All Forum Posts by: Jonathan R.

I have read all the comments on the thread and I think this is the best one. I do a similar type of investing to Ashley Hamilton, though I built a large part of my portfolio prior to listening to her podcast. It helped solidify what I was doing. First, you don’t need a mentor. And I love him to death and have liked many of his comments throughout the years, but Shiloh is wrong too. You can go on your own and own more that one or two properties. I’m at 12 in 5 years, 11 are owned outright. I haven’t even started to leverage. I wanted to learn the game first. 2nd, I’d get away from the wholesaling and flipping idea. You want to own the properties, the other is a job. To me, my properties are all worth a million bucks, I worked hard on them and have no intention of selling them in my lifetime. 3rd if you can make a relationship with an affordable, reliable and quality contractor, you will succeed. My guy isn’t high on the reliability scale but he checks the other two boxes. I bought him a cheap house and did a contract for deed with him that I pay for while he is working for me; I can’t wait to give it to him, honestly I’m buying him more the richer he makes me, I’m his retirement plan. I gave him a truck and pay his phone bill. He’s not going anywhere. He’s my contractor and my handyman. 4th and finally, you’ll figure it out. After my first deal I absorbed bigger pockets, the podcasts and the forums, while I saved up for my next deal. How can I? Let your brain scour and figure out how to fund the next deal after you find it. I put myself to the test on deal #3. I put it under contract with no idea how I would buy it, I gave myself 30 days. That seller and I have partnered on several units afterward. Real estate is crazy and limitless. Make friends. It’s a relationship game. If you can pick up friends, you can get rich. Best of luck!

PS. I started with a 7k tax return and 20k in a 401k, that’s it. I make below 80k in my W2 and am the sole breadwinner in my family. Anyone can do this, they just have to want it and take risks.

I’m buying crypto again. I have quite a bit of real estate and started buying crypto about 2017 but always sold during times of fear, uncertainty and doubt and threw everything at real estate. Don’t get me wrong, my real estate portfolio is rocking but I always ask what if I just kept buying crypto, I’d be killing it for sure. Recently a guy bought every top 10 crypto and decided to study it for a year. 7 of the 10 lost money and 3 went to the moon and he made like a 1000% return on the year. Spread out the investment amounts over 10 or so cryptocurrencies (they don’t have to be top 10-just something you like), 7 may lose money but the winners will prop up the losers, maybe to the tune of an insane return. Watch videos to find good entry points so even if you buy a loser it was still be bought at a good entry point at least. Be patient, it is liquid, though I’m trying to treat it more like real estate and make it illiquid till I have a significant amount in there to buy more real estate. I want to own physical assets, but I also want to play the crypto game because I don’t want to miss out on that. One is a truck and the other is a sports car.

Try American Modern for landlord insurance. I bet they are cheaper and they do a good job. They are very popular with investors. I use them on my rentals here in town.

I’m 4.5 years in and under contract on my 11th unit. I started out buying on my own but quickly realized it was a lot easier to partner with people that have more money than I do. I cashflow a hair north of 3k a month after expenses and haven’t even begun to benefit from the power of leverage. I am the only earner in my household and the W2 only pays around 60k. I’ve made something from very little. I live in a high cashflow market and invest primarily in low income neighborhoods. I may choose to invest in a higher asset class at some point but right now I’m building my cashflow safety net. No plans to quit the W2. Time to 10X. Current target is 30k a month.

@Edgar Adkins There are quite a few investors from the Wichita area here on BP. My guess is the reason you haven’t gotten replies to your post yet is you asked quite a lot of questions. Lol. First off, welcome to the site. I’ll do my best to hit on your questions.

-Personally, I buy about anywhere except Plainview and Hilltop. Hilltop basically sells homes on lots that have a lot rent associated with them. The area is rough, I don’t mind the rough part, but I want to control the dirt too. Plainview has old military homes on it that should have been bulldozed a long time ago, they were only meant to be temporary homes. The area is also rough, small multifamily on top of each other. I like my tenants to have their own oasis.

-I invest in C and D areas. I’m primarily a cash flow investor, but even so I have seen some appreciation over the last few years. Many people didn’t think I would see value gains, but I think I’ve proven them wrong in this market for sure. Regardless, cash is trash but cash flow is king. Just my .02.

-I’ve used a Heloc on my primary to purchase investment property. A Heloc is like a credit card on steroids. Once you make your payment you have quite a bit of that money available again for immediate withdrawal.

-I’m not in the camp that thinks to wait to buy investment property till 2022. Though, I’m also not competing with occupant buyers for the properties I buy, only investors. I’m in the camp that thinks we are entering a real estate supercycle that will last a decade or two. Don’t wait to buy real estate, buy real estate and wait.

-I’ve used a Heloc, 401k money, student loan money, unsecured loans, credit cards, and partners to buy real estate. I’ll buy real estate however I can. Partnering can be very powerful. 50% of something is better than 100% of nothing. 

-There is a meetup in Wichita on the 3rd Saturday of every month that focuses on large multifamily run by a few people. They are doing deals and looking for limited partners to buy apartment complexes. It’s a great group, I like them a lot.

-I don’t know what you mean real by hard fast rules for making offers.

-I personally self manage. I’m in the belief that no one will care more about my investment than I do. When it becomes too much I’ll either hire or consider property management. I’ll get to 20 plus properties and see how I feel.

-I haven’t used the brrrr strategy yet. Everything I have is owned outright, but I’ve certainly used creative financing ideas to build up my portfolio.

