These “Small” Rentals Boast BIG Cash Flow (Even at 7% Rates)

Think today’s mortgage rates are stopping you from getting rich with rental properties? Think again. Today’s guest built an 11-unit rental portfolio—starting in 2022, with high interest rates—and is cash flowing on each property. In fact, he’s making more cash flow than most investors we know, even with still sky-high rates. How’s he doing it with such little money down? No creative finance, no expert skills—Justin Albrecht is just following a simple, repeatable rental formula. After moving back in with his mom, Justin was getting the itch to find his own place. The problem? This was 2022, where single-family homes for sale were rife with bidding wars. What about small multifamily properties, like a duplex, triplex, or quadplex? That seemed to be the sweet spot. With zero experience in property management or landlording, Justin took the plunge. Fast forward three years, Justin now owns four properties totaling 11 rental units, and just quit his W2 job to focus his full-time efforts on his rentals. He did it all without putting a ton of money down and dealing with 7% interest rates on most of his properties. Still, he’s making sizable cash flow, impressive return on equity numbers, and living for free. Today, he’s breaking down his blueprint. In This Episode We Cover The small multifamily rentals that average investors can use to build massive wealth How to unlock monthly cash flow even with interest rates at 7% (or higher!) Getting into your first real estate deal with just 3.5% down Does the 1% rule still exist in the 2020s? Yes! Here’s how Justin is finding these deals “Turnkey” rentals that are move-in ready but still produce serious cash flow And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1159 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.

• 0:00Dave Meyer?

  This investor bought 11 units, almost all of which have 7% interest rates, and he's still producing cash flow. So if you're sitting around waiting for rates to drop before you buy an investment property, you're probably wasting your time. Instead, you could be in the game, building equity and moving closer to financial freedom every day. Today's guest is living proof that it's possible right now.

• 0:29Dave Meyer?

  Hey, everyone. I'm Dave Meyer, Head of Real Estate Investing at BiggerPockets. I've been buying rental properties for 15 years now, and on this podcast, we teach you how to achieve financial freedom through real estate. Today on the show, we have the story of an investor who seems well on his way to achieving financial freedom himself. Justin Albrecht bought his first property in his hometown of Kalamazoo, Michigan at the end of 2022. And since then, he's been able to cut his own living expenses to almost zero, and he's built a portfolio of four properties totaling 11 units. And the cool thing is that Justin's not doing anything crazy.

• 1:09Dave Meyer?

  He's just patiently buying one house per year, sometimes putting as little as $16,000 down at a time. He's also adding value to his properties by renovating them, even though he doesn't have some fancy construction background. And this is the exact investing formula I talk about all the time on this show. Justin is building equity that will compound over the coming years, and that should enable him to replace his entire income with passive real estate cash flow within the next decade. So let's bring him on and hear how he got started and how you can too. Justin, welcome to the BiggerPockets podcast. Thanks so much for being here.

• 1:48Speaker 01

  Thanks for having me, Dave. This is awesome.

• 1:49Dave Meyer?

  Tell me a little bit about yourself. Who are you? Where are you from? And how'd you get into real estate?

• 1:54Speaker 01

  Uh, my name's Justin Albrecht. I'm 30 years old, grew up in small town Michigan. And because I was from a small town, stayed local through college, I decided to get a job in tech sales from a global IT solutions provider and I moved out to Chicago, Illinois. Covid kind of brought me back abruptly, so I started my home search. And end of 2022, the housing market was pretty competitive.

• 2:19Dave Meyer?

  Oh, yeah.

• 2:19Speaker 01

  And so when I started looking for single family houses, I was outbid every single time. Um, not even competitive. People were offering over asking price for every single house. And of course I didn't have the funds to make that happen. So I actually looked at multifamily housing. That's when I started running the numbers of, oh, hey, we can actually have half or more of the mortgage covered by a tenant living in the other part of the house. And ultimately I ended up landing a house built in 1900, a very old Victorian style house that

• 2:53Dave Meyer?

  Oh, yeah.

