Hello!
My name is Nick and I am a Landscaper (manager) by day, real-estate investor by night! Or at least I consider myself one!
I've joined the Bigger Pockets network to learn and share, hopefully like yourself! I've learned by sharing first, the answers to your questions come much easier! For this I am grateful and hope that my story helps set you on a path toward your goals. My story isn’t one of massive success to some, but to me it is, because my hard work produced the result I intended it to, and I didn’t lose money. I also learned a lot along the way and hope to inspire those who, maybe are not looking to invest hardcore or full time, or maybe use my story to propel them to do so.
Down to business, how the heck does someone making 30-40k a year or less get in to real-estate investing with little to no experience, buy a multifamily as their first property, move in, add tremendous value for under $5,000 and then have almost 100% value increase in 5 years all while netting 1200/month positive cash flow after moving out? Seems like a pipe dream right? I'm honestly blessed to say it's not a pipe dream. It's actually how my journey starts.
A little about me, I'm not a millionaire, I don't ferociously pursue deals and I do not allocate all my funds to real-estate investing. I have progressively earned more money each year in my career while managing a property, getting married, starting a family and also buying a single family home.
This story comes from a place of wanting to show you what is possible and how I made it happen.
I was 16 years old, I am hungry and driven. I had been working part time for a couple years making all of $9.75 an hour and I noticed something...it seemed like the quickest way to make money....was with MONEY (and work) ...not just work. But I "didn't" have money. There were kids who smoked and drank who made the same amount as I did...but I didn't smoke or drink. So I thought... well I must be able to save what they spend, I just need to sacrifice the short-term fun for a long term goal. I actually did this backwards to most recommendations, my goal wasn't a dollar value or a time frame, I just fundamentally went to "what can I do without" So I did. I found on average some people spent between $20-$30 a week on butts. So I set up a separate bank account and set up direct deposit from work for $20-30/week (it increased as I increased my salary) every week. If THEY could live without that money, so could I. I then started goal setting. I read a lot, and I learned the power of real-estate. I learned that I could leverage a rental property/multi to have renters pay a portion of the mortgage, if not all of it. I could leverage money, to get other people’s money, to pay down my principle and put money in my pocket for the future. I learned that what others earn and are willing to pay could net me appreciation in my property. I was not AT ALL concerned with positive cash flow. I set a goal to close on my first house by the age of 25.
23 years old and I found myself in a much better position than I expected. I had stopped going to college at 19, I saw the economy crashing, people graduating with debt and no work. I had manage to stash away over $60K. I had it in my head all along that I needed 20% to buy my investment property. Then, as luck would have it...I learned by visiting with some financial advisers that even buying a multifamily, so long as it was my primary residence, I could put as little as 3% down. Now, had I been really adventurous, and maybe even a bit smarter...I would've leveraged this money a bit more than I did...but I was young! So I set a budget of $390k for a multi and searched. I purposefully pushed my search to 420k because I knew I could negotiate down after watching market trends. I searched high and low with my real-estate agent all across the state. From Franklin to Stoughton to Norton, Framingham, Somerville and everywhere in between. I spent DAYS and all my weekends on websites like Zillow and Redfin honing my knowledge and skills with regards to pricing, sales etc. I made spread sheets on excel to show me what my projected cash flow would be on every deal. I calculated all capital expenses that I could confidently identify and I ALWAYS left a giant margin for error (this was my first deal). I researched rent in the areas so that I could determine if I could qualify for the purchases. As a multifamily buyer, you get to use the projected market rental for the SMALLEST apartment and add it to your income in order to qualify your home, magnifying you buying power. Then I started researching where I thought the biggest boom in real-estate would be. The trend as with most is that the biggest most expensive growth happens in the metropolitan area/ near the coast. For me that was Boston. But I couldn’t afford Boston, I couldn’t afford 5 or 10 miles outside of Boston. But what I saw was that just outside and North of Boston was exploding. I found its access to public transportation and relative lack of resemblance to a rural area made it attractive to city goers who couldn’t afford Boston either. But THEY were willing and able to pay top $ to have access to it. So I looked for the next one, the next town or city that would catch the overflow of the boom. WEEKS of looking, learning, watching and asking I determined it was Framingham. It was 2013 and after putting 3 separate offers on 3 separate houses after viewing in excess of 30 houses and walking away from ALL of them for various reasons that I found my gem after 18 months of looking, I was 24 years old.