-I know of three meetups. @Jason Lavender runs a meetup once a month over lunch. The two other meetups, one is the commercial meetup I discussed earlier the third Saturday of the month in the evening and then another on a Saturday during the day. Check out meetup.com for those or Google search them.

-I have no insight on mortgage or brokerage companies with low fees.

-I like both CF and wedge deals. Both strategies work. I personally have been focused on replacing my W2 job income with CF. I’ve basically done that in 4.5 years. Now, I may throw a few wedge deals in the mix for good measure.

Best of luck in your investing. Certainly hit up some meetups and network with other investors. Real estate is a relationship game. Call me biased but I think Wichita is one of the best kept secrets for rei. We have a great market and some of the most affordable real estate in the country.

@Jayden Hamilton I mentioned in my previous post that you have to be bigger than your problems. Let me expand. You need to grow yourself. When you grow yourself you can then start dealing with more and more problems. Keep growing. Problems make you money. The more problems you can handle the more money you make. I started out with 1 tenant, then two, then three where you are. Now 11. I kept growing myself. I grew myself by listening to podcasts, reading books (like Secrets of the Millionaire Mind, The Richest Man in Babylon, The Millionaire Next Door, and soon to read the 10X Rule etc), networking with other investors, listening to motivational YouTube videos etc. If you can manage 3 tenants, why not 300? It’s all the same. Grow yourself and fix problems. Stay in there. You don’t need a property manager. Congrats on your success at an early age. I wish I started at your age. Best regards.

“Problems are good. Problems mean you have a tenant. You have to be bigger than your problems.” -T Harv Eker (Secrets of the Millionaire Mind)

If you are going to go into low income areas and invest I think it is important for you to be a leader in the community you are investing in. Don’t walk past the trash. Find a way after dark to make the graffiti in the neighborhood disappear. Consider paying $100 to the local community watch person in the neighborhood who is a member of the church up the street that has a cleanup effort. Encourage your neighbors to fix up their homes. Pay the kid that lives a few homes over to mow your lawn. All of these efforts will pay dividends.

I’ve been reluctant to reply to this thread because the op has been rather combative with other posters, even posters that have been podcast guests. You should give respect where respect is due. With that being said, I’ve had success with properties sub 40k that I purchase in cash. I’m about to hit the 5 year mark of buying them and am cash flowing about 3k a month after expenses. I now have an income stream I can fall back on should I lose my 9-5 job. I don’t regret taking the path I have because for me it was the only path. My debt to income ratio was too high to buy B class properties, so rather than going back to watching dancing with the stars I started buying distressed D and C class properties in cash and placing Section 8 tenants in them.

My advice is to buy in the outskirts of a rough area rather than dead smack in the center, at least in the beginning. My first purchase was for 18k and was near a highway exit on a street with only four other houses. Buying on the outskirts allows my tenant to avoid most of the headaches of the inner city. I still have that same tenant today, it’s been a cash cow and an anchor for the rest of my portfolio.

One of the hard things about buying cash properties in the manner discussed is that you run out of money pretty quickly, you have to be creative to keep buying. Heloc on primary, unsecured loans, Home Depot credit cards, 401k loans/hardship withdrawals, student loans even. You have to come up with the cash somehow when you burn through your initial hoard. I started bringing on partners because it was a lot easier to come up with half the purchase price and renovation than the whole purchase. One of my partners was someone that reached out to me from BP. We’re now buying properties out of his heloc, pretty sweet deal for me and for him too, I might add. He would have never reached out had I been combative in the forums like you have been. Much of the advice I received in the forums in the early days was discouraging. I’m glad I was persistent because the 20k houses with a 15k rehab are now all worth north of 60-70k. But I learned from others, even those that didn’t agree with me.
If I choose to I can now transition into a higher asset class. Some say investors buy D, then C, then B, then A class. My foundation has been D class. It’s hands on and a lot of work. You need an incredible handyman and rehabber. I bought one of these cheap properties and moved my handyman/rehabber in. He was previously couch surfing and down on his luck. I spotted his talent early on and got him vested in my business. We’ve formed an interdependent relationship with one another. I pay his phone bill and I gave him a 3k truck to drive. I completely control his expenses, so he is loyal to me and he picks up my phone calls. You need a supportive spouse if you are married and you need to network with other investors. Focus on your mental and physical health. Buying in the inner city is a lot like Mel Gibson in the movie Braveheart. That scene where he is on a horse coming down the hill after his wife is murdered. He’s calm, with his hands up, but then you see his eyes!!! Sure fire determination. Crazy eyes even. No fear.

Shout out to @Steve Vaughan, I’ve followed him in the forums for many years. Reading his advice to myself and others has been instrumental. And @Jay Hinrichs convinced me years ago that these properties are best owned in cash. I look after a couple handfuls of these now and they are all owned outright. I sleep well at night, even during a pandemic, not having to worry about making a payment to a lender should a few go vacant all at once.

Also, @JD Martin is not wrong in his posts. Learn what you can from others. It’s good to play devils advocate. The pitfalls with this class of real estate are many and it takes a special type of motivated person to be successful. This type of investing is not for the weak of heart, you must constantly remind yourself of your why and surround yourself with positive people. If I could have started out with B class properties I probably would have.

Oh, and to answer your original question, on 20k properties bought in cash the closing costs are nominal, maybe $400. At least in Wichita, KS.

Welcome to BP. I think everyone wishes they started sooner. :) We may be entering a couple decade long real estate supercycle. Yeah, never too late to jump in.