0 to 55 rentals in 2 years

0:00I'd love to talk a bit through your progression in terms of going from from zero deals just a few years ago to 55 how what did that look like you kind of mentioned the first one you took out a HELOC for a Triplex and then had that owner finance you the the HELOC was the down payment then it was owner finance can you talk through what the numbers kind of look like on that and then how you've progress to 55 from that first Triplex sure so for the first property like Triplex I purchased it owner finance the purchase price was 140,000 and then I put 805 down on it so I had to get the heok for that and that was because the sell the seller wanted wanted that cut cash for this property right so it's a huge down payment but I

0:49got like a it was 5% interest rate for the next year but on to me the more valuable part was this guy had 100 plus units in that area and as part of the deal he was willing to say I will give you all of my contractors their contact information I will help you through the renovation process and point out things that you know you should be aware of he actually went with me to the courthouse for the first eviction that I did and helped me file the paperwork so it was it was a seller finance mentorship yeah you know a little bit of a fee and so it worked out really well because it set me off on a a really good foundation because I had somebody that gave me confidence that I could say hey Gary like this is what's going on how do I how do I deal with that right and you know now as we our my business has gotten bigger you know the way

1:37we I do stuff and the way he does stuff are still are different right but I don't have any any disrespect for how he does it it's just not how I want to run my business but he really helped me get a really good head start on figuring all those things out because I would have been able to figure all those things out on my own it just would have taken me longer right and so while it wasn't a true partnership I think you know figuring out how to partner with people in the industry is is really powerful too and that this is how I got to my my second property up to my 55th because I can look at my strengths and where I'm deficient and try to figure out who I know or who I can work with that can complement those that my strengths will be that to you know beneficial to them and their strengths will be beneficial to me so anyway go back to the numbers so 85 down 140

2:26I put $50,000 into that property and then it refinanced for 270,000 I'm collecting $2300 a month in rent right now so after pii TI principal interest tax and insurance and then hold over for res reserves I'm Cash sing about $858 a month or something right around those so and more importantly I went through that property and I I mean it has it's a slab floor single basically a big shoe box right single Ridge roof and I put lvp through the whole thing I've got there'll be very little capex over the next few years I'm paying down my principal the rents will continue to go up and right now I've got really good stable tenants

3:15In there so I've got almost no problems at the moment with that house and fingers crossed right because who knows when the sewer line goes or some ridiculous thing but and when when you refinance that one did did you pay off yourself the HELOC or did you pay off the the the owner finance or what' you do with the cash so yeah so I paid off the owner finance so number one rule for me in in in real estate is always pay the lenders first right because like I would rather take a a bath on a property and keep a good relationship with a lender than burn a lender any day because the lenders they going back to real estate small they all talk to each other especially with private money and if I say you're my lender and I burn you five grand it

4:03doesn't burn your and my relationship it burns my relationship with you and anyone you know because you're going to go tell everybody that you lost money with me and so we have we have never lost money with with a lender private money lender and even if we did we would eat it because we will not poison that well because the relationships we have with them are so important got so I so I paid I paid him off I think I ended up leaving about $26,000 in the property in the HELOC it just it wasn't a perfect Burr but it's is Cash flowing now and I'll get the I'll get the HELOC paid off with a flip that I'm finishing up right now so all in all it'll it's fine but you know it's you always want your your first one to be a home run and I I

4:52From a lot of people I talk to your first one is such a learning experience that the real value is just doing it and learning from it it's not you're not going to get rich on your I mean maybe some people will get rich in their first deal but the vast majority of people are going to not make you know a total killing on their first property but they are going to learn so much that they're going to be far better off I've I've yet to meet somebody that has one property I know a lot of people with zero and I know a lot of people with two or more but I don't know anybody with one yeah yeah that's a good point and so that that's I think that's a great learning a great way to go about your first property you know that most people look for a traditional loan and do it themselves but like you said there's so much benefit in having that mentorship of someone who's been down that road too that

5:40Can kind of walk side by side with you so so that was your first one then kind of lit the fire and then what' you do from there so at that point my goal was to I had three doors right and so my goal was to have seven more doors in 2022 and so I was finishing up the renovation I was still working on the renovation in April and another the exact same building built the same year same layout same everything less than a mile away came up on the MLS and so but I had you know all my money I knew it was all spoken for with the rest of the renovation of my current first property and so I had no no money but I have a very My Philosophy on real estate is you know Rising tide lifts All Ships so I looked at the deal because I was running numbers all the time on properties even though I couldn't buy anything because just I just like to get do the

