In part four of our Multifamily Millionaires series, we highlight the incredible story of Dave, a full-time truck driver who transformed his financial life in just three years.
Dave embarked on his real estate journey with a clear goal in mind—to secure his financial future beyond what social security and traditional work offered. Starting with his home equity, Dave executed a series of strategic moves, transforming his initial investments into a multifamily portfolio worth over $6 million!
Building a Multifamily Portfolio: 4 Key Steps
Step 1: Leveraging Home Equity
Dave kick-started his journey by tapping into the equity of his fully paid-off home. He used this capital to purchase two multifamily properties. By strategically raising rents, Dave increased their value significantly. This initial step was crucial, setting the foundation for his future investments.
Step 2: Securing a Line of Credit
With the increased value of his initial properties, Dave was able to secure a line of credit. This credit line provided him with the flexibility to purchase a third property with an all-cash offer, acquiring it at a significant discount due to his ability to close quickly—within seven days.
Step 3: Strategic Refinancing
Recognizing the combined value growth of his properties, Dave consolidated them under one loan. He paid off the existing line of credit and used the remaining funds to buy properties four and five. Again, raising rents played a crucial role in maximizing property values, allowing him to execute a strategic refinance.
Step 4: Reutilizing the Home Equity Line of Credit (HELOC)
Dave then strategically reused his HELOC to further expand his portfolio with two more properties, leading to his current holding of 45 multifamily units, originally valued at four and a half million dollars, now worth over six million. Plus, he has successfully paid off his personal residence! His portfolio continues to grow in value, and he intends to expand further into larger properties using a 1031 Exchange.
From Truck Driver to Multifamily Millionaire
Welcome to part four of our Multifamily Millionaire series, where we shine the spotlight on ordinary individuals achieving extraordinary results through commercial real estate. In this interview, we feature Dave who, in just three years in our Protege Program, built an impressive 45-unit multifamily real estate portfolio.
Dave’s Motivation
Peter: Welcome everyone. Hey, thanks Dave for hanging out with us. I appreciate you being with us today, and I’m looking forward to what you have to share.
Dave: Great, let’s get into it
Peter: All right. Let’s jump right into it. What are some of the motivating factors of why you decided to pursue commercial real estate, particularly multifamily?
Dave: I think one of the main things was, thinking about the future, for example social security. These are things we don’t want to rely on. What can we do to control and have a little bit of that control as we get towards retirement? So, just thinking about the future in that way. So financial security was definitely a big one. You don’t want to have that option or not have that option to where you have to work and you can’t retire. Or you might be forced to because of health reasons. So a big why is to set yourself up now, think about the future and that’s what we were doing.
Balancing Truck Driving and Real Estate
Peter: Dave you’re a truck driver, right?
Dave: Yep.
Peter: What type of truck driver are you?
Dave: I haul fuel. It has a bad stigma about it, being high risk, and there’s some risk to it, it is physical, but I enjoy that. But it’s not something you can keep doing. So, I put a lot of hours into it.
Peter: So if there are truck drivers out there listening, I bet some of them are wondering, “Dave, how do you find the time driving a truck?” and end up buying 45 units worth six and a half million dollars. So how did you do it?
Dave: For me personally what I had to do is actually pivot. I had to look at my occupation and what I decided to do is flip from working early morning to working at night. And one of the reasons why I did that was because I wanted to have the accessibility to talk to brokers and do stuff while they were working. So I needed something where I can spend a few hours during the day when I get off after working at night and call brokers and reach out to property managers or have meetings, and get on group calls with commercial property advisors.
So I made a big move flipping my schedule over to do it. I enjoyed what I was doing, but did I want to be comfortable now and suffer later or make the move now and then be comfortable later? So, every situation is different, but that’s what we did and it paid off for us working with you guys.
Acquiring Properties and Scaling Up
Peter: That’s great. Switching your schedule so you can talk to brokers, visit properties, get on the coaching calls with us – and Dave switching that schedule over the last three years, look at what you accomplished! That’s nothing short of amazing. So, let’s jump into the deals. Over the last three years, you purchased seven properties, 45 units. So let’s talk about how you acquired them, the whole process is quite interesting.
Multifamily Deal #1 and #2
Dave: So, we started out, you and I talking, just kind of getting a feel for your program and everything. From there, once we got the ball rolling, you said, “Go out there, let’s do it.” We started out, where we did a refi from our home. So, I know you have a great video on that, How to Turn Your Home Equity into Monthly Cash Flow. So that’s where we were at. We had a home, but no cashflow. So we were thinking, what can we do to put the equity to work? And that’s when you and I were really talking seriously, discussing options. So what we did is we bought two properties with just a cash out refi.
Multifamily Deal #3
Then after that, we discussed, how can we scale more? And that’s when you got into saying, “Well, how much equity you got? Let’s see if a HELOC is an option.” So I went to talk to the bank, we went through numbers, and that’s how we got deal number three. After that is when the domino effect started.
