The Repeatable “Stack” Method to Buy Rentals Faster (and with Less Money)

One of the most repeatable, scalable ways to build a real estate portfolio is using “The Stack” method. This investing strategy allows you to slowly scale your real estate using low-money-down loans, turning one down payment into multiple properties. It’s one of the smartest, safest ways to build wealth, but it’s almost been forgotten. Today, we’re talking to an investor reviving “The Stack,” using it to build an eight-rental real estate portfolio starting with just $15,000. Like most investors, Connor Anderson had barely enough money to close on his first house, a condo. He scrounged together just $15,000 to buy his first property and immediately began to rent out the other rooms. But this was just the beginning for Connor. Over the next few years, Connor slowly turned the rent savings from that one condo into a single-family house, a duplex, and now a fourplex, which he is still house hacking in. The best part? Those properties he used to live in are now cash-flowing rentals WITH equity, which he has used to buy more properties. This is “The Stack” method done the right way, and if you want to safely, slowly, and steadily grow your rental portfolio without a ton of money, this is how to do it. In This Episode We Cover: “The Stack” method and how to use it to build a rental portfolio with little money Why you DON’T need to rush building a real estate portfolio to be successful One investing area that both Connor and Dave are very bullish on How Connor scored a zero-dollar-down, off-market duplex Interest rate buydowns and other strategies to create cash flow in 2025 And So Much More! Links from the Show Join BiggerPockets for FREE Let Us Know What You Thought of the Show! Ask Your Question on the BiggerPockets Forums BiggerPockets YouTube Maximize Your Real Estate Investing with a Self-Directed IRA Grab the Book “The House Hacking Strategy” Find an Investor-Friendly Agent in Your Area The Stack: The Perfect Blueprint for Scaling Quickly in Real Estate Connect with Connor Connect with Dave (00:00) Intro (02:36) First Deal for $15,000 (Condo) (08:23) Home Run Rental for 5% Down (House) (12:03) Off-Market $0 Down Duplex (17:36) The “Stack” Method (23:20) “Turnkey” 5% Down Fourplex (25:58) How to Find Cash Flow in 2025 (29:00) Best Area to Buy? Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1078 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected]. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Dave Meyer?

  You can still hustle your way into a cash flowing real estate portfolio with upside despite today's market challenges. You hear me say it over and over. I am long on the Midwest and I think house hacking is the best way to start investing. And if you haven't heard of the stack method, it still works to exponentially scale within just a few years. And today we're speaking with an investor who is living proof that all of these strategies can be huge winners in today's investing climate. Connor Anderson used to work here at BiggerPockets and has since left to build an impressive portfolio in Michigan using the stack method. He's progressed from a condo to a single family home and he's now on to multi-unit

• 0:48Dave Meyer?

  properties and is finding both cash flow and future upside despite today's market conditions. If you're not familiar with the stack method, or you're still not convinced about the Great Lakes region, I think this conversation will give you a lot to think about and to consider for your own portfolio. Let's bring on Connor. Connor Anderson, welcome to the BiggerPockets Podcast.

• 1:08Speaker 01

  Thanks for having me, Dave. I'm excited to be here.

• 1:10Dave Meyer?

  I'm excited too. You are joining a growing tradition of former BiggerPockets employees who have become successful real estate investors and come back to join the show and update us on your life. It's great.

• 1:22Speaker 01

  I know there's a couple of other people that have done the same thing and I want to, yeah, to share my story with everyone here.

• 1:26Dave Meyer?

  Great. Well, we'll get to what you're up to today, but let's just start with sort of the reasons that you got into investing in the first place. When was that?

• 1:36Speaker 01

  I remember thinking specifically, I was sitting in my six bedroom house that I was renting with my friends in college and the landlord, they were just kind of a mom and pop. They'd show up once a month, collect checks from us and they didn't seem like they were all that special. And I'm like, well, I could do this. And I'm like thinking like, all right, they're collecting 500 bucks per person here. I want to be doing that someday and just pad my, pad my wealth that way.

• 2:04Dave Meyer?

  Yeah, it's a very good thought. I really cringe thinking about how poorly I treated the rental properties I lived in college. Now as a landlord, I'm like, oh my God, how irresponsible.

