It all started with a passing conversation with my CPA in early April 2019, as we were discussing my 2018 taxes. I quit the cube in the fall of 2017 and hustled like crazy in 2018. I completed 36 transactions and made a nice income. I also had a really profitable flip that I had just sold. It was a home run kind of flip. My CPA told me that is you don't start buying rentals you are gonna get crushed in taxes next year. It hit me square in the forehead and I took it to heart. A week later I was under contract on 5 duplexes and 2 weeks later I had closed on the 1st one. 2 Weeks later I closed on 4 more. The plan was to not only create a nice tax shelter but to also create some cash flow so I didn't have to grind so hard. I felt like I replaced one job with another. That wasn't why I left corporate America. I had a passion for Real Estate, but I wanted freedom. I didn't want to grind everyday living and dying by each offer. I liken Real Estate to the Ocean. It's like the tide. When it's coming in nothing is sweeter! You have deals lined up and life is great. But when the tide goes out and the deals you thought were closing fall out, well then it is crushing. Nobody talks about the lows of being an entrepreneur. It's all Lambos and vacations. It gets real in a hurry when you enter a little draught. Panic sets in a bit and you start to chase shiny objects. Thee next great lead source of the silver bullet that will get you 10 deals a month and before you know it all you have is a bloated marketing budget and past due bills. I didn't want that to be my reality. After all, I had prepared for this. It took me way to long to leave my day job and there was no way I would fail. So you adjust, you shift, you listen to those that have made the mistakes, and hopefully, you avoid them. I digress. I had 10 units. What was the plan? Well, I bought them in an entirely new market. I had just moved to the east side of the Atlanta suburbs and I was still primarily investing in East Cobb County. Primarily a flipper, with the occasional wholesale. After reviewing the market I knew I overpaid for the duplexes based on their condition but it still worked for me because I had an aggressive plan to raise rents. The units were 2 bed/1 bath units and the rents were $450-$500. The whole market was kinda topped out at $650. My thought was I would do a much nicer rehab than the market and push the rents. It worked. I noticed all of the tenants immediately that the rent would be going up to $650 on day 60 of my ownership and asked them to check yes or no if they were staying. Shockingly 9-9 said yes. I only had 1 vacant unit and I approached that rehab like I would one of my flips. I put in shaker cabinets, lvp flooring, granite, all-new fixtures, doors, and hardware. Cosmetic rehab was about 12k. I also replaced all of the windows, HVAC's and repaired all of the exterior wood rot and painted the soffit and fascia. That fully cosmetic rehab I told some locals I was going to advertise it at $800 and I was told I was crazy. I ended up getting over 120 requests to rent the unit. I rented it out for $810. In hindsight, I shot too low because the next unit that I rehabbed I got $850. All in on the duplexes I spent about 80k on rehab. I used private money and paid 2 points and 10%. The next step was super painful. The refi. The 1st duplex I refi'd out and it went smooth as silk. It appraised right where I had projected and I brought 16k to closing. Remember I said I knew I overpaid a little. I knew going in that the values might not get to where I needed in order to refi out with no money in the deal, but I was ok with that because of the cash flow and my intent to keep them for a long time. Getting to the pain. The lender I used on the 1st refi couldn't do the others because the brokerage had a rule of only 2 loans per person, per 6 month period. I had just bought a personal home with them. So I had to find another lender. Unfortunately, I picked the wrong one. After being promised that I would be closed in 30 days or less it lingered on past 90. I had to pay a point per duplex to extend another month. After multiple crappy appraisals and what felt like 90 days of getting the life sucked out of me I finally closed them. Yippee! The bad news was because of the poor appraisals and the lenders ask of the appraisers to structure the appraisal more heavily weighting the comp vs. income approach I had to write the largest check of my life just to refi out. The lesson learned. Find a good lender. Do everything you can to buy low enough so that you can refi out and have little or no money left in the deal. Fast fwd 10 months, I had 3 more units turned and have raised those to $850 a month as well. This process was such a life suck I grinded hard in Sept, Oct, Nov to recoup the large check I had to write and took December off. I was burnt out. I needed a mental reboot. This is where mindset comes in and personal growth is key. What you put into your mind is what will come out. I took this time to grow mentally and get refreshed for 2020. 2020 started and I fully intended to start marketing for more multi-family but I got really busy flipping. I got extremely intentional about networking and that led to multiple deals. This is where the $0 marketing spend comes in. I bought the 5 duplexes off the MLS. I bought unit #11 in Feb from a guy that came to pick up appliances I had posted on the Facebook marketplace for free. You see, if you have an abundance mindset and you tell everyone what you do, it opens up opportunities. He ran a used appliance store and I asked him about it. I then told him I had brought over some appliances from a flip I had just bought and he said oh, you flip houses? I said yes. He said how would you like to buy a condo in Conyers? I said I would love to! Unit 11. About the same time frame, I became really intentional about networking. I started attending more meetups. Through those meetups, I ended up buying 2 flips and closed on the 1st of 3 Quads that I contracted from some guys I've become good friends with that are investors. That quad purchase puts me at 15 units in just under a year from that conversation with my CPA. It is the power of the made-up mind. If you write down goals, make up your mind, only you can stop you from achieving your goal. The only reason I haven't closed on the other 2 quads is because of Corona. As most of you know the secondary lending market had slowed and it has become harder to get loans. So I had to adjust and leverage private money to take them down one at a time instead of using hard money to buy them all at once. The plan for these is the same as my duplexes. Rents are low at $520 a unit. The next step is a rent increase notice to $720. Hopefully, some will leave and I'll rehab the interiors and push rents over $900. These are 2/2's and 300 sq feet larger than my duplexes. : ) Learn a market, and be prepared to pounce when you see a deal. I will close with the following advice for new investors. Learn as much as you can. The interwebs are your university. Be a servant. Operate with an abundance mindset! Your circle is where you will end up. Choose it wisely. Surround yourself with like-minded folks and ignore the haters and naysayers. Take action. Fail forward. Learn as you go and don't repeat the same mistake. Learn from other's failures. Network! Tell everyone what you do. You need to be top of mind when they have a house to sell. Start doing these things today and the rest is gravy! Please feel free to reach out if you have any questions. I hope that this will inspire someone to go out and make it happen. Keep it movin! Cheers!