Multifamily Deal #4 and #5
Once we got the properties stabilized and got a good team together. Talking with you about the numbers, when is the time to refi based on the value, based on the NOI, as you stress, where the cap rates were. We went ahead and we did a cash out refi on those 3 properties, combined them under 1 loan, took that equity, we paid off the HELOC, and then we were able to get properties 4 and 5 at that point.
Multifamily Deal #6 and #7
Once we let the dust settle there, we were still in acquisition mode, and we reused the HELOC that properties one, two, and three paid for and we got properties six and seven. Yeah, basically using that HELOC there was no money down because it was from the HELOC and then we used the bank’s money.
Rent Upside: Boost Cash Flow and Force Appreciation
Peter: Yeah, so brilliant. One thing you left out because you’re in it every day. On properties one through seven, you raised the rents and that was our focus on our monthly calls and sometimes weekly calls. There was an emphasis on getting those rents up, right? And you are even in a rent-controlled area and we’re able to get the rents up between nine and ten percent every year across all the units. So over time it raised the property values enough and that allowed you to pull the money out.
Dave: Correct. And just to touch on this; we got hit when COVID came. So, there were a lot of things happening there and we were able to still persevere through it. Real estate is resilient that way.
Importance of Property Management
Peter: One thing you mentioned to me, Dave, and we emphasize this in our program with our students, is property management. And I’ve heard you use the name Nicole, your star property manager, so many times I feel like I know her. She’s an amazing property manager. And that’s probably the key member of your team, right?
Dave: Oh yeah. Big key to that NOI (Net Operating Income). And adding value and putting that money to work to scale.
Achieving Financial Independence
Peter: That’s awesome. So, now these 7 properties are worth over $6 million and now that you have achieved multifamily millionaires status, what’s changed for you?
Dave: There’s a sense of freedom, Peter. I mean, all through the years I would hear about financial independence, the one percenters. I mean, my attitude wasn’t right. I’d just be like, that will never be me. But when that “why” is strong enough, it’s gonna cause you to pivot. You still gotta be smart, but now those risks or that fear starts to shrink because you’re like, I cannot leave an option to back out.
You got to move forward. And as I analyzed people doing it, and I’m watching interviews from your students before I got in the program, and I’m sitting there going, “We could do this, and we have to do it”. And that’s where the mentorship came in. We knew we couldn’t do it alone. I needed a little reassurance from someone that’s been there that’s done that, who can caution me of the red flags. So, there’s that sense of future, of security, to have that stabilized, and not relying on social security or the government.
Hedge Against Inflation
It’s given us options to build more income because social security is fixed. I do have a pension, but it’s fixed. And you can do your numbers at what you’re going to be at when you retire, but that number is fixed. And I guarantee you there’s going to be inflation every year, right? A minimum of 2 to 3%. So how are you going to make up that income? It’s like keeping a dollar in a jar. It’s going to continue to devalue. I believe in my opinion, your social security, your pension is going to devalue because that number is set. In the meantime, inflation is going like this. So we had to look at that and go, well, what can we do to even part time, build income. So that, that was a big why. Let’s plan for the future now and not wait.
Dave’s Pearls of Wisdom
Peter: Thanks for sharing that. Now that you have a few years under your belt, and you’ve been through seven transactions, could you share with us some of Dave’s pearls of wisdom that you’ve gained over the years?
Take Action
Dave: I would say one of them that held me back was take action. Don’t let the fear, false evidence appearing real, get to you because I think it holds a lot of investors back. I was one of them. I would listen to a lot of videos, but I didn’t take any action and that doesn’t get you anywhere, right? So, take action. Don’t let the fear stop you and then find a mentor that can reaffirm those numbers. Then when you find someone and it’s a go, then go for it.
In almost everything there’s a risk, there’s a risk everywhere So I just said, “You know what? If I can get educated, learn the numbers, and find a good mentor – there’s still risk but it’s so small once you get educated”. And you being totally accessible, if there’s any questions or any doubts, then I get connected with one of your team members. And as you learn more, it seems like the risk just starts to get very small.
Peter: That is so true. So, pearl of wisdom number one is take action. How about number two?
Build a Strong Team
Dave: Number two would be work on your team. How many property managers did we interview? And then we would go back, and we would talk about it, right Peter? And we would talk about the answers, and I would be like, “Peter, these are some of the answers I got. What are the red flags?” Because I didn’t know. Fortunately, we got connected with a great property manager, but we’ve heard stories of bad property managers. They’re the ones that are going to help you with that NOI which is going to give you that value on that property. Our property manager, Nicole, knows the rents across the street and if she tells me the rents could be $50 to $100 difference, well you better put those numbers in there.
So, I say get a team together, contractors, and lenders. Get some good relationships with lenders and get established there. And then brokers where you can get off market deals. I got pitched one just a couple weeks ago where the owner’s relocating and there’s a possibility we could double the value on that property. So, it’s huge, get your team together.