• 2:17Speaker 01

  Yeah, it's funny. I've seen those properties that I lived in pop up for sale. And my brother's like, you should buy one of these. And I just think back to how poorly we treated them. And I'm like, absolutely not. I do not want to be on the other side of that.

• 2:30Dave Meyer?

  I know the problems of that property because I created them.

• 2:35Dave Meyer?

  We're avoiding those. Okay, so you're in college and then how did you go from listening to podcasts, interested in real estate to actually investing?

• 2:45Speaker 01

  Yeah, so graduated college, moved out to Denver and that's, you know, when I ended up with a job at BiggerPockets because I was a big fan of them prior, just kind of connected with Scott Trench and Craig Kerlap. And, you know, landed a job there doing advertising sales. But truth be told, I did everything that is advised for new investors to get started. And I cut my expenses to as low as I possibly could to save as much money. So I was renting out my car on Turo and then biking 10 miles to work every single day. I was keeping my grocery expenses super duper low. Maybe spent like 50 bucks a week on groceries. I even used PTO to take a day off of work at BiggerPockets, still kind of collect my salary

• 3:29Speaker 01

  and then work for my friend's tent rental company to save up extra cash. So

• 3:33Dave Meyer?

  Double dipping on BiggerPockets. But I mean, you're allowed to.

• 3:37Speaker 01

  Yeah, so I was doing anything and everything I could to scrape together enough money to, you know, buy that first property and house hack with an FHA mortgage. So that's what I did from probably a six to eight months of just absolutely grinding it out, saving to, yeah, buy that first house hack.

• 3:51Dave Meyer?

  I feel like I need to ask you to share the story about living in Craig's house. Because I know you were, you were saving up a lot of money. Can you tell us about your, your living arrangement with Craig Kerlap? Who, if you don't know him, he's been on the show many times. He wrote a book on house hacking for BiggerPockets.

• 4:06Speaker 01

  Yeah, so it's a funny story, but Craig and I were good friends and we came up with an arrangement that incentivized me to buy property as quickly as possible, but also saved me money. So I moved in with Craig into a second house hack and was paying him $400 a month in rent. But my rent went up $50 a month until I bought a house. So basically, he was trying to get me out of there, you know, out of there and into investing as quickly as possible. So it was a fun arrangement that we, we put together. And I think I was there for like maybe six or so months.

• 4:39Dave Meyer?

  That's hilarious. A tough love situation. You started at 400 and but you're paying 700 a month? That must be very motivating. I would like. That's pretty high pace of inflation. It's like 10% a month.

• 4:50Speaker 01

  Yeah, I I've never heard of anyone's rent going up $50 a month. It's maybe $50 a year. So

• 4:56Dave Meyer?

  Yeah.

• 4:56Speaker 01

  I was motivated to get out of there.

• 4:58Dave Meyer?

  But it worked.

• 4:59Speaker 01

  Yeah.

• 5:00Dave Meyer?

  Could you tell us a little bit more the numbers about what target price you were looking at for your first deal and how much you needed to save up?

• 5:08Speaker 01

  Yeah, so I was pre-approved for around like $250,000 to $280,000. And this was back in late 2018. So with an FHA mortgage, I think I ended up all in toed spending about $15,000 out of pocket for the down payment and closing costs on that purchase. And I remember closing on the property, I showed up to the closing table with my mattress strapped to the top of my car. I got made fun of by my real estate agent and my lender. Who and but I was so excited. I want to move into the house. But I had like maybe $1,500, two grand to my name after that closing. But I was I was excited to move in.

• 5:48Dave Meyer?

  That's unbelievable. I have never heard of or seen someone showing up ready to move to a closing table, but I love the enthusiasm.

• 5:56Speaker 01

  Yeah.

• 5:56Dave Meyer?

  So you also mentioned something that I want to call out, which is that it sounds like you got pre-approved for your mortgage like pretty early on, which is a step I think a lot of people skip when they first get started. And spend this time wondering what they'll qualify for, or how much money that they need to save up. But just wanted to recommend to everyone to do what Connor has done if you're trying to get your first deal, because he knew exactly what he was pre-qualified for. You can build a buy box around that and you can set a savings target and sort of back into how long it's going to take you to buy a goal. So great, great work there. When you were trying to look for this first deal,

• 6:38Dave Meyer?

  did you have a long-term strategy or were you just trying to buy anything that you could afford and sort of make work?

