How I built a portfolio of 35 rentals and $10k+ monthly cash flow

[Anton Ivanov]

Hey Everyone!

BiggerPockets has been invaluable to my success as a real estate investor, so I just wanted to share what's possible with real estate if you set goals and follow through with your plan.

A Little Backstory

I am currently 31, married, no kids, living in San Diego and working as a senior front-end engineer + running a real estate startup on the side.

My portfolio consists of 35 total units, mostly 4-plexes, with a duplex and some SFRs sprinkled here and there. 3 units in San Diego, 1 in Atlanta, 3 in Birmingham, 28 in Kansas City.

My units cash flow between $250-$350/door and the total cash flow of the portfolio is about $10-11k/month (accounting for vacancies as well). My average COC return at purchase is about 15% and long-term IRR is 20%+.

All properties are financed. The only financing I have ever used was VA loans, conventional loans (as many as they would let me) and later commercial financing on multi-family properties. Never had any partners (besides my wife), never did syndicate deals, no seller financing, no other creative financing.

How did I get here? Here are the important parts:

• Joined the US Navy out of high school, active duty (Fire Controlman). Served most of the time in Japan.
• Both parents passed away in 2008-2010. I was left with a single condo where they lived. At first, I was going to sell it, but decided to rent it out through a local property manager (I was in Japan at the time). Cash flow was terrible, so that didn't really give me much encouragement to pursue real estate at the time..
• 2013: Left the Navy, moved back to San Diego, got a regular job (electronics technician at first). Decided to give real estate another shot. After about 6 months of searching, found a duplex that needed a good amount of work in a B- area. Moved in one of the units with my wife, rented out the other. She was not very happy, but this turned out a great investment over time and we eventually moved out. Used a VA loan with an 8% down payment.
• 2014 - 2015: Ready to buy more properties, but real estate in San Diego is too expensive and cash flow almost non-existent. Started looking out of state. Decided it was too risky to try to buy/rehab myself, so ended up buying 4 turnkey SFRs in Atlanta and Birmingham. Cash flow was good and prices started appreciating over the years, so still happy with these homes.
• 2016: Felt more confident with managing out of state rentals and owning properties in general, so decided that I could make more money by buying value-add properties off MLS or private sellers. After extensive research, decided on Kansas City, flew out there, built a local network, started looking at 2-4 unit properties. Ended up buying three 4-plexes in a private sale because my agent tipped me off.
• 2017: Feeling more comfortable in Kansas City, but was having a hard time finding new deals on the MLS (spent about 10 months looking). Decided to do a direct mail campaign to a very select group of multi-family property owners (about 90 total). Hand wrote the letters, added photos of their exact houses, sent out myself. Ended up landing 4 sales for more 4-plexes.
• 2018: Taking a little break for the first 6 months, focusing on doing rolling rehabs on all units I picked up in 2017, raising rents to market, improving general operations. Will start looking for more in the summer (already have some possible leads from the mail campaign).

Future Plans

My original goal was to get to 50 units before turning 40, so I'm quite a bit ahead of schedule. Barring anything crazy, I anticipate to get there within the next 1-2 years (15 more units to go).

This will put my passive income somewhere in the neighborhood of $15k/month or $180k/year. I'm not sure I want to retire quite yet, so I will most likely continue with the same strategy, buying more units up to 65-75 total.

I'm also planning to do a full review of my entire portfolio (now that there are a few years of operational history), sell the underperforming properties (and probably most SFRs) and re-invest into better performing multi-family buildings. I'm also considering focusing on larger apartment complexes, but we'll see.

Key Takeaways

It's hard to pin point a single thing that helped me the most. Some may say I was fortunate or "lucky" at several points in my life, but I think a steady, consistent growth strategy is what played the biggest role.

Here are some other things:

Maximizing My Income

Since I didn't rely on any "creative" financing strategies, all of the deals I've done required some cash from me to close. Now that I buy value-add properties, I also pay for the rehabs myself.

What really helped is maximizing my income from my full-time job and side-business. I went from being active duty in the Navy (around $40k/year) to senior front-end engineer (around $150k/year) and running a profitable startup (another $150k/year) in a few years.

Everybody's situation is different, but I think most of us can do at least something to increase their income.

Having a ~70% Savings Rate

Throughout my adult life I have consistently maintained a savings rate of around 70%. Combined with the point above, this was really the key to saving money for the next property quickly. Especially in the last few years, as my income increased substantially, this really helped.