6:28Reps because it gets you stronger underrating and I looked at this is a great deal like this even I could even see the inside pictures I'm like even if it's the same as mine it needs $50,000 like it's going to be a 900 Buck a month cash flow property and so I knew another guy that I actually had met via a mailer I'd sent out before I purchased my first one I'd been under contract with a couple of his duplexes and then backed out because I found the triplex and it was going to be a better deal long term and so I called him his name is Eric I said Eric hey I got this problem property it's actually on the MLS I don't have it it's on the MLS these are the numbers you should go look at it and you should buy it it's a great deal and he's like oh I'm going up there today I'll go look at you want to come with me keep in mind I've never met this guy in person I talked to him on the phone a few times but but he lived you know a couple hours away from me anyway

7:17So I said yeah sure I'll go up there and look at it with you and kind of tell you what I saw because it's the same as mine and so we met up there my first thought was we walked in and all the units were basically mostly redone and I'm like well crap this is 3,000 less than the one I bought and I put $50,000 into it I got screwed but anyway so I told him how good of a deal it was and he should buy it and said you should you know offer people ask me he's like well why aren't you buying it I'm like I've got no money in my account to buy this right now I'm trying to finish other property you know I need to make sure I'm I'm solvent and he said well you want a finder fee I said well as you know I don't a thousand dollars isn't going to make the needle move one way or the other for me I'd rather have somebody that I know buy the property and just have it in my General Circle right and so I'm not interested in to find it it makes it

8:05Very transactional when you take cash for anything and so I said no I'm good on that and he's like well how about I buy it and you manage it and we split the profit profit 5050 I'm like yeah I'd be interested in in doing that and so getting talked to him more he had built up over six years quite an extensive network of private money lenders through their self-directed IAS or through in the bank and he had been growing pretty well he was getting close to 100 units at the point that we met or you know started doing that one JV deal together but he's very like creative and he's a good point person he loves talking to lenders loves networking things like that but where I'm strong in underwriting and process and systems that's kind of where his weak spot is and so we we

8:54Said well let's let's do this one together and I found out he had all this money which was my pinch point at the time time I knew I needed more money to grow and I said well he's had a couple other partners I said I'm G be the your biggest partner by the end of the year he's like well let's just do one at a time and because I knew I was seeing deals like two to three a week that I couldn't do anything with but they were coming across and I was still running the numbers on and so and by the way what Market is this in this is a submarkets of Raleigh Raleigh North Carolina so basically we're on the east side of Raleigh all the all the submarkets on there got it so so we bought that one and we finished the renovations on that and then in June a six property portfolio came up and we bought that and then it just kind of snowballed from there where I think November we closed on 12

9:42Different deals and so everything I own besides that first property is with my business partner Eric and we started started a a fullon LLP company and we're getting we're going through some growing pains right now because we've grown so fast and a lot of the stuff we do buy is you know these deferred maintenance or PE properties that have Equity but you have to get it out through you know sweat so you got to put Renovations into them to get the equity out things of that nature so we're we're trying to grow we're growing the business and we're trying to not only grow the business as far as like number of properties but also trying to put systems and system Sops and CRM systems in place so that the things run smoothly because the size that we want to get too like we can't run things off Excel

10:31Sheets and off of you know whatever else we you know the manual methods we need to make a system where you plug in a deal and it flows all the way through everybody has a job that's assigned to them along the way and it comes out at the end as a profitable asset either as a flip or or or a rental hold got it that makes sense so you guys formed a entity together where you basically just split it down the middle and he was bringing the money to the table and you were doing everything else essentially yeah essentially so we broke our company into like four chunks so lender relations he's fully responsible for that Asset Management and Acquisitions those two are are both me then Property Management would be would be me and then I guess the other one piece of asset management would

11:19Be Renovations so geographically focused we have three crews three contractor Crews we manage different Crews based on where we live because I live kind of straight east of rale and so anything north and east that's me and anything south and east is him just because it's easier to get to those places from where we live now there's instances where I'll go down to fville or he'll run up to Rocky Mountain or whatever and last fall when we had a new baby he did a lot more running around than he probably would have liked but we're we're trying to to divide and conquer but try to stay within our own lanes because we until we set those clear boundaries in place there was a lot of of like oh I already talked to this contractor and then I end up talking to him again or you know no one paid that bill because no one thought it Neo thought the other one

12:07Was doing it and so making sure you have really clear guidance and guidelines around who does what who's responsible for what putting that CRM in in place and being able to assign tasks to people was really helpful and we're still going through a ton of learning and ton of growing pains as well so we don't act I don't want to act like I have it all figured out because we certainly don't