All Forum Posts by: Todd Powell

I see a lot of newer people looking for RE advice, so after several years of RE investing I wanted to share my story to see if it could help others

At an early age I was interested in real estate investing. My wife thought it would be "risky" so I took a slower path at first. I began my first quick flip in 2001, and then took off when I gained some confidence. Along the way, I have flipped some 40 properties but did so prior to HGTV and all the folks who have come out of the woodwork. I have paid massive short term taxes along the way. I found some deals on the MLS but the majority of the very best ones were off market deals. I have worked hard to find deals that were run down off market deals and convinced many to sell directly to me, or carry the contract so they for once could be the bank. I started with a HELOC with only $60k and over the years operated with my personal home HELOC of $421,000 as well as several non owner occupied HELOCS. Bank of America did away with the latter back in 2009-2010. I now have a local bank will do a non owner occupied HELOC on a local 4 plex with massive equity. I have had MANY along the way tell me I am risky or overly leveraged. Even Dave Ramsay would not agree with my RE journey. I took a hiatus from RE investing from 2009-2016. That was not very smart I will admit. I came from nothing and zero family help. I read a few books and my first catalyst was the book, "Rich Dad Poor Dad," and it helped me process that i needed to get outside the box. We just sold a 5 and 8 plex, but we do still own and manage 16 doors, have ownership in a 72 unit building near the OSU campus in Corvallis. Further, we bought into a opportunity zone in Atlanta, GA and a 62 unit building in Cincinnati, Ohio with a BP group cited called SNS Group. So technically, we have ownership in 300 plus units but most my headaches come from the 16 doors I currently manage. I am doing my very last flip right now, which is a 3/2 1500 sq foot house in Albany, Or. It was a off market deal I found word of mouth. It was the most difficult titling mess of them all. A dead aunt on deed, a mother suffering my dementia, a owner who had lived in the house for 20 years, and his dead wife still on deed. I paid $160k and waited a long 9 months under contract. I had to help the seller find a place and i even fronted him some money to move out fully. The house ARV is $400k with $62k of fix ups. So the cost basis is $222k but value of $400k. This would be my best flip ever by a long shot, but i decided to sell to my youngest son for cost to help him start his financial life journey in RE. 

I do tell you this to brag, but to help others along their journey.

What I have learned is this. Many people will have and give you opinions along the way, but those same people will be living paycheck to paycheck. Do not listen to people who are not successful. Follow people who are actually doing RE at a high level. Learn from those who are PROVEN! Do not be afraid to actually take the first step! Do not let fear hold you back. I was a guy who only bought deals at a discount. I never paid market price for a property. People have told me my entire life that I am lucky. I love hearing that because I have worked hard to make my own luck! Labor Under Correct Knowledge! That is how to spell LUCK! I have made several mistakes along the way. One time I viewed a duplex and one tenant said, "dont buy this place the plumbing is bad." I walked away and realize this $120k deal is now worth $400k today. I never bought and held houses, although BP teaches the BRRR method. That did not exist back then, and some houses I wished I would have kept. I liked the 4 plex theory instead because if I had one vacancy I knew the others would still carry the property. I failed at buying some opportunities. I failed at scaling up like many preach here. I failed to rip out all my equity to buy more properties. But what I did correct was to always be hustling to find deals. Always worked hard to find a diamond in the rough. I flipped properties so I could generate cash to further invest. I began later in my RE investing career to buy, fix and hold properties. I never let emotions make me pay more than the property was worth. If I did NOT buy under the market, I would not purchase. I worked hard to negotiate my best deals, while making the seller feel good about the deal. Always create a win-win! Find the sellers hot button and make it work. In the end, I am nearly 54 years old, and have many doors in RE and a nice size monthly cash flow. Many say I should retire but I have always enjoyed the RE chase. I have decided to quit flipping as I am too tired of the constant grind. I am self made with no help, money, or advice from family. I wanted to share this with you as YOU can do this! It takes drive within. It takes some discipline, but in the end it takes passion to want to get out of the rat race of your W2! You have to ask yourself, "what is my WHY? Time is your greatest asset so figure out your goals and go reach for them! Do not let others or fear stop you! Be conservative but take the risk. Do not let paralysis of analysis dictate your destiny!

@James Brackin learn everything you can but then do NOT let the paralysis of analysis take over. Find your best deal with the past research as your basis and pull the trigger. I love off market deals with lots of hair on it. The bigger the headache the bigger the return!

@Deangelo Mack do not wholesale this deal! Take it from a guy who has flipped 40 properties and also holds in more than 100 currently! Build wealth for yourself rather than the quick buck you will pay taxes on. Get the seller to carry and build long term RE wealth. Take the leap!

@Deangelo Mack it all depends how much you will spend to rehab and make rent ready. If its rentable now, its a no brainer. If it needs $30k to fix, its a no brainer. Since he has zero mortgage I would be inclined to see if the seller would love to be the bank and make the interest you would pay. They can see better upside and you can maybe come in with little down. I have done deals like this with 4 plexes. The key is to find their hot button. One elderly woman did a 30 year amortization for me but insisted on a 10 year balloon. We did the deal at purchase price of $260,000, with a $30k down payment at a rate of 4.75%. This was 3 years ago. I put $81k into rehabbing all 4 units so I am into this deal $340k. I make sure I have a no prepayment clause and this last year I reach out to her and say I want to refinance our deal unless she is willing to drop the balloon. She quickly offered to drop the rate to 4% but not drop the balloon. What is weird is she completely forgot about our balloon in the first place. Since she eagerly was willing to drop the rate, I got her to do both; drop the rate and remove the balloon and we reset the whole new balance on a new 30 year amortization! True story, so I took this same approach on the other two owner carried 4 plexes I own with separate sellers. One dropped to the 4% rate from the 4.75% and the other we kept the 4.75% but we pushed out his balloon a whole new 13 years! In the end, none of my elderly note holders wanted to get paid off and pay the taxes. I ALWAYS look for the win win and what is most important to my seller. I would have done the refinances but it saved me a ton of money and time to just approach my sellers with options that made sense to them. I love the art of negotiation and I think a owner carry could be a great option for you. Maybe you can leverage the price down even more if you show the seller how much they can make per year in interest! And they have zero repairs and headaches to deal with! Truly passive income for them. Again, find their hot button, as each seller will tell you exactly how to structure the deal!