This gem however, was still in the "rough" (as far as I was concerned)....it had been listed at 421K when I first started looking, so I never saw it. Matter of fact, I HAD seen it, before someone else rehabbed it. It had holes in the floor the walls etc. But now, it was all fixed up and the price dropped to 399k. Based on the rent in the area, this was still outside my comfort zone for positive cash flow potential, and would've disqualified me from the mortgage approval. The hard work was done on the house however. It was a 4 bedroom 3 floor duplex on a busy road. But alas, they made a mistake, they went overboard. They now had the nicest house on the block and it was a buyers' market. I knew this only because I had a minute by minute pulse on the market. We LEAPED on it, confidently and cooly so as not to set an eager tone. It was a duplex with off-street parking in a rough neighborhood with 2 condemned houses within a block, and a back-yard in desperate need of attention. After much inspection, my next objective was to ask myself, "how can I add massive value for very little $" This house had a finished attic, that was primed to become two bedrooms. But the builder didn't see it. I knew because of my research on local rent if I created these two bedrooms and make the apartment upstairs a 4 bedroom, I'd increase the rent by almost $400/month. I also saw that the gas and electric meters were separate…I didn't want to pay for anyone's utilities and planned to rent accordingly because this was a variable I could not afford. I also saw the really shabby backyard as an opportunity (as a then and now landscaper) to add massive "curb" appeal back to the property that the flipper wasn't willing to spend. I also noted the left side of the driveway was lined with cinderblocks which, after grabbing my tape measurer, prevented this driveway from allowing two rows of cars to park, I just had to eliminate it and add some dense-grade gravel. Off-street parking in this area was SO valuable. But I was not done. Mr. Flipper broke the cardinal rule of flipping, don't have the nicest house on the block in a buyers' market, you'll never get the value. I determined that this house wouldn't appraise for better than $370k. It was also fall, a notoriously slow market in New England. I also saw tremendous value in the foreclosed/condemned houses being within a block. Most people would be disgusted! I wasn't buying a house to turn a flip in 6 months. I needed a place to live and build wealth and that wasn't going to happen quickly…those houses someone will buy and fix. (And they did within 2 years!) I artfully negotiated some additions to his renovation and offered 374k when it was all done. BAAAAMMMM offer accepted and the appraisal came back…..370k???? NOPE 360k and the house was mine after the seller realized that the appraisal would stick with the house for 120 days because I was doing an FHA loan….I had landed my gem, albeit without my additional request, I saved another 14k on a house that was originally listed at 421k…a net savings on the original asking price of $61,000 or 14%!!.
I moved in immediately downstairs and got to work building two simple closets and a door to make two distinct (and legal) bedrooms on the third floor. This made the upstairs apartment a 4 bedroom unit. I simultaneously contracted a local agent to find me the tenants for half months fee so I could focus my time on adding value where I was good at it, the yard and driveway. After 4 weeks of working non-stop using my vacation time and every day after work along with weekends, I had a presentable yard, parking for 12, a 6 bedroom house, renters on the hook and all I spent was about 5k out of pocket between materials, equipment rental and 1 month’s mortgage. As part of the deal I requested first last and security. I promised them washer and drier in the unit which I used their last month’s rent to buy prior to their move-in date and pay the agents fee. How much was my mortgage? $2,300. How much did I rent the upstairs for? $2,100. I had a $300/month rent payment for myself after such a short time. I wasn’t content though. I wanted to live for “free”. I found a roommate who ended up paying me $400 month and they took the spare bedroom.
Fast-forward to today and I’ve spent about 20k in insulation/siding repairs/heating system repairs etc….nothing that added any value, but just your typical repairs and maintenance you find in a flip. I rent the upstairs for $2300 and my “old place” downstairs for nearly $1,700 (I have a unique deal where they tend to the landscape and snow for me at a reduced rate) And guess what? Framingham has exploded! IT even recently became a city! My house was recently appraised to sell for over $690,000. The most recent sales in my area suggest it would sell for over 710k however. All in all, my average since acquiring the house positive cash flow has been just about $1,000/month before cap ex expenses… all while adding nearly 100% to the value via appreciation.
Now, my expectations are for people to poke holes in this….was I fortunate to find myself in a growing market while I was looking for my first property? Yes. Was it an accident that I moved on a property knowing this? NO, if it had been the other way, my research would’ve led me to a different set of decisions. Am I fortunate to find myself in a community that lends itself to such growth, depends…I watch people who aren’t gutsy enough to pull it off in lesser markets making more money than I do. For all that you might say, I’ll agree with you.
Some things I hope you get from this.
1)I highly recommend this process being rinsed and repeated as the fastest, least expensive way to build a real-estate empire
2)While living in your multifamily you get a very juicy HELOC to buy another 2 family (assuming you met the criteria before moving)
3)Leverage other people’s money to build your dream.
4)A house is NOT an asset if it doesn’t put cash in your pocket monthly. Buying a single family and not renting it is a liability. I highly suggest before doing anything else with your life you read Rich Dad Poor Dad. I have two schools of thought on this,
a.The less conventional-If you buy a multi and you SAVE money on your living expenses, you’ve bought an asset…example, in my story above, rent would’ve cost me over $700/month…having a goal to save myself money was an asset to me.
b.The more conventional- If you’re generating positive cash flow, you have an asset as well
5)Read “The Slight Edge” then read it again, this book propelled my thinking beyond anything I had ever known.
I hope this writing encourages you to get started, start small, and dream big. I'm happy to say that after biding my time and diversifying my portfolio over the last 5 years, I intend to leverage our equity and head down a path of real-estate geared toward and using the BRRR method in a suburb which we can comfortably afford to do so.
Thank you for being a strong community, I look forward to doing my part for you!
Nick
