before closing on the above mentioned investment properties).  

Then one day, during one of the hottest residential markets ever experienced, we landed a house in the exact location we wanted which had a separate detached carriage house and renter in place. And property #4 (rental unit 7) was acquired ! 

Lastly now I'm trying to leverage my time and money into the larger multi-family assets and syndication world. Spent a bunch more months educating about that world, networking with people, phone calls, webinars, books, etc. etc.  And finally found a sponsor and deal I liked and will be getting into our first syndication deal.  My hope is to become intimate with the syndication process from the LP side first. Invest in a few deals and build relationships to eventually be in a position to co-GP a deal in the future.   My hope is that actually to pivot a career into that space, leaving the 9-5 world. 

That is the my story for now. 

If you take anything away (as a newbie), its that patience is truly needed and while even making peace with that, it may still be tested. Always continue to educate so that when the opportunity comes you'll be fully confident and have resources/network ready to call upon. 

I'd be happy to engage with anyone who is interested in more of the details above. Or simply connecting to chat. One thing I love about the REI world is that everyone is very eager to help and chat with each other. Very different than my industry for full-time profession.

Matt