I’m hoping my story will lead to some great connections here and maybe help a few people in the process. So, here we go..
In 2018 I sat down at my desk to go over my bills, which I was barely making. I had finally landed a great job making great money but still barely getting by. I remember thinking how absolutely absurd it was to still be living this way after tripling my income, and on top of that my Wife was getting ready to graduate nursing school which would add even more income but, I had no clue how to keep it from disappearing every month and wondering what happened. So I started researching books on investing and lo and behold if I didn’t find Rich Dad Poor Dad. I didn’t put the book down for 24 hours then, I reread it. Now I was hooked and instantly my research led me to biggerpockets where it seemed like I listened to Brandon talk for months straight without ever turning off the podcast. (Maybe a little exaggeration).
A few years earlier in 2012 I had filed for bankruptcy and was just now eligible to buy a house. After my research I no longer wanted a new fancy ready to go home, I was looking for a fixer upper. I bought my house for $50,000.00 in 2019 and with the help of my Step Dad we went to work. I had very little saved so I used other forms of money to complete the project. In 2020 the house was 75% done and I had to re appraise the house and get a new loan to pay off all my credit cards, personal loans, etc. It appraised at $358,000.00. All the sweat equity finally dug me out of the hole and I was ready for some rentals.
I bought my first duplex in 2021 along with a single family home a few weeks later. The duplex I bought for $65,000.00 with $10,000.00 down and owner financing. It was empty when I bought it and needed very little work to get it ready to go. After a month I had both sides rented at $650.00 and it was cash flowing great. The single family I bought for $55,000.00 financed with a bank with 20% down. The day I closed the tenant was moving in. The house was completely remodeled and needed nothing. It also cash flowed great.
After getting my feet wet I was eager for more and searched and searched and……….searched. I finally found another duplex a few towns over that had been sitting for a while, it was badly advertised. It needed minimal work to get it ready so I jumped on it. I talked the seller down to $109,000.00 and financed this one with a bank also. All my tenants so far I vetted and stayed solid on what my requirements were to lease. This caused me to have this duplex sit empty for a few months but I finally got it filled at $675.00 a side. Long story short I ended up selling this one and broke pretty much even a little over a year later. I had solid tenants but the numbers for this area just weren't where they needed to be.
Now in 2023 I was still searching and calling everyday. I finally landed a deal on a flip house I bought for $30,000.00 using my HELOC on my house. This was a 3bed 1bath that needed everything besides a roof. It took about 6 months of which I did the majority of the work but I was able to turn it into a 3bed 2bath house and sold it for $140,000.00 and a nice $50,000.00 profit.
Now I was hooked on distressed properties but had decided I didn't much like the selling aspect of it. So BRRRR it was. At this point I had a few cash cows and my finances in check so I wanted a bigger deal. I drove by this run down apartment building almost everyday and always said to myself it would make a very nice place with a little love put in it. So I started doing some research and found the owner. When I called the owner and told him who I was, he said he was actually thinking about calling me to see if I would be interested in managing the property for him. At this point I had found I was pretty good at finding and managing tenants so I partnered with a real estate broker and started managing for other investors. I told him I was much more interested in buying the building if he was willing to sell. He said he was willing to sell and we set up a walkthrough. Wow was I in for a surprise. The place was in very bad shape with only a handful of the 24 units actually rented. After the first inspection I knew this was a complete gut and remodel. I had never been more excited in my life. (Ok not true but close). I'll go over all the numbers at the end. So we agreed on a price, shook hands and signed some papers. Now I had no idea how I was going to finance this deal but I knew I was going to one way or another. So I started searching. I found 2 banks that would back me in the project both offering a construction loan with no payments during the rehab. After negotiating, USLA agreed to give me most of the funding I needed WITH NO MONEY DOWN! Now it wasn't all the money I needed but it was close, or atleast at that time I thought it was close. At this point I'm in disbelief thinking I might actually pull this off, until the bank called. My banker explained that they went to the board and they had turned down the loan. Ya I pretty much wanted to lay down and give up. So I went home and for about a week non stop I worked on a presentation of what all I was going to do in this project and how I was going to do it. I gave it to my banker. After she reviewed it we both felt really good about the whole thing and she went back to the board. Again they denied it. At this point I was devastated. I called and asked if it was possible for me to speak to the board and she said no but the president of the bank was willing to meet with me. I practiced in front of a mirror and my family for days. The devastation wore off because I knew I wasn't leaving that office without changing her mind. We were in a meeting for about 30 minutes where I went over every little detail and re-assured her there was 0 chance of me failing. (Of course that's a lie but I believed it). She shook my hand and said she would take it back to the board and recommend they approve it. A few days later my banker called with some great news, thay had approved the loan and even upped the original amount to help cover some other expenses. I closed on the building in June 2023 and I was off.
Right out of the gate I was over budget. I had bids come in to clean the building out and they were 50k plus. Lesson one I guess. I ended up paying 25K and they hauled out 120 thousand pounds of trash. No kidding they showed me all the dump receipts. Now with a blank canvas I got my contractors together and painted the picture. The first 6 or so apartments were very up and down but after that they were off to the races. Of course like any large project there was ups and downs but I don’t want to write a book. It's now August 1st and the final apartments are near done. I have 18 of the 24 units rented and I’m getting ready to open up the top floor (the last 6), which judging from how fast the others rented shouldn’t take long to fill up. I also just completed the new on site laundry facility and opened it up. I will say on one note the rubber roof was and still is a nightmare. Here are the numbers…
Purchase $375,000.00
Cleanout $25,000.00
Rehab $375,000.00 (I estimated a little under 275, 100k lesson)
All in right at $775,000.00
With current rents the NOI is 108,000 annual. Which puts the value with a 8% cap at around $1,300,000.00. When the building is fully rented allowing for a 10% vacancy the NOI will be $136,800.00 which will put the value around $1,700,000.00
The refi I have in place at current rates will give me about 200K cash out and 50K cash flow a year.
There's a ton more I could add in here but it's already a long post. If you would like to hear more please reach out. Thanks for checking out my post!
