Dear readers, yes this is a true story. The funny part is that I have been so focused on my clients’ investment properties that I only realized the results for my own portfolio just this month, after 4 years! The realization came as I was filling out my real estate schedule to get approved for an 11.6 million dollar loan with my partner for a 116 unit multi family property- a crazy advancement that I had been dreaming of for the last 3 years. The move to this point was difficult. I felt that I constantly was butting up against a glass ceiling until now.
To be fair, the initial $100k came from my father as a gift. I know I am incredibly lucky to have a father who can provide me such an opportunity, and for a long time that made me invalidate my own successes because it felt like of course I should be successful with such a start. However, now that I see what I did with the money and also have the experience to see how other people have squandered the same opportunities, I finally feel that I earned what I made from it and not to be ashamed that I received an easier start. In the end, I still learned this business from scratch, with no education in it, just by watching and doing.
How Did We Do It?
My first purchase was in May 2016 of two houses from an investor who I had worked with to provide due diligence materials for the foreclosure auctions. They were two 3 bedroom, 2 bathroom properties both on Wood Knoll Dr in Jonesboro, GA for $92,000 total. At the time this was expensive 😂! They needed a few thousand dollars of work, but not too much. I bought them together in cash, crediting my real estate commision into that (as a licensed agent) coming to a total of $90,656.
Next, I sold one of the houses in June 2017 for $70,000 (It appraised for 75k), in effect regaining most of my investment plus earning about $24,000 in one month.
Then, I purchased Pineglen in November 2016, a 3 bed, 1.5 bath home in Riverdale, GA for $55,000 but with a mortgage, so I only put down $18,235. I bought it renter occupied, and the same renter still lives there now.
At this time, I had already made money in two months, and had about $52,000 left to reinvest. So I purchased my next property, a 2 bed townhome in Hampton, GA for $55k with a mortgage. Therefore, only putting down about $6,000!
Then, I financed the remaining property on Wood Knoll Dr that I had originally bought in cash in April 2017 for a loan amount of $51k and received about $19k back from the value increasing.
Finally, I purchased a 2 bed townhome in the tax auction for about $13–15k. This one was renter occupied already, but I had to wait a year and a half before taking full possession and paying an extra $1000 to my attorney to do so. Even though there is a high HOA fee there of $220 a month, the property is now worth about $58k and the rent is $925/month meaning a return of 33% on cash flow, plus the property is worth 4.5 times as much!
Now I am left with about $49,000 in cash that goes to my savings account! Plus the gross cash flow from 2017–2021 equals $199,988, or about $120k net income including mortgage interest payments.
The Final Result
Now four years later, the value of these four houses has gone up to a total of $454,396, with a current total investment of $40,235 in cash, and a total loan amount of $97,971, equaling an IRR of $144.47%!
But amazingly, the benefits don’t stop there. Thanks to these properties and others that I acquired later on, my equity in conjunction with my partner’s equity allows us to make a huge transition in my career, from 3rd party or minority partner to sponsorship.
So all in all, $100,000 or any amount of money can be very powerful in achieving your goals if used right.
Originally published at https://www.eecapitalmanagement.com.