@Jayden Hamilton I have had several who have done this. I do not mind cash and have more on hand in the future so it does not bother me at all as opposed to others here on BP. It all spends the same

@Jayden Hamilton I have done both month to month and one year leases. The one year leases work wonderful in my college close properties and would be harder if month to month. Other properties I would go month to month as it gives me a look at the tenant stability. If they work out and just keep them in same format, but if they are not good tenants, its much easier to give them notice to move them along. A one year lease makes it harder to remove the tenant should they turn ugly. Lastly, I am sure many would disagree with me, but I NEVER raise the rent if the tenant renews their lease for a second year. Namely, its a mental time suck for me to market, show, sign, and do the turnover. I get market rents day 1 and do not need to raise so fast. I value the quality tenant and its too much work to find the next one and know how they will actually turn out. I am pretty careful now when I accept a new tenant and have learned many lessons from my past.

@Alyssa Lebetsamer kind of went through this. We bought a 5 plex, and inherited unit 3 and unit 5 was vacant. We rehabbed unit 5 and found wonderful new tenants. Unit 3 was a black man who admittedly took medicine to help him mentally. All the tenants were afraid of him. One day I get a call from unit 5, 1 and 2, all telling me unit 3 beat up unit 5 so bad they got the police involved and the man you got beat up went to the hospital with several injuries. People wanted to move due to unit 3 and his erratic behavior. No one had any proof and each told a different version. After a little investigation, unit 3 went off on my telling me he could have cut his throat and left him on the sidewalk to bleed out. This same crazy tenant also put a red dot through plastic when my contractor installed granite and windows in his unit. He proved to me how mentally unstable he really was. So I had no choice. The other good tenants were all wanting to move. The man injured was afraid to ever reside there in the future. I hired a lawyer and went for eviction. I knew this was tough as the police involved did not even uncover what had happened. In the end, it costs me $7000 to do the right thing. My lawyer used the law to make a case as unit 5 ended up needing surgery on his wrist and they also wanted to press charges on unit 3. The judge in my case found unit 3 guilty based on evidence and tenants who showed up to testify. I won the case, stood up for my other tenants, but the judge would NOT grant financial victory for me, thus costing me the $7000 in fees. Unit 3 left his place a mess. I felt better about the situation and then I was called as a witness when unit 5 went after unit 3. That judge said he found my testimony credible and of course we cited the eviction we had also just won. I forgot to tell you, we were right in the middle of selling this 5 plex, and there was zero upside for us. We spent the money to uphold integrity and the protection of the other tenants. Moral victory sometimes comes at a price. My advice is protect yourself and document. Maybe both of your tenants are at fault? Maybe one is? But you have to show good faith as a landlord that you will protect your tenants in some fashion. We did not want to manage the drama with this nearby city and sold it with only a 1 1/2 year hold time, but proved to be a good investment. Paid $370k and sold for $545,000 and paid ZERO realtor or escrow fees!

Best of luck with your situation! Dealing with people’s drama is a real mental and emotional time suck!

@Zack Kosenka I love these situations and my best deals have come from off market deals with lots of hair on it. The key is finding a win win solution and treat all parties with respect. If you work your numbers out have a conversation with the nephew and explain that you are buying the house and that its time to move on. I just bought a house where multiple druggies were in the house and reasoned with the owner living there that when ALL parties were out, I would close on the house within 72 hours. I had the house under contract for 9 months and worked through multiple obstacles! We had a dead aunt on the deed. A dead ex wife and the druggie in foreclosure. When it came time to getting the 5 people out we worked out a deal, but I was always in control. I had the seller sign and produce the death certificate. I then fronted him $5000 up front and from the price balance owed from titling. This way he could get a ARBNB for "rental" as he had bad credit and no job. But, within days he had the $80k from his equity and I let the druggie get all his friends out. The key to these deals—and I have done 40 flips—is winning the sellers over and giving them what they want. Namely, solving their problems but while at the same time making your deal a reality! Closed on April 9th for $160k and almost done for $62k in rebab and worth $380,000. I am letting my son buy it for my true cost so its a deal for him but this could NEVER been done on the MLS.

The key to high profit deals are finding off market deals with a ton of issues going on. Simply solve those issues being the nice guy and maintain all control to use kind and proper leverage.

Best of luck!

@Fernando Vitorino we own and manage in Oregon, the most liberal state for tenants. This being said, we invested this year in RE deals with partners in Atlanta, GA and closing this week on 62 units in Cincinnati, Ohio with a Bigger Pockets syndicate, SNS Capital Group. I think other markets make sense IF you have the right expertise leadership. To try and do this 20 states away only sounds like trouble to me. Best of luck!

@Scott Esmail make yourself MORE valuable than your competitors and let the tenants know that will not charge them that fee as the others would. I let my tenants know that if they stay the following year there will be no rent increase. They feel good and I love the fact I do not have the turnover. My units are all college focused so I am used to the change over but I also value getting a 2nd and 3rd year renewal. Why get greedy and go for a lease renewal, but rather use it as a hook to keep your folks happy and coming back. Just my thoughts from a guy who owns and manages 16 doors. The other 72 units we have a property manager