Along the same lines, I've never touched any of my income from rental properties or other investments. 100% of that is re-invested.

Again, I think this is something that can be done by anyone, regardless of their income level. I meet far too many people who make six figures and have almost no savings, because of their lifestyle choices.

Focusing on the Right Markets

There isn't such a thing as "the best market". Macro and micro economic conditions are also always changing, so the markets that may be "good" for rental properties today will not be the same a year from now.

I wouldn't consider myself an all-around expert of picking rental markets, but I have talked to a lot of people who are a lot smarter than me and have developed a set of criteria that help me focus on where to invest next.

Since where I live is so expensive, and I originally had limited funds (and wanted higher cash flow), I primarily focused on larger metropolitan areas with good economic and population projections, but which have strong cash flow and average property prices around $55-85k per door (for multi-family properties).

Last time I did my "analysis" a few years ago, there were several promising candidates, including Atlanta, Dallas, Charlotte, Kansas City, Nashville. I ultimately settled on Kansas City and that's where I'm planning to buy in the next few years.

Being Very Conservative with Cash Flow Projections

I'm an analytical person by nature, so the whole process of analyzing potential cash flow from a rental property always appealed to me.

I've always been extremely conservative when estimating cash flow projections. This probably caused me to pass on some "ok or good" deals, but ultimately got me "great" deals, which is what you obviously want.

I never use rough estimates or the so-called "50% rule" (I think it's actually extremely misleading). I look up exact rental comps to estimate rents, I look up what insurance, management, utilities, and property taxes (after sale, NOT current) will be for each property.

On top of that, I use high vacancy and maintenance estimates, basically accounting for the worst possible scenario. I've gotten into plenty of arguments with sellers over "my numbers", but this strategy has only done wonders for my returns.

Running My Rental Portfolio Like a Business

I've figured out pretty early on that owning 1-2 properties isn't going to make me rich or allow me to retire early. After I set a goal to get 50 units, my brain started thinking about what I need to start doing NOW to make this possible at the end.

And what I came up with is a realization that I should treat this whole operation as a business, instead of just passive investing. So I focused on 2 things - building a network and a team of professionals to help me (property managers, agents, lenders, mortgage brokers, insurance guys, etc.); and training/teaching them to basically do most of the work for me.

The biggest challenge of owning this many units, especially all over the country is management. I never self-managed a single property. I have always used property managers and over time developed a set of criteria for picking them, and a system for keeping them accountable.

I don't get into day-to-day operations, but I basically groom each of my property managers to do the job for me in a way where I'm satisfied. It takes some work up front, but overtime pays off big time, as mutual trust and understand develops.

Thanks again to this community to providing so much support and wisdom throughout the years! I hope my story will serve as motivation for some who are just starting out.

[Benjamin Mann]

Hi Anton,

Great reading about your success and I hope it continues! I also live in San Diego and am interested in both SFR and multi family, I’ve explored the option of turnkey a lot and have been also looking at Birmingham. Did you purchase you turnkey through Spartan Invest? Could you recommend any turnkey providers?

Keep up the good work mate!

Cheers,

Ben.

[Tomma Price]

You have done exactly what I want to do.  I currently have two properties and you're right, that's not going to make me financially independent.  How did you come up with the down payment with each property?

Awesome accomplishment!

[Bernie Huckestein]

Great job nice to here and appreciate the detail

[Shavona Mondoux]

@Anton Ivanov,

Thank you for sharing your inspirational journey.  I am new, however armed with a 5-10 year plan.  Next year, I plan to share my beginner story and hope its as inspirational as your story.

Shavona M.

[Gary Carver]

congrats. Very inspiring 

[Meshael Eady]

#inspired

[Anton Ivanov]

@Leo McNair

Sure, I'll send you the questions in a bit.

[Anton Ivanov]

@Rebecca Shine

My biggest "criteria" for property managers is that they were referred to me by another investor(s) who used them in the past. Meaning I don't cold-call or cold-search for PM companies - I only get them through referrals.

I also prefer larger and more established companies, as opposed to very small operations or companies who've only been in business a few years.

I think those two can be applied by anybody. The rest of your "criteria" will depend on what you're looking for and what types of properties you need managed. Nowadays I buy only multi-family properties, so I find PMs that specialize in those and have in-house project management and rehab teams.