Peter: So, Dave, your team was responsible for half of your acquisition, right? Because out of your seven properties, four of them were found off market, but three of them were through your broker relationships, right?
Dave: Correct.
Nurture Broker Relationships
Peter: How do you get them to listen to you? How do you get their attention?
Dave: You build rapport with them. What I did above and beyond is, I would not just transact a deal with them and then just move on. Even when I wasn’t looking for a deal, I would randomly call the brokers and just say, “Hey what do you see in the market?” and just chat with them and then ask them, “Hey, what are you doing for the weekend or how was your weekend?” So, build rapport, show interest in them, and just stay connected with them and they’ll think about you. When they find that pocket deal, they’ll send you an email and they go “This might be a good fit for Dave, see what he thinks.” So yeah, that was a big one.
Seek Opportunities
Peter: Dave, do you have any bonus pearls of wisdom?
Dave: Be a contrarian. Think the opposite. When it’s easy to swim downstream, the opportunities are going to be upstream, right? So, I’d say, if you listen to the media don’t do what they tell you. Be cautious with that because there could be a lot of fear, going back to pearl of wisdom number one. You don’t want that to stop you. Seek opportunities and keep learning because the market’s always changing. It’s like you talk about, right? The best time to buy was five years ago, the next best time to buy is now.
So, the good thing is no matter what the market’s doing, you might hear, “Oh, this is not a good time to buy” I disagree because if the numbers pencil out you go for it. Our property number seven, that one was right when the market was in a downturn. I think that property we got a loan at a 6.5%. But that property we got I think for almost $450 to $500,000 less than asking when the rates were low and the caps were low.
So again, everybody was panicking. Banks were not lending. And I got connected with a banker and that said we can do that deal At 75% loan to value. I went back and did the numbers, we negotiated with the seller, he wanted to move on that property and the numbers worked.
Peter: Yeah, your last property, probably the best one, you bought at ironically “the worst time”. Contrarian thinking, right?
Dave: Exactly.
Peter: All right, Dave. This has been so awesome. I’m sure our audience is going to eat this up. We appreciate you so much for sharing all your wisdom and look forward to what’s going to happen with these seven properties. And some of them you’re going to sell and 1031 exchange into larger projects. Look forward to working with you on that as well.
Dave: Yes, definitely. And again, just thank you for everything Peter, getting us to this point. It’s like I said, when you start out small, you feel like there’s a lot of risk there, and I would just encourage anyone listening to this, just seek a mentor and Commercial Property Advisors is fantastic. I know even from our first refi, it more than paid for the tuition to get into it. So, it’s huge. I’m very encouraged. And a shout out to Chris and Bruce, those are fantastic videos too. I know I got a lot out of those.
Peter: Awesome. I’m sure they’ll get a lot of your video. I appreciate you, Dave. We’ll talk soon.
Dave: You take care.
4 Keys to Dave’s Success
Raising Rents Strategically: By consistently focusing on increasing rents, Dave effectively increased his properties’ net operating income and the property values. This strategy provided him with leverage to refinance and grow his portfolio.
Hiring an Exceptional Property Manager: Dave hired Nicole, a standout property manager, to manage all aspects of his properties. Her expertise in maintenance, marketing, and financial management was instrumental in keeping operations efficient and maximizing property value.
Controlling Expenses: Keeping expenses in check was essential to maintaining a strong net operating income. By controlling expenses, Dave ensured property values continued to rise, supporting our refinancing strategy to acquire additional properties.
Intelligent Use of Debt: Dave utilized debt wisely to multiply his investments. By strategically leveraging the financing on his properties, Dave methodically expanded his portfolio from one to 45 units.
Finding the Best Deals
Dave found that the best deals were often off-market, underscoring the importance of finding opportunities outside conventional listings like the MLS or LoopNet. Four of his property purchases resulted from off-market strategies, while strong broker relationships facilitated the remaining deals. Despite being an introvert, Dave excelled at nurturing broker relationships, ensuring he remained a top candidate for exclusive deals.
Dave’s Journey to Financial Freedom
Dave’s story demonstrates how ordinary people can achieve extraordinary financial success through strategic real estate investments and mentorship. By leveraging his existing assets, focusing on raising rents, and fostering strong professional relationships, Dave has paved his road to a more secure financial future. His story inspires aspiring investors to take action, build strong teams, and continuously seek opportunities in the ever-evolving real estate market. Whether you’re just getting started or looking to expand your portfolio, Dave’s experience with our team offers invaluable lessons.
Questions or Comments? Text PETER to 833-942-4516.
Every Successful Multifamily Millionaire Has a Mentor
Remember, the best time to start was five years ago; the second best is today. Let’s get started! Apply here and get mentored by me and my team: Commercial Property Advisors Protege Program
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