• 2:54Speaker 01

  As you can imagine, you know, it's been split up a million different ways through different ownership throughout the years. And, you know, I don't pride myself on finding home run deals. This certainly wasn't one of them, but it allowed me to get my foot in the door through my very first acquisition.

• 3:11Dave Meyer?

  I'm very familiar with these cut up in Victorian 1900s. That's how I got started as well. They can make good deals, but man, the maintenance is, is an interesting element to it.

• 3:21Speaker 01

  Yeah.

• 3:21Dave Meyer?

  I love that you're saying that this isn't a home run deal. And honestly, I think that's totally fine. We'll hear more about the numbers, but for first time investors, the goal is not to hit a home run. The goal is to get into the business and learn a little bit. It sounds like for you, the goal maybe at that point was just to even find somewhere to live, to move out of your mom's house. But I'm curious, did the property management element of buying a multifamily instead of a single family home intimidate you or give you pause at any point?

• 3:53Speaker 01

  It certainly did. Yeah, I quickly began a plethora of Google searches of how to make this happen and how to do it the right way. I came from no experience and it certainly wasn't the plan going into my home search, but I found bigger pockets fairly quickly, actually, thankfully. And you guys had so much information out there of how to be a landlord, how to do things the right way. You had documents available for leases, move-in checklists, all of that, that actually quickly built my confidence in becoming a landlord and kind of squashed a lot of the hesitations that I originally had.

• 4:29Dave Meyer?

  Well, I'm glad to hear that we were able to help you get over the hump. That's what we're here for. How did it go? Can you tell us maybe just some of the numbers? What'd you buy it for? What kind of neighborhood was it in? Give us some details about the property you bought.

• 4:43Speaker 01

  So I originally bought this house in Kalamazoo, Michigan for $255,000. Like I said, it was a four-unit house. I bought it at the end of December of 2022. So the first year in 2023, I put $15,000 into renovations. In the following year, I also put $15,000 into renovations. When tenants would move out, that's when, kind of when I would fix up the place and then re-rent for a greater rent.

• 5:08Dave Meyer?

  How did you finance it originally?

• 5:10Speaker 01

  I financed it with the FHA 203K loan. So I leveraged the 3.5% down. The 203K loan, there was about 10K in renovations because there was an unfinished kitchen and an unfinished bathroom. So that 10K that was actually built into the loan via the 203K portion of that loan, that was done prior to me moving in.

• 5:32Dave Meyer?

  And were the other three units occupied?

• 5:35Speaker 01

  They were occupied, yes.

• 5:37Dave Meyer?

  And what was it like inheriting tenants? Because that's a question we get a lot on this show. And I think especially if you're moving into it, it's an intimidating thing. You want to know the people who not only going to be your tenants and residents, but also your neighbors. So what was that like?

• 5:53Speaker 01

  It was actually great. Western Michigan, University being so close, it's kind of student housing centric. So actually, all of the tenants that were there were roughly my age and they were super nice. They had lived there for multiple years prior to me buying the house. So they knew the house better than I did when I moved in. And establishing a good relationship with them quickly led to just finding the quirks, any renovations or repairs that needed to happen right away. It led to a good relationship.

• 6:22Dave Meyer?

  I'm glad to hear that because a lot of people hear this idea of house hacking like you were doing and understand the financial benefits, but get hung up on the idea of living next to the residents and tenants that, you know, are part of your business. So I'm glad to hear that because I want just everyone in the audience to remember and know that these situations more often than not actually do work out, at least in my experience. There's no like data about that. But as Justin can attest to, and I can as well, it actually can be a benefit if you get to know and be in your property because you'll learn a lot about it. And you also get to learn to be a good property manager at the same time. So Justin, tell us a little bit about the numbers because you said at

• 7:04Dave Meyer?

  the beginning, you got into multifamily investing and purchasing because the financials just didn't work with the single family home. How much were you actually paying out of pocket to live in this property? Or were your tenants covering your entire mortgage?