• 6:45Speaker 01

  Yeah, so I was really just trying to buy anything that I could afford because, you know, Denver is expensive. My income wasn't crazy high yet. So that $260,000 range is basically all I could afford. And in Denver, that basically meant I could buy a townhouse. So I found a townhouse that was two bedrooms, two and a half bathrooms with an unfinished basement, knowing that I could finish out that basement. I lived in the basement bedroom and then I rented out the upstairs bedrooms for about $800 a month and I accomplished the goal. I was living for free.

• 7:18Dave Meyer?

  Awesome.

• 7:18Speaker 01

  So yeah, took that pre-approval, worked with what I had and found a property that made sense.

• 7:24Dave Meyer?

  Were the roommates that you had random people you just met? You found tenants or the people you knew?

• 7:29Speaker 01

  No, they were friends. One of them was a friend from college who also moved to Denver and the other was a friend from the gym. But yeah, I think that's the best way to get started is, you know, finding some friends that are looking to rent.

• 7:42Dave Meyer?

  Yeah, it's such a good way to do it. It makes a lot of sense. So you wound up doing a little bit of value add to that deal though, too. You finished out the basement. Did you do it yourself or pay someone to do it?

• 7:53Speaker 01

  A little bit of each. I handled, you know, some of the paint and the trim, but I hired out the drywall and the electrical and the carpet.

• 8:00Dave Meyer?

  Okay, so that was your condo. You house hacked it. How long did you live there?

• 8:04Speaker 01

  I was there for about a year and then I moved back to Michigan from Denver to be closer to family and friends. And that's when I bought my next property. But I still own that property today. I've had some long-term tenants there and it's still cash flows a couple hundred dollars a month to this day and it's gone up quite a bit in value. So that's been a great first deal for me.

• 8:23Dave Meyer?

  All right. So you left Denver, you moved to Michigan where you're from. What, what did you do when you got there?

• 8:29Speaker 01

  I lived with family and then bought my property in Grand Rapids. And I'd ever actually lived in Grand Rapids, but I just knew that it's the second biggest market in Michigan. It's quickly growing. It attracts a lot of young people. So I just knew that's where I wanted to be. So this was the midst of COVID when I was buying this property. I couldn't actually tour it until I got under contract. So I just, you know, one day looked on Zillow. Drove by six houses that I thought were interesting to me and ended up writing an offer on one of them. And it's been a fantastic property.

• 9:00Dave Meyer?

  You just drove by it and wrote an offer?

• 9:02Speaker 01

  Yeah, drove by it, wrote an offer. Yeah.

• 9:04Dave Meyer?

  That's awesome. In a city that you barely knew?

• 9:07Speaker 01

  Yeah, I had spent some time there, maybe for a day or an afternoon, stuff like that. But I'd never actually lived there, but I knew it was just where I wanted to be.

• 9:14Dave Meyer?

  Yeah. And great fundamentals in the market. So that that totally makes sense. And how did you afford that? Cause it sounds like you sort of did the hustle thing for the first deal. How did you finance the second one?

• 9:26Speaker 01

  So finance the second one with a 5% down conventional mortgage, but since I was house hacking for a year, it was very easy to save up that cash. I didn't have to rent out my car and never eat out for an entire year. I was able to kind of enjoy some luxuries.

• 9:44Dave Meyer?

  Drove to work.

• 9:45Speaker 01

  Yeah, it was a lot easier to save up for that second property because my living expenses were so low from house hacking the first time around. So that's why you get into this. That's why you house hack because it allows you to slowly build up and save money pretty easily.

• 9:58Dave Meyer?

  Awesome. So you found that you moved into it and then just, I assume for a little while focused on building out your agent business.

• 10:09Speaker 01

  Yeah. So when I was living in that single family house, I did have roommates for a period of time, but thankfully the mortgage on it is so low. It was like, you know, $1,400. So with roommates paying $500, $600, you know, that covered the vast majority of the cost. But that's when I really started hitting the ground running as a real estate agent in Grand Rapids. So this was May of 2020 that I bought that property for, you know, $225,000, gone up quite a bit in value. And right now rents for about $2,400 and cash flows pretty well. But

• 10:37Dave Meyer?

  Awesome.

