Podcast Summary
From humble beginnings to successful real estate investor: Taking small steps, doing the work, and utilizing valuable resources can lead to financial success in real estate, even in unfavorable market conditions. Passive investing through private funds and no money down rental opportunities are smart options.
Real estate investing is a marathon, not a race. Darius, a relatable and inspiring investor, shares his journey from humble beginnings to successful real estate investor while working an hourly job. He emphasizes the importance of taking small steps and doing the work, even in unfavorable market conditions. The Bigger Pockets community played a significant role in his journey by providing valuable insights and resources. Another key takeaway is the opportunity to invest passively in real estate through private funds, like PPR Capital Management, which offers monthly income without the hassle of property management. Lastly, Rent to Retirement offers an intriguing opportunity to buy new construction rental properties for no money down. These opportunities demonstrate that persistence, the right resources, and smart investments can lead to financial success in real estate.
Overcoming unexpected challenges in real estate investing: Starting small and staying positive despite unexpected challenges can lead to significant success in real estate investing
Starting small and overcoming unexpected challenges can lead to significant success in real estate investing. Darius, a guest on the Bigger Pockets podcast, shared his experience of buying his first property in 2014, which had no furnace, hot water tank, or electrical panel. Despite this unexpected discovery, Darius remained positive and reached out to his network to find solutions. Before this, Darius was at a low point in his life, living with family, making only $10 an hour as a janitor, and totaling his car. But with determination and a little help from others, he was able to save money and eventually build a portfolio of 8 rental properties and surpass $100,000 in gross rents. This story serves as a reminder that setbacks and challenges are inevitable in real estate investing, but with a positive attitude and a strong network, they can be overcome to achieve financial success.
Buying Homes During Economic Hardship: Despite economic hardship and unexpected challenges, the speaker successfully bought two homes for cheap prices and achieved financial stability
During a time of economic hardship and high levels of vandalism, the speaker was able to purchase a home for $9,100 through an auction on homepath.com, but upon moving in, they discovered that the house had been stripped of its electrical and plumbing systems. The speaker believes this happened due to vandalism during the listing period. Despite the unexpected challenges, the speaker's goal was to buy a home to reduce living expenses and achieve financial stability. This experience led the speaker to purchase a second home for $25,100, and they were able to find these cheap homes at a time when many were being given away by the state due to unpaid property taxes. However, getting financing for these homes was difficult, and some people advised against buying them due to their run-down condition. Overall, the speaker's determination to buy a home during a difficult economic period paid off, even if it came with unexpected challenges.
Buying a house without essential utilities: Overlooking necessary inspections and utilities when buying a property without a mortgage can lead to unexpected challenges. Building essential skills and forming relationships can help overcome these hurdles.
When buying a property without a mortgage, important inspections and necessary utilities might be overlooked. Darius, a real estate investor, shared his experience of purchasing a house without electricity or water despite living in a cramped space with six people. He was motivated not by the desire for personal space but by a moral obligation. However, many people criticized his investment due to the lack of value in the properties at the time. Darius had $100,000 in student loan debt from pursuing a master's degree to increase his income. Despite facing financial challenges, he completed his education and landed a job as a design engineer at a Fortune 500 company. In 2014, Darius bought his first property at an auction for $10,000, but upon inspection, he discovered it had no water or electricity. Feeling had, Darius approached a neighbor and formed a friendship, learning essential trades like electrical, plumbing, and gas work to improve his property. This experience marked the beginning of his learning journey in real estate investments.
Learning through hands-on experience in real estate investing: Starting small and learning skills can lead to acquiring multiple properties using the BRRRR method. Confidence grows with each repair, even when major challenges arise.
Starting small and building up skills through hands-on experience can lead to significant returns in real estate investing. The speaker shares his journey of purchasing a $25,000 house and learning to remodel it himself, which gave him the confidence and skills to move up the corporate ladder and buy more properties. He used the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method to acquire multiple properties, starting with a $10,000 house, a $25,100 house, and a $35,000 house. The pace of acquiring properties picked up, with each repair taking about 8 months on average. However, the third property presented a major challenge with a $10,000 plumbing issue, which he solved by assuming a non-family member tenant and learning the financing process. Through this experience, he became a confident real estate investor, able to tackle the problems that come with the industry.
Inspections with a sewer camera save costs and hassle: Using a sewer camera during property inspections can help identify pipe issues early, saving thousands in repairs and permits, and streamline hiring with platforms like Indeed.
Investing in a sewer camera during property inspections can save significant costs and hassle in the long run. The speaker shared his personal experience of dealing with two pipe issues within a short time frame, leading him to the realization of the importance of using a sewer camera during inspections. This tool can help identify issues such as cracks and root intrusions in the sewer lateral, which, if left unaddressed, can lead to costly repairs and inconvenience. The use of a sewer camera is particularly important because the cost of permitting and repairing pipes that require street excavation can be high. By identifying issues early on, investors can make informed decisions and potentially save thousands of dollars. The speaker also emphasized the importance of hiring quality candidates to streamline the hiring process and avoid potential issues. He recommended using Indeed as a matching and hiring platform to find quality candidates efficiently.
Streamline business processes with NetSuite and save on taxes with 10/31 exchanges: Businesses can save costs and improve efficiency by using NetSuite for unified business management and real estate investors can defer taxes with 10/31 exchanges, both strategies leading to increased savings and focus on growth
Businesses can reduce costs and improve efficiency by implementing a unified business management system like NetSuite. This cloud-based platform consolidates accounting, financial management, inventory, and HR into one system, reducing the need for multiple systems and the associated IT costs. By streamlining business processes, NetSuite can help businesses save time and resources, allowing them to focus on growth. Additionally, real estate investors can save on taxes by utilizing 10/31 exchanges, which allow them to defer capital gains taxes when selling and buying investment properties. Companies like First American Exchange specialize in facilitating these exchanges, making it an effective strategy for building a rental property empire while minimizing tax liabilities. Finally, investing in personal growth through therapy can help individuals make the most of their time and resources, leading to increased happiness and productivity.
