Building A Real Estate Empire

S

schockergd

New member
Dec 11, 2008
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Circleville Ohio
As I've posted in a few different threads, earlier this year I started my own Real Estate Investment Company in order to build a nice little empire of income producing properties.

Part of the whole process is also to develop a video series detailing the process and then build a website/coaching system around the whole process of building your very own real estate empire (Affiliates, hint, hint).

Anyways, we started in July with around some funding (Around $120K total) and so far have bought two properties.

Right now we have enough cash in the bank to buy a 3rd property, but are holding off till we can refinance the two we've purchased. I expect us to cash them out for around $100,000 or so which would recoup our entire investment while still yielding positive cashflow each month.


Property #1 - Mill Street
Purchase price - $26,500
Rehab - ~$34,000
Total cost - $60,500 (Or so).

Features

  • ~2,000 Square Feet
  • 6 bed (Originally it was just a 3 bed, part of the process has been to set it up so there are many, many more bedrooms).
  • 2 bath
  • Corner lot
  • 1 car garage
  • Partial basement
  • Median value area of town (5/10)
  • Expected income of $1,050 per month
  • Equity gain of $275/mo
  • Market value of $110,000
  • ROI of ~15% after all expenses, much more after leverage.
  • Total equity of $49,500
[ame="http://www.youtube.com/watch?v=KpCN1aCqO-M&feature=c4-overview&list=UUypEBi70jGe3KsyyxvMC1gg"]MillDemo2 - YouTube[/ame]




Property #2 - Logan Street
Purchase price - $22,500
Rehab costs - $6,500
Total cost - $30,000


Features

  • ~1200 square feet
  • 3 bedroom
  • 1 bathroom
  • 2 car detached garage (We won't be renting it out)
  • Low end area of town (3/10)
  • Rental income of $625/mo
  • Equity gain of $150/mo
  • Market value of $50,000
  • Total equity of $20,000
[ame="http://www.youtube.com/watch?v=WMODciR5DHQ&feature=c4-overview&list=UUypEBi70jGe3KsyyxvMC1gg"]Home for rent in Circleville, Ohio - $625/mo 3br 1ba - YouTube[/ame]
 


Good stuff man.

I started picking up income property back in June but since I live in Socal I do it out of state.

Are you doing the property management yourself? Looks like you got cap rates of 20-25%, that is really good. Are you finding these houses on the MLS?

Since I am out of state I buy from Turnkey companies that do all the rehab and and property management for me. Cap rates are still around 10% which is good and it's completely hands off. How hard is it to do all this work yourself? Can you outsource the rehab to a good foreman or do you have to be pretty hands on with it?
 
Mill street was listed on HUD's website but not on any local MLS systems (it was listed by a broker outside of our MLS). The second one was a FSBO.

I've outsourced 90% of the work. The only thing I really do with these is go buy and schedule material shipments to my workers, since I know that I can negotiate a better deal. At some point I'll hand that over to them too.
 
Nice hustle. Thought about doing this too , but realized Vancouver lacks a reasonable price:rent ratios. Brb spend 200K and only get like 950/mo in rent. Subtract maint fee/taxes/cleaning/random bullshit and it comes out to an amount so low I can't be arsed to even look at it.

Btw why are you counting equity gain in the ROI calc? It's not like you can withdraw that money at any time (cept with you sell) and there's no guarantee of consistency.
 
juntao65 said:
Nice hustle. Thought about doing this too , but realized Vancouver lacks a reasonable price:rent ratios. Brb spend 200K and only get like 950/mo in rent. Subtract maint fee/taxes/cleaning/random bullshit and it comes out to an amount so low I can't be arsed to even look at it.

Btw why are you counting equity gain in the ROI calc? It's not like you can withdraw that money at any time (cept with you sell) and there's no guarantee of consistency.
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You can cash the extra equity out through a second mortgage or refinance. Sure it costs, but it can be done. We figured 3% APY appreciation which is median for our area over the past 20 years or so.

charlesmartel said:
Are the renters Section 8?
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Some will be , but not at this time.
 
Looks like some good returns OP.

I have to chuckle at the dimensions of the first house. Who in the world builds a 6 bedroom house with only 2000 sq. ft. and then has only one garage?? Is that normal in Ohio??
 
Esquire said:
Looks like some good returns OP.

I have to chuckle at the dimensions of the first house. Who in the world builds a 6 bedroom house with only 2000 sq. ft. and then has only one garage?? Is that normal in Ohio??
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It is if the house was built in 1880 and has had 3 additions built onto it.