• 7:20Speaker 01

  My mortgage payment after the income that was coming in from the tenants paying rent was only $400. And I thought that was awesome. I'm like, if I can get a $255,000 house and pay $400 a month with room to grow as repairs and renovations happen, that, to me, that was awesome. I was, I was sold. I was like, let's do this. How do we do this again and again?

• 7:45Dave Meyer?

  I mean, that, that is amazing. And I think something for everyone to remember here is that if you are house hacking, the whole goal is not necessarily to cash out. If you can get positive cash out, great. That's difficult in a lot of markets these days. But if you can just lower your total cost of living, that's going to greatly set you up financially for the rest of your investing career. Now, you were probably, I don't know if you were paying your mom rent. So like your cost of living was sort of inevitably probably going to go up, but by going only up by $400 is great. And that doesn't even factor in. The other ways that you're making money from real estate, just by paying down your mortgage,

• 8:29Dave Meyer?

  every single month, you're earning money because you're paying down what you owe the bank. And I would imagine that's probably close to 400 bucks a month minimum. So you're probably at least coming out even if not ahead every single month. And you get all the tax advantages, you get that appreciation upside as well. So you're being humble and modest, saying that this isn't a home run. But I think starting from zero and getting a deal like that is a fantastic first step into real estate.

• 8:55Speaker 01

  It was great for me because I knew the house needed work. That was the expectation going into it. And if I only had to cover $400 a month in the mortgage, then the rest of that money or additional money could all go towards repairs that I was kind of expecting anyway. So it actually helped cover a lot of the work that needed to be done to the house. And it wasn't ton, it was more so stuff that I could do myself. It was flooring, I did do a kitchen remodel, which I bought cabinets and stuff off Facebook Marketplace. So I was pretty savvy in terms of buying things that still looked good, but weren't going to break the bank.

• 9:31Dave Meyer?

  This sounds like a classic great house hack. This is an excellent first step into real estate investing from a financial perspective. Let me ask you about the time perspective too, though. You're working a full-time job, you have other stuff to do. Was becoming a property manager and a landlord a burden for you time-wise?

• 9:52Speaker 01

  It definitely took more time than I expected.

• 9:55Dave Meyer?

  Says every landlord ever.

• 9:58Speaker 01

  And I generally joke, but I'm serious when I say I tend to do things the hard way for some reason, especially when I first start off. So doing the renovations, working at a cardboard box, trying to work while there's renovations going on, was absolutely a thing. That definitely happened. And I wouldn't, I would be lying if I said it wasn't a little distracting. But at this point, it's my first house. I'm super excited to fix it up, make it myself. So I was super excited. I didn't care about the time or even some of the extra man-hours I had to put into it.

• 10:32Dave Meyer?

  Very cool. Well, hats off to you. This is a perfect example of how to get creative, to get into real estate. You know, you put in a little bit of elbow grease. You find a way to finance a low down payment. You find a way to get money from a 2K or 3K loan to put in the renovations. You do some of the work yourself. Like, I know you are not wanting to call it a home run. Maybe the finances aren't as crazy as some of the things that you hear on social media. But this, for our audience, people listening, this is a good deal. This is a good real estate deal. And if you're thinking about how can you get into real estate? This is a very good example and template that I think many people could follow. I want to hear what you did after this first deal, but we do have to take a quick break.

• 11:17Dave Meyer?

  We'll be right back. Some listeners may wonder why their insurance quote only took 30 seconds. Some listeners may wonder why their insurance quote took 30 seconds. A better question is, how long will that policy actually hold up when you need it? At EnReg, the goal isn't just getting coverage in place. It's making sure your investment property is properly protected when a real claim happens. That's why they take time to evaluate each property's unique risks and build coverage design for the realities investors face. Because anyone can sell a policy, EnReg focuses on standing behind it. Visit nreg.com/bpllc to learn more.

• 12:01Dave Meyer?

