SEEKING INPUT! Been chasing RE investing and retirement dreams!

[Todd Powell]

Hoping investors with experience can advise me here. Or, any new investor comments or insights are welcome.

My story in a compressed version. I have been managing car dealerships since 27 years old--1995--but have always had a passion in RE. A car wholesaler handed me a book one day, RICH DAD POOR DAD, and I could not put the book down.

Just weeks before 9/11 occurred, I invested into a manufactured home. I ONLY reason I did this was because my brother in law managed a manufactured home dealership. They would take trade ins and figured them for zero, so I saw an opportunity to park the money into their trade ins and they would resale them for me. I did this roughly 12 times, and in 2002 I bought my first fixer upper. I had been looking for distressed properties and could not find a good enough deal. I paid $80,000 for a small 3 bedroom and fixed it up (rather simply when I look back), sold it to one of my salesman and made $27,000. I was hooked!

In those days, I could find some bank owned properties here and there. I knocked on a door and asked a woman, "Hello, this is a strange question, but would you like to sell your home?", and Gail responded, "yes, I would, I have been praying that someone would take this." I am not kidding, I merely saw tall bushes and a home in horrible repair, and I did not research her late payment history with the bank. I made roughly $30,000 on this deal. To speed up here, I found homes anywhere from knocking on doors, networking, realtors, word of mouth, and writing letters. I flipped roughly 20 properties from 2002-2009, while working a full time job and coaching my sons basketball teams. My wife wanted to kill me, but I had a overwhelmingly desire to retire and making this extra income I felt was the way to accomplish this. We paid a lot of short term taxes doing these flips and saved up money so we could invest in RE.

In 2007, I picked up the Sunday paper and my wife and I agreed to go look at a triplex open house. It was a 1900 older building near OSU campus, and needed a bunch of work. I negotiated the price down within the week from the $250,000 asking price down to $190,000 AS IS, and took my first buy, fix and hold deal. We invested roughly $50,000 into rehabbing this and found tenants. My first tenant, however, violated the NO SMOKING policy and ended up burning the front of this building down two years later (another story). My wife and I also bought another 1900 older run down triplex near the OSU campus in 2007, and one more pre foreclosure 4 plex in 2008 in the midst of a bad economy. The appraisal was $300,000 in a very bad economy and the bank wanted to know how I was purchasing this for $228,000.

In 2011, we were lucky enough to get a 15% ownership via a LLC with a buddy of mine who owned many larger apartments in various states. I used my personal home line of credit to buy into this--$202,500--our portion of the 1.35 million down payment. We paid 5.5 million for 72 units near the college campus. I then needed to sell two of our old triplexes, pay taxes, and pay off our house line of credit.

I switched my employment between dealerships in my town in this ship wrecked economy which began in 2008 and cut my paycheck in half in car sales. I ended up taking 2009 though 2016 off without doing any real estate investing other than the 2011 leap with my partner into this 72 unit building. I had seemingly lost my RE passion and only held the old 4 plex we purchased in 2008 and the 15% ownership in the 72 unit building. We cashed flowed roughly $4500 per month on these two investments. Then in 2016, I knocked off the rust since I went dormant for 7 years! I had hit my 401K pretty hard for years, but was realizing that I could not retire without achieving cash flow. My buddy who let us in the 72 units building always laughed that I worked too hard at 2 jobs, as he shared with me how he earns $45,000 cash flow on all his huge apartment buildings. I asked myself, "have I been doing this all backwards?" That is, flipping so many house, and paying those taxes, while my others buy and hold appreciating assets and make cash flow?

So, in 2016, I set my sights on making some more money invest into the bigger picture of cash flow, and buy and hold. Here were my steps:

1) flipped a 1920 bank foreclosure

2) flipped a second 1915 bank foreclosure (sat for 4 years vacant).

3) Bought a 4 plex that needed $100K in renovations. owner carry.

4) wholesale flipped little house (guy called me from 9 years ago after I stopped by his house).

5) Bought a 4 plex near the other one that needed $120,000 in renovations (sat vacant for 13 years.) owner carry.

6) Bought 2000 square foot house on owner carry roughly $50,000 below market. Breaking even, but bought for equity.

7) Bought a run down 4 plex on owner carry.

8) wholesale flipped older house for $7000 profit.

9) Bought 5 plex 50/50 with my son. First ever commercial loan.

10) Bought 8 plex 50/50 with my son. Second commercial loan.

Due to all of this, I have my interest only debt down from $500,000 to $421,000. This interest only is roughly is $1650 per month. I used my personal home on all of this fix ups and down payments. I have 13 years left of 15 year draw period interest only.

Let's say no vacancies I am cash flowing roughly $14,000 per month on all these RE deals.

What is your opinion here? Do I focus on paying down this HELOC, or try and leverage into bigger apartment building to achieve cash flow? I have these units in Corvallis, Lebanon, Albany, Monmouth, and Forest Grove, so consolidating could be smart, or do I just pay these down?

I am curious on what your thoughts are and I appreciate you reading this long post. I am 51 years old and trying to make future decisions on what is the best course of action. I feel a downturn in the economy approaching, and flipping seems near impossible at the moment finding deals.

At 51 years old, I am thinking hard about my next steps and want to make the right moves!

Thanks for reading and any input you can give to me, as this forum is full of many diverse RE minds!

Cheers,

Todd Powell

Corvallis, Oregon