How We Bought 8 Rentals in 1 Year: A Step-by-Step Guide to Real Estate Investing
Introduction
In this blog post, we will discuss how we were able to purchase eight rental properties in just one year. As real estate investors, we understand the challenges and hard work that goes into building a successful portfolio. We will break down the steps we took to achieve this milestone and provide valuable insights for those looking to enter the real estate market.
Key Takeaways:
Understand the numbers and analyze hundreds of deals to gain confidence in real estate investing. Set a budget and only spend half of it to have a safety net in case of emergencies.
Choose a market that cash flows and research the best cash flowing markets. Build relationships with agents, property managers, and contractors to gain insights and confidence in investing.
Utilize the bird strategy to buy distressed properties, renovate them, and refinance to get cash back. Attend meetups and network with other investors to expand your knowledge and opportunities.
Be obsessed with real estate investing and constantly talk about it to others. Consider partnerships to mitigate risks and expand your investment capacity.
Focus on scaling by analyzing more deals, networking, and effectively communicating your investment opportunities. Put in the work and take action to achieve your real estate investing goals.
About Us
My name is Josh Baldovino, and I am a marketer and real estate investor. Currently, my wife and I own 125 rental units, including long term, short term, and mid term rentals. We have also recently syndicated an apartment complex in Dallas with 111 units. While we have made significant progress, it is important to note that our journey started with a lot of hard work and dedication.
Understanding the Numbers
The first key to successful real estate investing is understanding how the numbers work. This involves analyzing hundreds of deals to determine which ones have the potential to generate profits. Additionally, it is crucial to establish a budget and stick to it. By setting a maximum amount to invest and only spending half of that, you can protect yourself from potential financial setbacks.
Saving for Investment
To fund our initial investments, my wife and I saved $100,000 over three years by making sacrifices such as living with our parents, cutting back on vacations, and minimizing expenses. This seed money became our starting point for purchasing our first rental property.
Choosing the Right Market
Once you have saved enough money, the next step is to choose a market to invest in. The primary consideration should be whether the market offers positive cash flow. This means that the rental income should exceed the expenses, including mortgage payments, insurance, property taxes, and maintenance costs. Researching the best cash flowing markets can be done by searching online for blogs and articles that provide insights into potential markets.
Building Relationships
To gain a deeper understanding of the chosen market, it is essential to build relationships with local professionals such as real estate agents, property managers, and contractors. By reaching out to these individuals and gathering their perspectives, you can gain valuable insights into specific neighborhoods, investment opportunities, and potential pitfalls. Building rapport with these professionals also allows you to tap into their network and access off-market deals that may not be available to the general public.
Leveraging Social Media for Growth
In addition to attending meetups, I also utilized social media platforms like Instagram to connect with other real estate investors. I started sharing our journey, tips, and insights on my Instagram page, and it quickly gained traction. People were not only interested in our story but also wanted to learn from our experiences. This led to more networking opportunities and even potential deals. I realized the power of social media in expanding our reach and connecting with like-minded individuals in the real estate community.
Researching Neighborhoods and Zip Codes
In addition to building relationships, it is crucial to research neighborhoods and zip codes within your chosen market. Look for areas with low crime rates, good schools, and amenities that attract tenants. Analyze the rental demand and vacancy rates in these areas to ensure a steady stream of income. By narrowing down your focus to specific neighborhoods and zip codes, you can become an expert in those areas and make more informed investment decisions.
Gaining Confidence Through Education
Real estate investing can be intimidating, especially for beginners. That's why it's important to gain confidence through education. Attend seminars, workshops, and webinars to learn from experienced investors and industry experts. Read books, listen to podcasts, and follow real estate blogs to stay updated on market trends and strategies. The more knowledge you acquire, the more confident you will feel in making investment decisions.
Learning from Mistakes
Along the way, you will inevitably make mistakes. It's important to view these mistakes as learning opportunities and not let them discourage you. Reflect on what went wrong, analyze the situation, and make adjustments for future investments. Learning from your mistakes will make you a better investor and increase your chances of success in the long run.
Implementing the BRRRR Strategy
The BRRRR strategy, which stands for Buy, Rehab, Rent, Refinance, and Repeat, is a popular method used by real estate investors to build a rental portfolio. This strategy involves purchasing a property below market value, rehabbing it to increase its value, renting it out to generate cash flow, refinancing to pull out the initial investment, and repeating the process with the newly acquired funds. By implementing the BRRRR strategy, you can recycle your capital and accelerate your portfolio growth.
Exploring Short-Term Rentals and Management Contracts
As our portfolio grew, we started exploring different avenues within real estate investing. One area that caught our attention was short-term rentals. We saw the potential for higher cash flow and decided to give it a try. We purchased a property in Joshua Tree, a popular vacation destination, and converted it into a short-term rental. The results exceeded our expectations, and we quickly realized the value of diversifying our rental portfolio.
To manage the growing number of properties, we also began exploring management contracts with local property management companies. This allowed us to focus on finding and analyzing deals while leaving the day-to-day operations to professionals. It was a game-changer for us, as it freed up our time and allowed us to scale our business more efficiently.
Selling Properties and Reinvesting
As we continued on our journey, we realized the importance of constantly evaluating our portfolio and making strategic decisions. We identified properties that were not performing as well as we had hoped and made the tough decision to sell them. By selling underperforming properties, we were able to free up capital and reinvest it into better opportunities.
This process of analyzing, selling, and reinvesting became a crucial part of our strategy. It allowed us to constantly improve our portfolio.
Conclusion
In conclusion, my journey from zero to eight rental units in one year was a result of hard work, analyzing deals, and building relationships. By understanding the numbers and having a clear budget, I was able to confidently invest in properties that cash flowed. Picking the right market, networking with property managers and contractors, and attending meetups also played a crucial role in my success. If you want to scale quickly in real estate investing, it's important to put in the work, communicate effectively, and constantly analyze deals.