When I say 6 bedrooms, i'm using HUD methodology for it. Technically it's 6 'whatever' rooms , a formal dining room, one living room and two full bathrooms. By stating it's 6 bedrooms I can get significantly more money for it :)
 
Anyone ever compare REITS vs buying rental property? I can never make rental property make financial sense to me considering the risk
 
schockergd said:
It is if the house was built in 1880 and has had 3 additions built onto it.

When I say 6 bedrooms, i'm using HUD methodology for it. Technically it's 6 'whatever' rooms , a formal dining room, one living room and two full bathrooms. By stating it's 6 bedrooms I can get significantly more money for it :)
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We're spoiled out here in Vegas. "Older" homes here are built in 1980, not 1880...I just sold a home I was living in that was built in 2000 and am moving into one that was built in 2006. LOL.
 
I have done research into pros and cons of both and the reality is that reits generally perform better when you don't know what is going on in the real estate side. If you can't at least say that a quote is too much without going on Google then a nice reit should do better. Some I am in are doing around 8% year over year, which isn't great but still nice.

However there are some scammy ones like League Canadian High Yield Corporations (formerly Trusts) - Large private REIT files for bankruptcy protection - Canadian High Yield Corporations (formerly Trusts) - InvestorVillage that just suck.


If you have an in, like being a real estate agent, knowing brockers etc then you might do better with more of your time invested.

As the guy in Vancouver said there are locations in the world where the return is negligible, so you are really just taking on risk. Vancouver and Victoria both come to mind on the west coast as the prices for the purchase are so high, while rent is not in line with the monthlies as opposed to NY or other nicer places.

When I was a kid my dad owned around 30 houses, bought them all for around 4k each, rented for 850 a month. Every winter he was out of work so would do all the repairs himself, and it worked out very well for him. Once the market picked back up the equity quickly grew and he did well when he cashed out.
AdHustler said:
Anyone ever compare REITS vs buying rental property? I can never make rental property make financial sense to me considering the risk
Click to expand...
 
AdHustler said:
Anyone ever compare REITS vs buying rental property? I can never make rental property make financial sense to me considering the risk
Click to expand...

Depends on the areas. REITs typically have solid returns (As long as we're talking true REITs and not mREITs). Rentals can range from 3%/yr to 50%+ per year in return. It all depends on your local market.

Esquire said:
We're spoiled out here in Vegas. "Older" homes here are built in 1980, not 1880...I just sold a home I was living in that was built in 2000 and am moving into one that was built in 2006. LOL.
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My cousin just bought a home here in town that was built in 1830.

We have plenty of 60s, 70s and 80s built properties, however older ones tend to be cheaper (and in worse shape). I really enjoy properties from the 50s and 60s though - More solid than newer homes yet VERY easy to work on, and less risk of electrical problems.
 
Guy lied a good deal on the AirBnB article. He forgot to include the condo association fee and several other ones that decreased his cashflow a good bit. He's already got it for sale for around $5k over his total cost. Typically that indicates something is wrong.

Right now we're working on cashing out the property via a mortgage. Got turned down by the first bank due to 'not having enough income' off the properties which doesn't really make a whole lot of sense. So we're trying a few other banks and looking for private lenders. If any of you know someone who wants 5%-6% returns secured by low LTV realestate let me know :D
 
Hmm.. Already posting videos targeted to your desired renters.. NICE!

[ame=http://www.youtube.com/watch?v=rj_-b_sYROE]How to steal a car - YouTube[/ame]

srsly though, that is why you create a unique channel for each business project you have. You don't see fortune 100 or fortune 500 companies where the CEO is posting video's he found funny or of his/her children along with their latest product launch.
 
imbo55 said:
Hmm.. Already posting videos targeted to your desired renters.. NICE!

How to steal a car - YouTube

srsly though, that is why you create a unique channel for each business project you have. You don't see fortune 100 or fortune 500 companies where the CEO is posting video's he found funny or of his/her children along with their latest product launch.
Click to expand...

Haven't felt like doing a channel yet. All the videos so far are me just play in around, really low quality stuff. I don't see fortune 500 companies filling up their channels with crap.
 
Everything is finally rented and we're solidly cashflowing. We made a decision a few months ago to draw down the number of contractors to just one guy because of funding issues (Banks haven't been too awfully keen to lend to us, even when we cashflow) so it took a bit longer to fix the big 2,000sf house than was anticipated.

So far, so good though, total invested is in the area of $90,000 and the cashflow from properties is $1150/mo which comes out to 15.33% pre-leverage.

We'll start shooting video of the whole process on the next property, right now we're bidding on it.
 
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