• 10:37Speaker 01

  In those four and a half, five years since then, I've become a very successful real estate agent focusing with investors have sold about 150 properties since then. And the main people that I work with are investors just like myself. Many of them house hackers, some of them out of state investors. Or in-state investors, along with, you know, helping my family and friends buy their properties as well.

• 10:59Dave Meyer?

  That's great. I'm curious and congratulations on building such a great business. But now that you've been an agent there for a long time and you know the market so well, did you make a good buy on the, on the single family?

• 11:12Speaker 01

  I did. I completely lucked out. I didn't know really much about the market other than like, hey, this seems like a good spot, but I absolutely love that property. I think I bought it in the perfect location. I don't think I could build a house within a different block. Like I, that's just where

• 11:26Dave Meyer?

  Really?

• 11:27Speaker 01

  I would like to be long-term. So no, I really lucked out.

• 11:30Dave Meyer?

  It's so funny because I know I'm like the data person, but intuition goes a long way with these types of things, even if you're just driving around, you just get a gut feel of where you want to live because you will get a sense for which places are growing and which places are most aligned with your strategy. So good job on that.

• 11:49Speaker 01

  Yeah, thank you.

• 11:50Dave Meyer?

  All right. So you bought your condo, you bought your single family, you're building an agency business. I want to hear what comes next, but first we got to take a quick break. Trying to get started in real estate investing or wholesaling? The hardest part is finding and talking to motivated sellers before everyone else does. That's why new investors are using PropStream. PropStream gives you access to over 160 million properties nationwide, plus simple AI tools that help you find better deals faster. Use pre-built lead lists like pre-foreclosures, vacant homes and cash buyers, then let the PropStream intelligence assistant help you analyze properties and estimate opportunities

• 12:31Dave Meyer?

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• 13:14Henry Washington?

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• 13:57Henry Washington?

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• 14:14Dave Meyer?

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• 14:59Dave Meyer?

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• 15:43Dave Meyer?

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• 15:58Dave Meyer?

  We're back with Connor Anderson, talking about how he went from house hacking and hustling to having a growing and successful portfolio. Connor, we talked about your deal in Denver, your single family home as your first property in Grand Rapids. What did you do after that one?

• 16:13Speaker 01

  Yeah, so I bought that property, the single family house, in May of 2020, and then became a real estate agent. And during that time, quit my job at BiggerPockets and went from W2 to 1099. And unfortunately, I had to wait a couple of years until I was able to buy that next property because financing was no longer easy for me as a 1099 employee without any sort of track record.

• 16:35Dave Meyer?

  Yeah, you know, I'm sure you're here on the podcast too. People are always talking about whether they should become a real estate agent in this decision. And there's no right or wrong answer, I think, to this. But the very important component of this is that getting loans as a 1099 employee, whether you're an agent or any other type of 1099 employee, is a lot harder. You could do DSCR loans, but those are more expensive. But so it's just something to take in consideration.

• 17:01Speaker 01

  Basically, the lender just needs to see that you have strong, steady income coming in from being a 1099 employee. In my case, I kind of had like a half a year on my first taxes, and then I had two full years, you know, after that before I was able to buy my next property.

• 17:16Dave Meyer?

  And what did you buy?

• 17:18Speaker 01

  It was 2023, so. There was not a ton on the market at the time. Listings were pretty low, so I created my own inventory. I went and basically scoured every single expired listing, withdrawn listing, or canceled listing in the area that I wanted to live. That was a duplex or two to four unit property and reached out to every single one of those sellers that had a property that I thought was attractive. Got one callback from a guy who had 13 or 14 properties that he was looking to offload. So I picked my favorite one, closed on that with an FHA mortgage, used my commission to cover the vast majority of my down payment.

• 18:03Speaker 01

  It's actually kind of funny. I collected a check at this closing table.

• 18:06Dave Meyer?

  Wait, how?

• 18:07Speaker 01

  So 3% of my commission covered 3% of the down payment.

• 18:12Dave Meyer?

  Yeah.

• 18:12Speaker 01

  I had $5,000 in closing costs that I had the seller pay for because there are some work that need to be done. I closed strategically on like the first or second day of the month, so I got all the rent for that month. Plus their tenant's security deposit, which is, it's not my money, it's the tenant's money, but still it's money that was credited to me. And then, of course, I had my earnest money deposit that I paid upfront, but I think all been told, my cash out of pocket to close on that property was like five grand, but I collected a check at the time of it.

