0 to 7 Units in First Year

[Zack Clopper]

Hey everyone, I first want to say that Bigger Pockets has helped me out so much along the way with all the stories I have read on the forums. I hope my story can help someone else or motivate like so many others here have done for me.

I closed on my first rental August 10th, 2017 after reading forum posts and listening to a lot of podcast episodes. My first rental is still my highest cash flowing rental so far. Which I will link to below for the full breakdown on that deal:

1. House #1: Last August I saved up for and purchased off the MLS the first day it was open to investors, it was a foreclosure. The list price was $80,000 and that's what my offer was for. The house value is right around $110,000-115,000 currently. The PITI on this home is $507 now and it rents for $1,300 per month in Baltimore County.

Link to my previous post about this home with pictures/numbers: First Buy and Hold Success

It took me a little while to get that house rented, I didn’t get all the repairs done until October so the house was vacant until November because I was doing all the work myself.

Funding my next three deals

In November of 2017 I decided to sell my weekend car (94 Toyota Supra) which helped me purchase my next three deals with a business partner, we did a 50/50 split on everything.

• House #2: A 2-Unit home in Dundalk, MD area that we found through a wholesaler for $69,000 and closed on in February 2018. The second floor unit was already rented out for $525 which is way under market rent. The first floor needed work put into it and was vacant for a few years. We used a hard money lender to purchase the deal and then used our own money to do the updates. In total we have $11,770.53 into the property that includes closing costs, updates, etc. The downstairs unit rents for $750 per month and we were able to raise the rent 5% on the upstairs unit to $551.25 per month making the total rent for this property $1,301.25.
• House #3: Next we purchased another home from the same wholesaler another home in Baltimore County for $66,000 which was an eyesore and overwhelming for someone like me that has only done minor fixes up until this point. The house had junk piled up about waist high in every room of the house. We took a loan from the hard money lender for $15,000 for repairs and went slightly over that amount due to us putting central A.C. into the house.The house should appraise now around $140,000 and we have less than $95,000 including closing costs. Also the rent for this home is $1,375.
• House #4: this one looked to be a quick turnaround property but ended up putting some money into it. We purchased this one for $97,000 yet again from the same wholesaler. The A.C. system ended up going bad in the house before we got it rented out so we had to replace that and went ahead and did the furnace as well which set us back $4,000. The house should have rented for around $1,450 – 1,500 but we wanted to get it rented faster so we dropped the price to $1,400 to get it rented out faster for this time around. There are homes in this neighborhood selling for $150,000-165,000 so yet another home that if we decide to sell in a few years we have some equity.

We are going through the refinance process now for the above three loans and doing a cash out refinance on the second two homes to try and pull back out around $30,000. Hopefully we are able to buy another three homes without putting any additional of our own money into the bank accounts.

Road Bump

My boss at my company decided to leave earlier this year in April and wasn’t sure if I was going to have a job after he left. As soon as he told me he was leaving I signed up for an online Real Estate class that day and started taking the class every night when I got home. In June of 2018 I passed my Maryland RE Test and now am a licensed realtor. In the short 2 months I have been a Realtor I have been able to help one couple purchase their first home which was great.Earlier this month in August I really wasn’t looking for a new primary anymore until my girlfriend was done her residency as a nurse but a house popped up in Towson, MD that I thought would be a perfect live in flip.

• House #5: On August 8th I got an offer accepted on a house in Towson, MD which is where the second largest college in Maryland is located and pretty expensive area.The home needs updating which is why I really wanted it, the comps in the area when it is updated are around $475,000 – 525,000. I was able to get this home under contract by waiving my commission and still getting 3% seller help for $315,000 and plan to live in for 2 years and then sell it. The house also has an in-law suite that I will be able to rent out for around $1,100 – 1,200 per month.The house is less than 1 mile from Towson University which makes it a good back up if I can’t sell to just rent the entire house out for over $3,000 per month. In total the house needs around $30,000 in updates and that price is me doing it myself not hiring out the work which if I did it would be closer to $50k or more but I plan to do it over the next two years when I can and profit as much as I can.

The best part about this deal was it popped up on the market and since I put a lot of my savings into the other 3 homes getting them updated I did not have that much cash available. Luckily earlier this year I got a 100% HELOC on my primary residence and using it for the down payment and closing costs on this new home and only using a small portion of the HELOC.

• House #6: My current primary residence that I bought when I first graduated college in January 2015 I will be renting out for $1,400 – 1,450 per month. My current mortgage on this house is only $786 which leaves a good amount for cash flow and to hopefully buy more homes in the near future. I have a $35,000 HELOC on this home and owe only $97,000 on the house. The HELOC will help me purchase the house in Towson along with hopefully a few other properties.

Future Goals

• I hope to close on at least 2 more properties this year whether it is with my business partner or in my own business name.
• I plan to transition into only buying multi-families unless there is SFH at a very good deal and try and plan to have 30+ units by the end of next year.
• I set a goal for myself to “retire” by the end of 2019 which would be less than 5 years out of college and only 29 years old. I am still a long way off from $7,500+ cash flow per month but hope to change that with a few more deals.

Thanks everyone for reading hope this helps someone or motivates them to get started in Real Estate Investing.