Real Estate Appraisals: Unpredictable and Subjective: Appraisals are just estimations, true value lies in what buyers pay, understand local market and comps to make process predictable.
Appraisals in real estate can be subjective and unpredictable, and their value may not align with the market price. The speaker shared his experiences of encountering varying appraisals for his properties, some of which were lower than expected, while others were surprisingly higher. He emphasized that the appraiser's opinion is just an estimation, and the true value of a property is determined by what a buyer is willing to pay for it. The speaker also advised understanding the local real estate market and its comps to make the appraisal process more predictable and beneficial for investors. Additionally, he shared his experience of dealing with HOA issues and selling a condo to buy a single-family home instead.
Understanding your local real estate market and having a steady income: A solid grasp of your local market and consistent income can lead to informed decisions, financial stability, and increased opportunities in both your career and real estate investments.
Having a solid understanding of the specific real estate market you're investing in and having a steady income can significantly enhance your real estate investing journey. Darius, for instance, has seen the benefits of this approach by creating an infrastructure around him in his local market. He's able to use the same contractors, has a good eye for rent flow, and even knows the exact rent for each property. This live data allows him to make informed decisions and take risks, both in his job and in real estate. He also noticed that having passive income from real estate can provide financial stability and freedom, allowing him to take risks in his career that he might not be able to otherwise. These two aspects of his life worked together to make his wealth-building journey smoother.
The importance of physically inspecting properties before making an offer: Online data from sources like Zillow can be misleading, emphasizing the need for on-site inspections and live data from auctions for informed real estate decisions. Cash on hand is necessary for auctions where loans aren't allowed.
While relying on online data from sources like Zillow for real estate decisions can be helpful, it's essential to physically visit properties and inspect them before making an offer. The speaker shared his experience of buying multiple properties in distressed areas, where he found significant discrepancies between the data online and the actual condition of the properties. He emphasized that live data from auctions, where you can see the properties firsthand, can lead to better deals. However, not all auctions allow the use of loans, so having cash on hand is necessary. The BiggerPockets forums were instrumental for the speaker in seeking reassurance and guidance when he was unsure about scaling his real estate investments. Overall, the discussion highlights the importance of a combination of online research and on-site inspections in making informed real estate decisions.
Maximizing cash flow through strategic real estate investing and refinancing: Buying a multi-unit property and refinancing multiple times can lead to substantial cash flow growth. Aim to build a team for repairs and potentially expand into property management and rehab business.
Strategic real estate investing and refinancing can lead to significant cash flow growth. The speaker shared their experience of buying a 4-unit property and then purchasing several single family homes through multiple refinances. Currently, they own nine properties, with five rented out bringing in $66,000 annually, and three more under remodeling, expected to bring in an additional $36,000. They aim to refinance and add debt to lower their DTI and protect their assets. They also plan to build an internal team for repairs and potentially expand into a property management and rehab business. Despite the economic uncertainty, their cash flow is set to increase, with a net profit of approximately 60% on the current rents.
Turning Troubled Properties into Profitable Businesses: Through learning new skills, perseverance, and identifying opportunities in distressed markets, one can turn a troubled property into a profitable business using cost savings and the BRRRR method.
Taking action and adding value to your investments can lead to significant financial gains. The story of this individual, who started with a troubled property and turned it into a profitable business, highlights the importance of learning new skills, persevering through challenges, and identifying opportunities in distressed markets. By focusing on cost savings through self-improvement and the BRRRR method, this person was able to snowball their equity and cash flow, ultimately leading to a substantial portfolio and improved lifestyle. Additionally, choosing the right location can also play a crucial role in building a successful real estate business.
Building a portfolio for financial peace of mind: Investing in multiple sources of passive income, like real estate, can bring financial freedom. Focus on goals, find the right resources, and stay committed for long-term success.
Having multiple sources of passive income can bring financial peace of mind and reduce the pressure of managing monthly bills. Darius, a real estate investor, shared his story of building a portfolio and enabling his wife to assist him, selling him properties and providing tips. By doing so, he no longer needs to worry about having enough money to pay bills each month. This story serves as an inspiration for those who want to achieve financial freedom. Darius can be found online through various platforms such as Google, his website rewithd.com, Facebook, and Instagram @Darius_oneofone. Rob, who travels frequently, can be found on YouTube at robuilt and Instagram at rob Bild. The importance of staying focused on financial goals and finding the right resources, such as investor-friendly agents, was emphasized. BiggerPockets Agent Finder is a free resource that can help investors find the right agent to navigate the real estate market and make informed decisions. Remember, financial freedom is not about timing the market but rather about time in the market. It's important to note that past performance is not indicative of future results, and all opinions expressed are their own. Investing in real estate or any asset involves risk.
Invest wisely with caution: 2. Invest only what you can afford to lose, 3. Seek advice from qualified advisors, 4. Understand the risks, 5. No guarantee of returns, 6. Market can be unpredictable, 7. Approach investing thoughtfully and informed
Investing comes with risks, and it's crucial to only invest money that you can afford to lose. Before making any investment decisions, use your best judgment and consult with qualified advisors. Keep in mind that BiggerPockets LLC disclaims all liability for any damages arising from reliance upon the information presented in this podcast. So, while the potential rewards of investing can be significant, it's essential to approach it with caution and a clear understanding of the risks involved. Remember, there's no guarantee of returns, and the market can be unpredictable. By taking a thoughtful and informed approach, you'll be better positioned to navigate the ups and downs of the investment world.