• 18:42Dave Meyer?

  That's unbelievable.

• 18:43Speaker 01

  Yeah, it was, it was a very weird experience. The lenders were confused. They didn't know what to do.

• 18:46Dave Meyer?

  Yeah. I was gonna say, you've been a part of, you just said 150 transactions since. Have you ever seen any other buyer get a check?

• 18:53Speaker 01

  No, no buyers ever pulled that off.

• 18:55Dave Meyer?

  Anyone listening, if you've had this happen, please let me know. I'm very curious if this is a, a once in a lifetime thing. So let's dig into this one because obviously 2020, 2023, big shift in market conditions. First of all, like, you know, if you had looked at an on-market deal, was there anything attractive? Or was going off-market and sort of grinding it out the only way to find something that really made sense?

• 19:21Speaker 01

  Yeah, just the inventory has been a struggle for the last five, six, seven years. Like it just is an issue, especially here in Grand Rapids, so. There was just not many deals to pick from. There is maybe 10 to 12 listings for multifamily properties on the market compared to right now, we're seeing like 40 to 50. So it was slim pickings. So I had to kind of go off market to even find something that I would want to live in.

• 19:46Dave Meyer?

  Yeah. How much time did that take you?

• 19:49Speaker 01

  See, I might've gotten lucky, but it did not take terribly long. Like I mentioned, I kind of, you know, went through all these expired listings, canceled listings and reached out to probably 20 or so people and got a response within a week.

• 20:01Dave Meyer?

  Okay. So 20 people in a week. Yeah.

• 20:03Speaker 01

  But I found the right guy because I bought that property and then built a relationship with him, built some trust with him, and he decided to offload his entire portfolio with me that year. So not only did I buy one of his properties off market, I sold in another 11 properties for him that year, which was, it was about $45 million worth of real estate that I sold for him that year.

• 20:24Dave Meyer?

  Four to five, not 45, right?

• 20:26Speaker 01

  Yeah, four to five. Yeah.

• 20:27Dave Meyer?

  Okay. I was gonna say, wow. So we talked a little bit about one of the potential drawbacks of becoming an agent of 1099, but it sounds like this is one of the real benefits that you've experienced by being an agent. Do you think you could have pulled this off if you weren't an agent yourself, this type of off-market deal finding?

• 20:44Speaker 01

  I think I could have found the deal, yes, but I definitely would not have been able to build the relationship with that owner and be like, hey, I want to sell your properties for you if I was not licensed. And I don't necessarily recommend everyone get licensed if they're going to be a real estate investor. Now, I kind of don't recommend you get your real estate license if you're just going to be an investor.

• 21:04Dave Meyer?

  Agreed.

• 21:05Speaker 01

  But vice versa, if you are a real estate agent and you're not investing in real estate, you need to start considering that.

• 21:11Dave Meyer?

  My advice to people is usually that to be an investor, you just need income. You know, it's like you need a job, I believe. And if being an agent is going to get you a lot of income that you can use to invest, great. If you have another job that's going to make you more money, probably just stay there and then invest the money that you have there. But geez, there's obviously trade-offs.

• 21:30Speaker 01

  Yep, absolutely.

• 21:31Dave Meyer?

  So it's interesting about your story, Connor, is that you sort of have gone in this like slowly escalating path, right? You started with a townhouse, then you went to a single family home. Did you purposely then go to a duplex to try and like start to get some scale in terms of number of units?

• 21:48Speaker 01

  Yeah, I just, I just kind of took the cars that I was dealt and you know, when I was looking to buy, bought opportunities that I think that would make sense. And you know, when I first started investing, all I could really afford was a townhouse. When I bought the second property, there wasn't really any duplexes available. This next time around, you know, was able to find them off the family property that made sense. And for the fourth deal, you know, was able to buy something even bigger. So I've just kind of been taking advantage of what was out there in front of me and available at any given time.

• 22:17Dave Meyer?

