How I have Bought 14 Rentals Without any of My Own Money

InvestFourMore Real-Time Stats
16 flips currently in progress. 114 flips completed. 14 rentals properties.
Follow me to see how I make money in any market cycle. Join Free Now >

rentals with no moneyThis summer I refinanced a few of my rental properties and I sold two as well. I made a lot of money selling my two rentals and took a lot of cash out from the refinancing. Because of that money I got back, I have actually not invested any of my own cash into my remaining 14 houses. I definitely had to invest a lot of my money to buy the houses and fix them up, I am not trying to claim I never used my money. After this summer I was able to get back all the cash I spent on down payments and repairs. I bought my 16 rentals for $1,665,218, spent about $188,000 on initial repairs, and spent about $350,000 on down payments. It took about $538,000 to buy those houses, but I have refinanced 7 of those properties over the last 5 years getting about $300,000 cash back. I have a line of credit on one house for $120,000, and when I sold my two rentals I got back $212,000. Overall, I have received more money back from my rental properties than I used to buy them, without counting any of the cash flow I have made over the last 6 years.

What are the details on the 16 rental properties I have purchased?

I bought my first rental in December of 2010. I have put down 20 percent on almost all of my properties, except for a few. My portfolio lender does not require an appraisal on loans under $100,000. If my loan was just over $100,000 I would lower the loan amount to save the appraisal costs. Below is a table with all my rentals, when I bought them, what I paid for them, and what they are worth now. You can see the details on all my rentals on my resources page.

Purchase Date         Purchase Price         Initial Repairs         Current Market Value

12/20/10 $96,900 $2,500 $235,000
10/11/11 $94,000 $19,000 $235,000
11/30/11 $92,000 $18,000 $225,000
2/14/12 $88,249 $18,000 $199,950*
3/28/13 $115,000 $18,000 $220,000
4/18/13 $113,000 $7,000 $240,000
11/18/13 $97,500 $16,000 $200,000
2/14/14 $133,000 $5,000 $210,000
3/19/14 $99,917 $4,000 $185,000
7/23/14 $109,152 $15,000 $210,000
10/1/14 $109,000 $17,000 $235,000
3/4/15 $120,000 $15,000 $184,000*
3/9/15 $127,000 $15,000 $235,000
7/1/15 $45,000 $0 $50,000**
7/10/15 $134,000 $16,000 $200,000
8/28/15 $91,500 $2,500 $170,000

Total Purchase Price                      Total Repair Cost                    Total Current Value

$1,665,218                                         $188,000                                $3,233,950

*I sold both these properties in 2016 for the value indicated.

** This was a turn-key rental property I bought in Cleveland.

Thanks to some great appreciation in Colorado and getting great deals on my rental properties they have performed awesome for me.

My book Build a Rental Property Empire, goes into detail on how I bought these houses, how I financed them, how I manage them, and much more.

How and when did I refinance my rental properties?

One of the best ways to get money out of your real estate investments is to refinance them. However, when you are refinancing investment properties you are usually not able to finance more than 75 or 80 percent of the value of the property. When I bought my rentals I put 20 percent down, which meant I had to get a great deal on them in order to refinance them to take cash out. In 2012 I refinanced one property, in 2013 I refinanced another property, in 2015 I refinanced two more properties, and in 2016 I refinanced 3 more properties.

Overall I got back close to $300,000 from refinancing my properties. All of my properties (except the turn-key rental), were great deals that made me money as soon as I bought them. That made it much easier to refinance the properties because I had so much equity.

Should you invest for just cash flow?

Why did I sell some of my rental properties?

I have written a couple of articles about why I stopped buying rental properties in Colorado, and why I sold two in 2016. Prices have increased substantially in my area, but rents have not kept up. I want positive cash flow on all of my rentals, and that is tough to do when prices are so high. The median price in my town is about $260,000. Not only did I stop buying rentals in Colorado, but I sold two of my rentals. I sold those properties because I did not like them as long-term holds. One property was a college rental duplex, and the other had a weird floor plan that made it hard to rent.

I did very well on those properties selling one for $199,950, which I bought for less than $90,000. The other property I sold for $184,000, which I bought for $120,000. If you add the money I got back from my rentals I got about $512,000 in total cash back from selling and refinancing my rentals. That is not quite as much as it took to buy my rentals, but I was also able to get a line of credit on another rental that I paid off. I used my cash flow from all my rentals to pay off the first rental I ever bought. I got a line of credit on that property for $120,000 which I used for my flips. I will not count that entire line of credit as cash back, because I used money to pay off that loan. However I bought that house for $96,900 with a loan of $72,675. If I simply subtract the amount of the loan I would have had from the line of credit I would have about $40,000 more in cash back from that property.

In total I have spent about $538,000 on my rentals and received back about $550,000 from refinances and sales. I still own 14 rentals and they still provide an awesome monthly income.

How to get a line of credit.

How much money am I earning every month on my rental properties?

Not only have I recouped all of my money back from buying and repairing my rentals, I make money on them every month. I have always shot for $500 per month in profit on each property. I did an analysis of my rentals a couple of years ago and was right on that number with my actual returns. That analysis was in 2014 and my rents have gone up on all of my properties since that time. However, my payments also went up when I refinanced some of my rentals and took cash out. My profit on my rentals is still right around $500 a month, which means I make about $7,000 each month. That is after paying taxes, insurance, maintenance, utilities and property management. The rents on my properties vary from $1,100 to $1,600 a month.

Not only do I make $7,000 a month on my properties, but I am paying down the mortgages every month, have awesome tax advantages, and the rentals I still own are worth about 1.3 million dollars more than what I paid for them (that accounts for repair expenses).

My future plans for rentals

I love rentals because of the income they can provide, the wealth they can create, and the little money they take to purchase compared to the returns they provide. I am not going to buy any property and hope it goes up in value. I want to make sure the rentals I purchase have cash flow and possible appreciation. I have thought about buying in other states or buying commercial properties in my area. I still have a plan to purchase 100 rentals by the year 2023, but I am way behind on my goals! I am not idly sitting by and waiting for the market to change, I have been flipping houses like crazy. I have 16 active flips going and will have a 17th later this week. When I do find more rentals to buy, I will be in a good position to purchase them thanks to the money I am making flipping.

 

3 Comments

  1. Landmark Village December 21, 2016
  2. Michael Ramos December 19, 2016

Add Comment

HTML Snippets Powered By : XYZScripts.com