Growing From One Rental to 100+ Units

Hi everyone, how are you doing? If you’ve been following this channel for the last couple of weeks or so then you know that I’ve been to a couple of paid real estate events. There was the Houston Wholesaling Live which was a lot of fun, and most recently at day two at Flip Hacking Live. Part of the reason I’m going to these is that I want to grow my network and really understand what other successful real estate investors are doing, and so far a couple of things have stood out to me. I’m a horrible networker when it comes to going up to someone I don’t know. Talking to them and telling them about our story is pretty foreign to me. It’s not something I’m great at, so obviously something I need to work on. But really what I wanted to focus on today was what it takes to go from one to a one hundred rental units.

The reason I want to do it is that I’ve kind of told that story, maybe a dozen or more times over the last couple of weeks and each time it sort of feels like the person getting it really is receiving value. I don’t think there’s any magic in this, and I don’t think that I have solved anything special. It is our story and it is what we went through. We write a lot about the details in the book One Rental At a Time, available on Amazon, but really there’s really only three things that you need to realize and respect about how to go from one rental house to whatever the perfect number is for you. Whether it’s one to one hundred, one to 21, 200, or one thousand, whatever it is.

I think there are only three things you need to realize. The first one is that it takes time. You should know that this business that you’ve chosen to get into is not getting rich quick. I don’t care what people tell you, it’s not. It takes time, especially if you follow the One Rental At a Time process. We went through, and I don’t remember exactly but it felt like six years when we got to eight houses and then that’s where we saw an explosion of growth, which we’ll talk about in a minute. It’s really become obvious at the event that I’m at this week that going from zero to one is the hardest step. Going from one to two is remarkably easier and two to three and so on and so forth. So you’ve got to get started, and you’ve got to take your shots.

am very conservative, risk-averse, and not high leverage. I’m really nothing like all these gurus, but you do have to write an offer, so learn your markets, take your shot, and only write offers that make sense to your business. You’ve got to write offers because you’ve got to go from zero to one and see if this is right for you. The other thing you have to appreciate about time is how slow it can move. That first cash flow house isn’t even paying your electricity or water bill. It’s nothing in the big scheme of things. You have to remember you’re doing this for the long term and it’s not about this one house and this one month, it’s about getting the one, getting the two, and then as you keep taking those positive steps, equity is building.

And this is what I want you to appreciate with time. At some point in your career, you will have the ability to do things that we have done the first three or four years into our business. We did what’s called a cash-out refinance, and we took equity from our first purchase and bought another one and then we took equity out of our second and bought another one. A couple of things about this- First, don’t do what we did on our first refi. We took out too much money because we thought the banks knew better and we turned a positive cash flow property into a negative cash flow property. I call those things alligators. In the book, you do not want alligators, so I recommend that you run your numbers. Never ever, ever create a negative cash flow property. The next thing that you’re going to be able to do at some point if you choose is a 1031 exchange.

This is where you ladder up. In our case, we went from a house to a five-unit building. Then we went from a house to an eight-unit building. Then from a house to an 18 unit building because we were able to take the equity and transition that tax-free because of light kind exchanges and do a much bigger asset. It helped us get units and it helped us increase depreciation. It just helped us. We went from eight to 80 units within 12 months, maybe 14 months because of 1031 exchanges. Then the market turns and again, time will tell you what to do, right? Then we go from 80 to 150, and so on and so forth. Time is number one. Number two is focus. This has been a big deal for the last couple of days. These events are put on by some great people who are trying to give, give, give and they’re bringing up all kinds of speakers.

But unfortunately for some people in the audience who are just getting started, they’re like, “What do I do? Do I do direct mail? Do I do niche marketing? Do I do thousands of mailers? Do I do I cold call? Do I do ringless voicemail? What do I door knock, right? Do I drive for dollars?” There are all of these things going on and people are getting confused. Pick your lane and decide what kind of investor you want to be. Less is more, in the beginning, you want to try and get good at one thing and avoid getting distracted by shiny objects. The other thing I’ve seen people bounce around the last couple of days is about markets. They haven’t even got a deal done yet in their primary market, and they’re already looking at a second or third market. Just stop it. You can’t effectively know a market without spending some real-time learning it.

Learn your market, take some shots, build the team, do all of that. We did toy with the idea of going to another market, but we realized after time it just wasn’t worth the risk and it was just too far away. I’m not saying that’s bad, but what I am saying is focus on one market. Just stop everything else until you get that infrastructure going and you’ve learned your market. There are too many cities and too many shiny objects. Focus is important. Then lastly you have to be giving consistent effort (If I had anything as a superpower this would be it, and I didn’t even know). I have said it many, many times. I have looked at my market every day for a decade. I know when things are coming on, I’ve seen them. I know what’s working, I know what’s not.

I can see it change. I can see that price points above X are staying longer, and I can see this is, you know, condos. It’s just when you look every day, good things happen. But remember, consistent effort goes beyond that. It’s saving money, it’s sacrificing, it’s riding offers, and it’s getting after the next offer. It’s just so important. in conclusion, the keys to go from one to one hundred units is time, focus and consistent effort. It’s really that simple. I’d love to hear from you. Am I missing anything? If so leave a comment below and let me know. Share this blog with people that are talking about doing too many things too often. Let’s help them out. As always, thanks for joining me. Have a great day and be well. Thanks.

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