  Well, I want to talk about the bigger thing too, in just a minute, but I want to call out that, you know, Brandon Turner, former host of this podcast, has this concept of the stack method where he advises people to buy, you know, in your first year, buy a single family. And then in your second year, or your second deal, even if it takes you more than another year, go buy a duplex. Then the following year, do a fourplex. And you've sort of embodied that. I think it's a great strategy. I personally like getting to that fourplex, sixplex, eightplex. You don't necessarily need to get into these like huge multifamilies, in my opinion, but I really think for people starting, it is a good mindset to have. And it sounds like you just did that sort of naturally.

• 22:57Speaker 01

  Yeah, absolutely.

• 22:58Dave Meyer?

  All right. So tell us about the duplex. You got paid to buy this duplex somehow. I assume you moved into it and house hacked. And then was it cash flowing? Did you have to do any work to it?

• 23:08Speaker 01

  Yeah. So this duplex is a three bed, two bath each side. And there's not very many side by side, three bed, two bath duplexes in this portion of town. So I knew it was a very rare opportunity that I wanted to take advantage of. One side was pretty nice. It has some great tenants in there. The other side was gross. Had just kind of some guys that, you know, worked at bars, late nights. One was a drummer and there was just, you know, always empty beer cans and cigarettes being smoked on the front porch. So when I got in there, I had to do a ton of renovations. Basically I did everything but take it down to the stud. So I did all brand new electrical because there was knob and tubing there. Did all new plumbing because there's lots of galvanized plumbing in there.

• 23:53Speaker 01

  All new flooring, all new paint. The kitchen we ripped out because the cabinets were so gross and stained from. They're cooking or whatever. They just, they just cannot be salvaged. And then, you know, the bathrooms had to re-glaze the showers because they were just moldy beyond belief and, you know, cannot be cleaned up. So did everything to that property that you basically can. And the way that I paid for that was with a HELOC that I took out of my old primary residence, that single family house before I moved out of it.

• 24:24Dave Meyer?

  Oh, nice.

• 24:24Speaker 01

  I took a HELOC on that and used that for the renovation cost of the duplex.

• 24:28Dave Meyer?

  How much did you budget for the renovation? Did you hit the target?

• 24:32Speaker 01

  I was budgeting like forty to forty-five thousand dollars. I think it came in at about fifty thousand dollars. Had like one hiccup with the city. The city made me basically reinstall the electrical service because it was too close to a set of stairs. So that was annoying. That cost me about three grand. And then it added air conditioning as well in the side. And that, you know, boosted up the budget a little bit, but made it a heck of a lot nicer to live in.

• 24:59Dave Meyer?

  Okay, great. And then when you leased it up, were you able to get the rents that you were expecting?

• 25:06Speaker 01

  Yeah, I got a little bit higher rents the first go around. So I've had a couple of different tenants now on that property and been getting between nineteen hundred and twenty-one hundred dollars a month in rent for the, the each, each side. So it is renting for at or just above the one percent rule because I bought for four-ten.

• 25:23Dave Meyer?

  Oh, that's amazing. Okay, so four-ten, but you had a total of like four-sixty in it by the end?

• 25:29Speaker 01

  Yep.

• 25:30Dave Meyer?

  All right, great. And now is it cash flowing?

• 25:32Speaker 01

  It does cash flow. The, the mortgage payment, including the HELOC is about thirty-two hundred dollars a month. And then getting rents of, you know, two grand each side is, you know, four grand a month. So toss in about three hundred dollars, forty dollars aside for vacancy and repairs. The cash flow is two to three hundred dollars a month.

• 25:51Dave Meyer?

  That's awesome. That's great. And it sounds like a really good deal. I assume it's in a good part of town and that you think it's like got some long-term potential.

• 25:59Speaker 01

  Yeah, it's in a neighborhood called Heritage Hill in Grand Rapids, and it's super close to the wealthy street district, which has all the, the coffee shops, the restaurants, the cocktail bars, just the places that, you know, young professionals oftentimes want to be.

• 26:11Dave Meyer?

  And so what, what was the experience like doing your first sort of, it sounds like a big renovation project?

• 26:17Speaker 01

  It was somewhat stressful because I was doing this, I mean, while living in the property. Sometimes during the renovations, I wasn't actually living there. So, you know, living in a construction zone is not fun. I hired out a good portion of the work. So all the electrical, all the plumbing, refinishing the floors and the carpet I hired out. But I was doing all the painting. My dad and I did, you know, installed the kitchen. So I was there basically, you know, every single day with some help from my family, putting together this property, while also selling a number of properties and getting constant phone calls from my buyers, my sellers. It was a lot of work. Took about three months to do the renovation and I'm very happy that I did it.

