I currently own 3 SFR. Two cash flowing and one currently being rehabbed.
Why I got started:
I work for a refinery on the gulf coast and have been in this profession since I graduated tech school at 21. I'm 42 now. I've always contributed to a 401k plan but have seen several large dips that pretty much took the wind out of my sails. Dot com bubble, 9/11, the great recession... I mean realistically im not going to live comfy from my rinky dink 401k plan. If I saved all my life and ended up with a million in my account that would still only give me around $35k/year to live off of if I go with 3.5% per year draw that the "experts" suggest. Then what happens if Kim Jong or someone even crazier decides to do something stupid that effects the world? Yep that nest egg gets scrambled once again. Why? Because EVERYTHING affects the stock market. I don't like not having any control over it. Secondly, over the years in my profession I've noticed a reoccurring theme amongst the retirees. Boredom. Stir crazy. Time and time again I'd run into one of the old timers working at the local hardware store or Wal-Mart, or wherever. When asked, "Why? You're retired!" The answers were consistent. Boredom. "I got stir crazy sitting at the house all day." Or "I can only mow my grass so much before I'm ready to do something different." Hell, my dad (semi-retired 70yr old welder) is the same way. He'll drive you crazy if he doesn't have a project to focus on. So.... with all that said, I figured buy and hold RE is the perfect retirement option for me. Especially being quite the handyman myself. I do love to ride my motorcycle, travel, fish, hunt, play beach bum, play sports, watch sports, and do anything else that brings joy. I plan to continue all of that good stuff into retirement. However, crazy as it sounds I also enjoy "piddling" on DIY projects here and there. So why not invest in rentals? Even though "bored" isn't even in my life's vocab but if by some miracle I ever do get to that point, I wouldn't mind changing a water heater, stopping a drip under a sink, or replacing a door knob in order to break the mundane. But if it happens to be the week I'm in Costa Rica with a cold cerveza & hot senorita or Disney with the kiddos when that infamous "2am clogged toilet" phone call comes in I can just allow the professionals to handle it. Best of both worlds.
How I got started:
For my first deal I was quite a bit more naive & ignorant than I am now. I may have read an article here and there and even found biggerpockets.com but I was far from ready. Luckily I thought I was. At least I was smart enough to know what area in my town I wanted to invest in and with that alone I was lucky enough to find a deal on the MLS after about 6 months of looking. A musty smelling late '50s era 2/1 with great bones in overall good shape. It was compartmentalized with the kitchen being totally sectioned off from the living room. Not even a window to communicate from LR to kitchen. I'm sure that's why it was on the market for over 2 years. Owners were deceased and the heirs lived across the country. With a "I really don't care if I get it or not" attitude my wife and I offered $30k less than asking price. After some attempts from the sellers at countering we stuck to our guns on the price and they eventually said yes to our offer. Oh crap! Now it was time to figure out how to pay. We did a HELOC on our home for the down payment and financed the remaining 80% with a 15 yr conventional. All OPM. For the rehab I scoured Craigslist, Facebook sale sites, and local papers for all things building materials. Kitchen cabinets, kitchen island, leftover sheets of sheetrock, over estimated tile leftovers, light fixtures, vanity, toilet, ceiling fans, all black & stainless appliances, etc.... My kids (6, 8, 11, 14) and I knocked out the main wall dividing the house and opened the LR, DR, & kitchen all to one open area. I did 99% of the work myself. Tiled the kitchen & bath. Replaced kitchen cabinets. Used but they looked spectacular after painting. I picked up a VERY large granite top Kitchen island with new stainless cooktop from a recently remodeled home being demo'ed for the local university parking expansion. A LOT of work but all said and done I only put in about $5k(which came from my W2 income) on the rehab. Purchase price on the property was $60k. I'm currently doing a refi this week's on the property bc I'm following the BRRR strategy and it just appraised at $112,500. The credit union is loaning 80% so now I'm looking for my next deal. Via Driving for Dollars on the Harley of course.
My second deal:
While working in the home mentioned above I noticed a fresh "For Rent" sign pop up in the yard across the street. A 3/1. Curious to see what they were asking per month I called the number and pretended to be interested. The more I questioned the owner the more I sensed her resentment of the property. She lived over an hour away and was tired of showing the place. At one point in the conversation I heard the words, "That house is a pain in my ***!" LOL She also mentioned she was trying to move north but that was the only thing keeping her there. An exact scenario as in one of the RE books I was reading. So I inquired about her possibly selling. Casually she mentioned she might if she could get around $50k. As she showed the place 2 days in a row I'd walk across the street and talk to potential renters as to gauge how interested they were in the place at her rate of $850. Every single one of them wanted to live there! I called fidelity to inquire about a 401k loan that day and found out it could be dispersed within 10 days. So I offered the woman $32k cash. After a little negotiating we settled on $35k. Fidelity cut the check on a 6 year payment plan, we closed on Sept. 1st and I had a renter with a 1 year lease for $850 month on Sept 2nd. It's not making great a deal of cash flow but the lease is up next month and the rent is going up to $910.
My 3rd deal:
I purchased this 3/1 about 4 months ago. It is quite the fixer upper but by now I ain't skeerd. :-) By this time I've devoured every suggested real estate book that comes highly suggested by BP and listen to a podcast every time I have an hour or more commute. In following in what just about every author suggested I had business cards made. It was less than a week from their arrival and the subsequent laughter from co-workers at the fact that I had the audacity to call myself a real estate investor that these cards paid dividends on the $15 Vistaprint investment. My kids and I were visiting a local pizza joint for a quick dinner when we ran into an old acquaintance. When asked what I've been up to I jumped at the opportunity to pass along my new business card. That led to a brief conversation about a property he inherited then a more in-depth phone call the next day. Turned out that he was in a situation of too many bills going out and not enough income coming in. Typical American, right? So this windfall was actually a burden to him. Dont ask me how but over the next several days I negotiated a zero money down deal, zero interest, $150/mo note while I work to flip the house. He didn't have the money to get it to rentable condition & mainly just wanted no expenses like taxes, electricity, and insurance on the place while trying to sell. So our deal alleviated all of that plus gave him $150 in his pocket. It was all contingent on me refinancing and paying the entire amount within a year.
So.... in conclusion I've been able to close one OPM deal (which equates to zero down), one cash deal by reallocating some 401K savings, and one zero down zero interest deal. After I finish the current rehab I plan to 1031 exchange this home bc it's not in the location I am interested in. This is also the last one I plan on investing so much sweat equity in. From this point forward I plan to follow the advice of savvy BP investors and leave the construction to the pros while I focus on finding and funding deals. Which btw seems to be getting easier. The more enthusiastic I am about it all, the more people seem to want to help. Even some of those haters that once laughed at my business cards are now asking if I can use some of their money in order to give them more of a return than the bank is offering. I believe things are about to get interesting!
My suggestion is to continue to learn. Books, audiobooks, podcasts, forums, etc... but most importantly ACT on the information that you learn. That one vital step has kept thousands from being our competitors and unfortunately kept them one step away from financial freedom. So far every single thing that I've read or seen in the books and BP that I've actually tried to implement has worked exactly as described! Very exciting!
Good luck.