@Nixon Davis

Sent.

@Benjamin Mann

No, I bought from Decas Group and have been overall pretty satisfied. I've heard good things about Spartan Invest as well, but haven't worked with them directly.

You have to be careful in Birmingham, though - it's a pretty depressed market, especially around the city center. Older homes, lots of bad areas/streets and most tenants will be Section 8. If you start going out to the suburbs, it gets better.

[Benjamin Mann]

Hi Anton, 

Thanks for the quick reply. Also just downloaded DealCheck. I’ll check out Decas group. 

Are you able to refinance with your turnkey to reinvest?

[Nima Mohajeri]

Great article, thanks. How do you go about finding the best property manager? I've had turnover with my place in AZ but if I could just figure this out it would go a long way!

[Parth Vaidya]

Hey Anton, thanks for sharing your story, this is super inspiring. I am 24 and recently starting working in Real Estate and totally in love with the action. Fortunately working alongside some really smart and experienced individuals that own over 2000 units. Best take away for me from this post is developing that saving mentality, extensive due dilligence, conservative underwritting and simply starting out at some point. 

[Susan Hill]

Great article... wanna ask/ say... get opinion-- I have a rental- duplex now-- profiting 7000k monthly.  I do have a small mortgage-- so 5700$ monthly profit. I could pay that off.. but not gonna.    Remodeled upon purchase 2009.   So not much upkeep... until now. Old home-- starting to really need more work.  Gutters, that kind of work. Not much inside.  Therefore I was going to sell.  But I keep seeing folks that have several rentals-- 5-6-7 or more, that barely profit what I do with ONE.  So.... am I dumb to sell?  Im mean, kinda of a no brainer-- if you have a 'team' as you mention.  I don't.  And didn't need until now--- I cannot manage the place alone anymore. But the managers I've interviewed NEVER get the rent I can.  So kept doing it on my own.  But I do love your 'business model' for sure.  Wish I had more luck with the manager companies.

I just don't want to keep using cash to fix- cover any issues that come up now.   Im getting tired. 

Again, dumb to sell?   

7000k monthly is darn good on ONE property?  I was considering a sell/ 1031-- but I still can't see the profit margin the way I have now? 

Just looking for opinions.  

And BTW, if anyone reading in... the Duplex is on the market now... on MLS. Just to see what happens. DENVER.

Let me know if interested.

Thanks!!!

Susie

[Don Van Nguyen]

Congrats on your story and appreciate you being so transparent! Awesome success.

[Justin Young]

@Anton Ivanov This was very inspiring to read a post that didn't involve much creative strategy but spoke more about consistent hustle. 

[Rashida Raby]

this is great. Thank you for sharing all the best my friend

[Andy Le]

congrats on your success Anton. 

[Christopher Grobbel]

Thanks for sharing. I'd be very interested to know your criteria for property management and how you keep PMs accountable.  That's the single biggest impediment I have to investing long distance right now. I realize that might fall under the category of "proprietary." Thanks and best! 

[Clark Meyer]

Congrats @Anton Ivanov on your success - Great story! 

I think I heard a podcast with you being interviewed :) with @Marco Santarelli

[Gary Murano]

@Anton Ivanov As someone looking to get into real estate investing I appreciate you sharing your story. I was hoping you could share some additional insights on how you determined Atlanta, Dallas, Charlotte, Kansas City, and Nashville as suitable rental markets. More specifically are there any specific websites or resources out there to study rental markets?

Thank you in advance!

[Lee Johnson]

Great Story! I am transitioning from Single Family Renovations into Multifamily. I would be very interested in knowing your system of managing property managers.  

[Gregg Heminger]

Anton,

Have you had more than 1 VA at a time, and if so, how did you get approval from the VA?

[Alex Evans]

Congrats @Anton Ivanov !

I am also a fellow veteran and developer looking to utilize the VA loan to purchase my first multi-family.

You mentioned you put 8% down on your first purchase, was that required or was there another reason for that?

Keep up the good work!

Alex

[Shannon Young]

How were you able to finance so many properties? I thought 4 was the maximum

[Logan Brown]

Awesome work man! Pretty inspiring stuff! 

What was your experience with the turnkey providers? Would you do it again? Do you have any tips for folks looking into turnkey investing for the first time?

Thanks for sharing your story! Cheers!

[Troy Perry]

this is incredibly helpul