• 27:01Dave Meyer?

  Cool. Well, that sounds great. You alluded earlier to buying a even bigger property, which I want to hear about. But first, we got to take a quick break. Stick with us. For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple. But honestly, it was really overwhelming. It was pretty time consuming and still, the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps

• 27:41Dave Meyer?

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• 31:27Dave Meyer?

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• 32:09Dave Meyer?

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• 32:29Dave Meyer?

  We're back with Connor Anderson on the BiggerPockets Podcast, talking about how he has built a successful portfolio, starting before the pandemic, but has continued to grow even in the higher interest rate era. He bought a duplex, renovated it. Connor, what'd you do after that?

• 32:46Speaker 01

  Yeah, so was in that duplex for about a year and a half, and then just recently bought a four-unit property that I'm also house hacking.

• 32:54Dave Meyer?

  So four house hacks in a row, right?

• 32:56Speaker 01

  Yeah.

• 32:57Dave Meyer?

  Over five or six years?

• 32:58Speaker 01

  Started in December 2018, and this last one was purchased December of 2024. So yeah, six years to buy four properties.

• 33:06Dave Meyer?

  Awesome. Great. So tell us a little bit about the deal. What did it look like? How'd you finance it?

• 33:11Speaker 01

  Yep. So this deal was, it was listed on the market. It was a four-unit, about a mile to the hospitals here in Grand Rapids. And it was originally listed at $630,000, which I just thought was a very high price. And I'm paying attention to the market all day, every day for myself and for my clients. And I'm like, that's just too high. So waited for probably 30 to 40 days on market before I finally wrote an offer on it and used 5% down conventional financing to buy this with the owner occupant for $580,000.

• 33:44Dave Meyer?

  Wow. Okay, that's great. Are you doing another big renovation? Or how's the condition of the property right now?

• 33:51Speaker 01

  Yep. So they're all two-bedroom, one-bath units. And thankfully, the previous owner did a fantastic job of renovating the property to the point where it's completely turnkey. The only thing I plan on doing to the property is, you know, when tenants turn over, just getting, going from green paint to some other nice color. But yeah, it's really just going to be paint and maybe carpet whenever tenants move out. But it's as turnkey as it can get.

• 34:20Dave Meyer?

  Oh, that's awesome. So you're up to eight units now?

• 34:22Speaker 01

  Correct.

• 34:23Dave Meyer?

  That's great. And do you have a strategy for where you want to take your portfolio from here?

• 34:28Speaker 01

  I think I just want to continue to slowly grow. And thankfully, you know, since I have been able to build up a sizable portfolio and, you know, make an income as a real estate agent, I think, you know, can kind of have that more exponential type growth. But my next property, I want to start trying the short-term rental space.

• 34:45Dave Meyer?

  Oh, nice.

• 34:45Speaker 01

  Mainly because I just want to have second homes in different parts of the country that I can take advantage of.

• 34:51Dave Meyer?

  Of course you do. It's awesome.

• 34:54Speaker 01

  That sounds fantastic.

• 34:55Dave Meyer?

  Yeah.

• 34:56Speaker 01

  But no, I closed on this property less than two months ago. I haven't had my first mortgage payment, so I don't have a dialed in plan of exactly what's going to be next to when, but I think I might dabble in the short-term rental space next.

• 35:08Dave Meyer?

  You know, we've interviewed a lot of people on this show who started before the pandemic and things have definitely changed. I'm curious, what gives you the confidence and the ability to find deals and keep wanting to invest even in a different era of real estate investing?

• 35:28Speaker 01

  Yeah, I think, I mean, there's just two things that I pay attention to when analyzing a deal, and that's how much will it rent for? And what's my mortgage payment? And as long as I can have a healthy enough spread between those two numbers, I think it's going to be a good long-term deal. So for this, this four unit that I bought, I know that, hey, market rents are going to be about $1,500 per unit. So that's $6,000 of rent coming in and the mortgage payment on it is right around 4,800 to five grand. So I have like a thousand dollars of spread there that I can kind of make sure that I am afloat on that property for a very, very long period of time.

