All Forum Posts by: Heath Jones

My plan is to post a series of experiences with the hope they provide information that may help someone else as they start their real estate investing journey.

Lesson #1 - Don’t Open the Fridge!!

One of the first things we learned was the difference between physical occupancy and economic occupancy. We had inherited 3 tenants that were behind on rent and two that were behind by 3 months. Within the first two weeks, we had to give notices to pay or quit. Unbeknownst to us, one of the tenants went to the electric company that day and turned off the power.

After receiving no correspondence from whatsoever from the tenant, after the allowable 14 days (as stated by Alabama State law and the lease agreement), I went into the unit and it was all moved out except the smelly, outside bin for garbage and a pile of what appeared to be junk was in the middle of the living room. I then went to inspect the rest of the unit.

As I walked through the kitchen, I stopped to see if they had at least cleaned out the fridge... I opened the door and was literally knocked back by the smell. I gagged and it took everything I had to hold down whatever was in my stomach. The fridge was full, I mean completely full, of absolutely rotten food.

At that moment, I vowed to never make that mistake again and made it a personal crusade of mine to save anyone who has never experienced the horror of something like that. This is why you pay a cleaning company to clean. You did not get into real estate so you could scrub refrigerators (which I did for hours and ended up just buying a new one anyway because it was a lost cause). Let the experts handle it.

So please, always remember if you are new (or aren’t but have never experienced this) and walking through your rental units...

DO NOT OPEN THE FRIDGE!!

The fourplex was listed at 135k and we got it for 132k. Since it was considered a rental property, the lender required a 75% LTV which was 33k down. It was (and still is) fully rented and grossing $2050/month.

The 16 unit was listed at 635k and we got it at 540k because we negotiated seller-financing (5yr term/30yr am with option at Year 5 to extend another 5 yrs) The seller required us to bring 120k down, which we raised as private loans (secured by contractual personal notes) from friends and family, and two of those 0% interest for 12 and 18 months credit card check offers totaling 20k (which we have mostly paid off in this first year). Let me know if you have any other questions. Love talking about this 😁

@Brian Garrett

The fourplex was listed at 135k and we got it for 132k. Since it was considered a rental property, the lender required a 75% LTV which was 33k down. It was (and still is) fully rented and grossing $2050/month.

The 16 unit was listed at 635k and we got it at 540k because we negotiated seller-financing (5yr term/30yr am with option at Year 5 to extend another 5 yrs) The seller required us to bring 120k down, which we raised as private loans (secured by contractual personal notes) from friends and family, and two of those 0% interest for 12 and 18 months credit card check offers totaling 20k (which we have mostly paid off in this first year). We w

I had thought about doing one (super long) post vs several shorter posts but reasoned it may be easier to consume, and for me to write, if I did the one a day. Also, people could address and discuss each individually instead of filling up the feed with questions that hit different lessons. I’m also making it a point to become lore engaged with the BP community and wanted to do this by posting daily. That was kind of my rationale behind it.

Two suggestions is to start looking for duplexes on a listing site (i.e., realtor.com) and find a real estate agent in your area. I would also go talk to a mortgage broker and see about getting a pre-approval letter. This will help determine what your price range will be. If you start looking, talking to real estate agents, and a mortgage broker, you are taking the actionable steps needed to buy a duplex. Would you be house hacking it? 

Last February 2019, my wife and I purchased our first rental property. After looking and analyzing several single family residences (SFRs), we decided multifamily properties were a better way to scale quicker. We put in an offer on a triplex and unfortunately were outbid. Within a day or two, a fourplex apartment building came on the market one afternoon at 3pm and we had an offer to the seller by 6pm, and it was under contract the next day. We were stoked!

During our due diligence period, I wanted to go bigger and as luck would have it, there was a 16 unit property on the market. After doing considerable homework, and consuming everything I could from Michael Blank, Joe Fairless and Matt Faircloth just loud enough for my wife’s to hear (I had to get her on board too of course), we put in an offer and got it under contract. We closed on both properties a month apart from each other.

Within in the 3 months, my wife and I went from making a decision to become real estate investors to owning 20 rental units. And all it took was an initial $33,000 from a 401k I had with a company I worked for before transitioning to a federal job. We bought the 16 unit with other people’s money (reply if you would like to hear our we managed to make that happen and I’ll write another post).

How did we do this? By taking action and extreme hustling!!

This was awesome because we now owned 20 rental units. However, this was not-so-awesome because now we needed to self-manage 20 rental units. Following this post, I plan on adding additional posts everyday, each with one lesson I learned from this first year of self-managing.

Stayed tuned and reply with any questions or things you would like me to discuss!!

Last February 2019, my wife and I purchased our first rental property. After looking and analyzing several single family residences (SFRs), we decided multifamily properties were a better way to scale quicker. We put in an offer on a triplex and unfortunately were outbid. Within a day or two, a fourplex apartment building came on the market one afternoon at 3pm and we had an offer to the seller by 6pm, and it was under contract the next day. We were stoked!

During our due diligence period, I wanted to go bigger and as luck would have it, there was a 16 unit property on the market. After doing considerable homework, and consuming everything I could from Michael Blank, Joe Fairless and Matt Faircloth just loud enough for my wife’s to hear (I had to get her on board too of course), we put in an offer and got it under contract. We closed on both properties a month apart from each other.

Within in the 3 months, my wife and I went from making a decision to become real estate investors to owning 20 rental units. And all it took was an initial $33,000 from a 401k I had with a company I worked for before transitioning to a federal job. We bought the 16 unit with other people’s money (reply if you would like to hear our we managed to make that happen and I’ll write another post).

How did we do this? By taking action and extreme hustling!!

This was awesome because we now owned 20 rental units. However, this was not-so-awesome because now we needed to self-manage 20 rental units. Following this post, I plan on adding additional posts everyday, each with one lesson I learned from this first year of self-managing.

Stayed tuned and reply with any questions or things you would like me to discuss!!

Get in touch with me about your Multifamily investing experiences and we may have you on our show!

Are you looking to own more of America?

On this show we discuss Multifamily Real Estate Investing strategies for the career professional to help you own more doors while keeping your day job. 

Join Hutch “The Marine Investor” and Dr. Heath Jones as they speak with real estate professionals about the results of their multifamily investing “experiments”. 

Each week questions about multifamily investing are systematically dissected by your two host and their guest as they work through observations and data to answer the question of the week. 

You can find the show on Spotify and iHeartRadio. Check out the link below: 

https://open.spotify.com/episode/2Eoa34xuuw4FWgcLd8Npcm?si=-JReI4cuS9qxDlifSPh8ew

Hey BP,

Where is the best place to promote podcast?

Thanks!

@Derek Harris Agreed. I use Rentec Direct for the 22 units we have locally. Between my partner and I, we have close to 80 units across personally owned apartments and two multifamily syndications. The one out of state property is managed by a PM there. We are now looking to scale up our business to hit 500 units within the next year or two. We have talked about hiring virtual assistants to handle a lot of the smaller tasks we could offload so that we could focus on increasing the quality of our relationships with our brokers, finding/analyzing more deals, raising capital and our weekly podcast we started a few weeks ago. We have help with asset management so far, but are planning to take that on for all the new deals we partner on in the future. Would love to hear more stories of how people went from landlord to managing large real estate portfolios. Thank you so much for engaging, it is very much appreciated!!

What is your current focus and what’s a problem you are trying to solve right now?