Scaling with an 8plex and a $2m vacation rental

[Brooke Jackson]

I started in real estate investing 10 years ago when I bought my first duplex in Lehi Utah. At the time, lehi will still farm county but was starting to grow. I was living in Brazil at the time and my husband and I were expecting our first child. I wanted to move back to Utah so I started looking for areas that I wanted to buy a house. I started calling the city building and planning committees in a few counties as well as researched the potential growth in the area in the next 5 years. Lehi had great promise and was expected to triple in size within the next several years due to a technology/ busines boom (Lehi is now referred to as Silicon Slopes in the Tech industry). I decided that I wanted to buy in the area and I found an ugly under valued house that had a basement apartment that I could fix up and house hack.

With an FHA loan I was able to buy it for $167k and $10k down. The house was 4000 sqft and had 7 bedrooms/ 4 bathrooms with 2 kitchens and .33 acres.

I lived in the home for 1 year while renting out the basement. I then moved into my friend's parent's vacation townhome for $600 and rented out my entire house. My mortgage payment was $900. I was receiving $1350 from my basement renters and $1650 from my upstairs renters.

I kept this rental for 10 years and was a landlord to over 25 individuals. There were several maintenance issues that seemed to happen only on holidays including a burst house on the washer unit that flooded my basement on Halloween night. I went over at 7:00pm, in my Halloween costume and pulled the carpet, mopped the floor, got fans installed and apologized to the tenants.

Another incident was when I received a phone call from one of my tenants letting me know that the SWAT Team had busted through the front door, hand cuffed everyone (I had an older couple living upstairs and 4 guys renting downstairs) and started a thorough search though the house. This included busting down 2 of the 3 tenants doors to their private rooms as well as ransacking the tiles in the ceiling. The ploice had gone undercover and identified one of my tenants as someone who was dealing meth and contacted the SWAT Team to get him. Unfortunately, he was the only one not home. After a high speed chase, they finally caught him and he's currently in the local prison.

This indecent cost me several thousand dollars in repairs as well as all of my tenants breaking contract and moving out.

I continued renting, however with better back ground checks this time around and found new tenants. I continued to cash flow and things were great. During this time I had moved 45 min away and had 5 kids under 6. Landlording was becoming more difficult with my big family and I decided to sell.

Over the life of the property, including the sale, I made over $500k with only a $10k investment. I was amazed but a little burned out.

I bought a business called snackperk.com in April 2019 that was very successful and with the proceeds I wanted to open a local burger/ice cream restaurant for fun. In March 2020, Covid hit and my business suffered greatly. I decided to jump back into residential real estate and started talking to my friends who were involved in investing. One friend recommended that I listen to Bigger Pockets and I became even more excited.

One friend had 40 properties free and clear in Indianapolis so I flew out to see what he was doing. He forwarded me all of his leads from his whole sellers and I found a property that I was interested in. I made a cash offer in the airport the next day on my way home back to Utah. We closed 2 weeks later and I was pumped. Soon after I found another house on the same street and bought it sight unseen.

I put together a team out in Indianapolis and cleaned up both properties. The second one I put back in the market for a quick flip and the second one is a gut-to-the studs rehab that I'm using hard money to rehab then I'll refinance.

During that time I found a mountain home just 15 min from my home that fit all the criteria that I was looking for. Ugly, outdated and undervalued. It was listed for $437k. I offered $380k but they wanted to wait fit a better offer. It stayed on the market for several weeks. I reached out again and offered $380k. I didn't want to go above that number. They asked if I'd do $385k. I almost said no, but decided to see if I could do anything on the agent commissions side to stick with my $380k offer. I called several agents and finally found one that would give me 75% backpay on their commissions if I had them represent me. Deal! At $380k the sellers negotiated a 4.5% commission, 2% for the listing agent and 2.5% for the buyers agent. A total commission of $17,100 ($7600 to the listing agent and $9500 to the buyers agent. $7125 will come back to me for listing with my agent that is giving me a 75% payback once closing happens. This brings my actual purchase price to $377,825. Which is below my $380k offer!

The property was just appraised for $400k and I'm going to use the extra equity as part of the down payment on the conventional loan. Im planning on putting in $150k to rehab the property in which it will bring the ARV up to $650k. This will give me $100k of instant equity. I can also rent the unit as a vacation home (close to a golf course, utah lake, hunting, fishing, skiing etc.). Market value supports monthly rents to vary from $6000- 12k per month depending on occupancy and season.

I am now looking at 2 new deals. One is a $2.1m home that is listed for $1.5m (distressed owners) . The other is a 16 unit (8 duplexes) that I could get with sellers financing. Each property has potential of bringing in rents of $15k-40k per month.

This amount of scaling is new territory for me and I'd love some advice! My plan is to continue to scale. I'd like to buy a multi family with 50-100 units and buy over seas as well. I have some areas in Brazil that look promising and I've also considered Switzerland.

I love connecting with fellow investors and partnering on deals. Im looking for experienced investors that can give me some advice on these two new opportunities and I'd love to share my knowledge with others!