• 36:10Speaker 01

  You know, there might be some years where $800 of that difference is going towards vacancies and repairs and only $200 of it is cash flow on a monthly basis. But there'll be other years where, you know, maybe it's the opposite and only $200 of expenses I average on a monthly basis and $800 is cash flow. So that's really all I look for is just have build a nice spread between rent and the monthly payment.

• 36:33Dave Meyer?

  And you've done this by entirely house hacking and people who listen to the show know that I am, I'm long on the Midwest. I think affordability is a really good, important metric. Is it possible to generate cash flow in Grand Rapids or in other markets in Michigan where you, where you operate if you're not house hacking right now?

• 36:54Speaker 01

  There definitely is the ability to create cash flow. Is it as good as the cash flow that we saw in years where the interest rates were three, four, or five percent? No. But I think with getting, you know, creative and also especially if you're managing your own property, yes, it is definitely possible to, to cash flow rental properties. One way that I have gotten creative is I did a two, one interest rate buy down on this property, which I'm not sure if you've talked about in this show, but basically I got the seller to pay upfront concessions to where my interest rate on that property for the first year is 2% lower than the current interest rate. The next year is 1% lower. And then after

• 37:36Speaker 01

  that it's, you know, the seven and a half percent interest rate that I got on the mortgage. But that allows me to kind of do two things and it's increase rents over that period of time and also maybe pull off a refinance if rates do come down. So I think that is another potential option for people out there that are looking to, you know, create their own cash flow in this market.

• 37:57Dave Meyer?

  Could I ask you what it costs to do that two, one?

• 37:59Speaker 01

  It's about two and a half percent seller paid concessions.

• 38:03Dave Meyer?

  And what was the purchase price?

• 38:05Speaker 01

  $580,000.

• 38:06Dave Meyer?

  So it was like 11 grand or something?

• 38:08Speaker 01

  Yeah, something like that. Yeah.

• 38:09Dave Meyer?

  Well, Connor, congrats on, on building the successful portfolio. It sounds like you've, you've done well both as an investor and as an agent, which is great to see for our former employees at BiggerPockets. We appreciate it. Is there anything else you think, you know, either as an investor or an agent, you think our audience should know maybe about investing in the Midwest right now? Cause we do get a lot of questions about that.

• 38:31Speaker 01

  Yeah. I think the Midwest is a fantastic place to invest in. You know, I don't know everything there is to know about, you know, other cities in the Midwest, but I know a lot about Grand Rapids specifically. The two biggest things that I look at are, you know, supply and demand. I know you're always talking about this, Dave, but there is a lot of demand for housing in Grand Rapids in the Midwest because it's affordable. The average price point in the city of Grand Rapids is about $380,000, which is below the average sales price in the country. So it's an affordable place to live. And because it's an affordable place to live, there's lots of demand.

• 39:06Dave Meyer?

  Yeah.

• 39:06Speaker 01

  On the inverse, there's not a ton of supply. In my county here in West Michigan, they do a study and the study showed that we need 35,000 more units of housing in Kent County to meet the demand that there is over the next five years. And last year, they built like two or 3,000 units of housing in Kent County. So like, there's still going to be a continuage of shortage of housing in Grand Rapids and Kent County specifically. So I feel pretty confident that with those two metrics, prices will go up, rents will go up, and it'll be a great place to invest.

• 39:40Dave Meyer?

  Yeah, I mean, that's a great analysis. And I just want everyone to, to think about that because I, I obviously, I say the Midwest is a very big area. Not everywhere in the Midwest is a good place to invest. In fact, most places probably aren't. But I just think there are cities, like what Connor is mentioning here, that have really strong fundamentals and are relatively affordable. Doing that type of analysis, whether it's in the Midwest or anywhere else, is exactly what you should be thinking about. Figuring out if there's going to be sufficient demand to fill your rental properties, if there is going to be a good balance between supply and demand so that prices and rents keep moving up modestly. They don't have to be amazing, but moving up near the pace of inflation, doing something a little bit better than that.

• 40:23Dave Meyer?

  That's what we need to be looking for as investors. So Connor, again, congrats, man. It's great to see you and thanks so much for joining us today.

• 40:30Speaker 01

  Thank you, Dave.

• 40:31Dave Meyer?

  And thank you all so much for listening to this episode of the BiggerPockets Podcast. We'll see you soon.