  You know that thing where you discover a feature you wish your software had? And it turns out it already exists, just on a different platform. Like, oh, you want rent payments processed in two days? Rent Ready does it. Oh, you want to block tenants from making partial payments mid eviction? Rent Ready does that, too. Oh, you want full accounting and tax-ready reports without paying for a second tier? Rent Ready does it. And oh, you want tenant screening that doesn't overcharge your applicants? Rent Ready also does this. Basically, if you've ever complained out loud about your property management software, Rent Ready probably already built the fix. It's $12 a month.

• 12:42Dave Meyer?

  You're welcome. Sign up right now for $50 off your first year of Rent Ready with promo code BPcash. BiggerPockets Pro members get it completely free. Sign in through your Pro account at rentready.com/biggerpockets. That's rent, R-E-D-I, dot com slash biggerpockets. There's a point where basically every investor realizes traditional financing stops scaling with you. At first, it works. You qualify with your income, your job, your tax returns, but as you grow, that model starts to break. Now, it's not really about your personal income, it's about the income from your properties. That's where DSCR lending comes in, and it's why a lot of investors end up working with lenders like Host Financial. Host Financial

• 13:26Dave Meyer?

  qualifies deals based on property income, not personal income. So you're not dealing with W2s, or tax returns, or DTI constraints. And with 80 to 85% LTV, you can stay more flexible as you scale. It's just a different framework, one that tends to align better with how investing actually works. If you're buying rentals, refinancing, or growing your portfolio, go to hostfinancial.com, that's H-O-S-T financial dot com, and see what you qualify for. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate

• 14:06Dave Meyer?

  most of the cost against your income legally, 100% IRS compliant. That's instant cash flow improvement. Cost Segregation Guys is the number one firm nationwide specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states, from remote cabins to apartment complexes. So if you own investment property, this is a no-brainer. So visit costsegregationguys.com/bp for your free proposal and find out how much you could save this tax season.

• 14:42Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm here with investor Justin Albrecht. Before the break, we talked about Justin's first deal, a house hack that he did in Kalamazoo, Michigan, bought a four unit, moved into one, fixed it up a little bit. That was at the end of 2022, right? What have you been doing since?

• 15:00Speaker 01

  So quickly after that, in August of 2023, I bought my first investment property. I bought a duplex, another fixer-upper for $126,000, and that was leveraging a true investor conventional mortgage loan. So I had to put 25% down, which ended up being $37,000. At this point, I had listened to hours of BiggerPockets community. I think I was within the 1% listeners on Spotify at this point. So when I was looking at the numbers of this new duplex, putting 25% down on this property, my mortgage ended up coming out to be about less than $1,000. I think it's 975. And running the numbers, I knew

• 15:42Speaker 01

  that I could get about $2,000 per month in rent. The kicker on this property was that it came with an extra lot next door.

• 15:48Dave Meyer?

  Oh, what?

• 15:49Speaker 01

  Yes. So it's kind of a buffer in my eyes where like, if this really hits the fan, I can parcel this off and sell the extra lot for about $15,000 and cover any unexpected expense that comes my way. So to me, it was kind of a safe bet where all I have to do is completely gut this whole house and then I'll have about almost $1,000 in cash flow per month.

• 16:13Dave Meyer?

  All I have to do is just rebuild this house from scratch. That sounds like a lot of work.

• 16:17Speaker 01

  So I didn't have to take it down to the studs or anything, but I did all new flooring, all new paint, new kitchens and new bathrooms. That actually kind of happened over time. It didn't all happen right away. The really cool thing about this property that I would tell, you know, anybody on the street is that my sister moved in the weekend after I closed on it. Her apartment lease ended on a Friday. And then that whole weekend, my brother and I ripped out all of the gross carpet. We painted and muddied the whole house. Like, there was a lot of cracking. There was chipped paint. There was a lot of this. So we got this place pretty much move-in ready in a weekend for my sister to move in.

• 16:57Dave Meyer?

  How much did it cost you, Justin, to get the property rentable? Because you said you put $37,000 down. How much more did you have to come out of pocket to bring things up to par?

• 17:09Speaker 01

  Throughout the year of 2023 and then into 2024, I've put about $22,000 into the house.

• 17:17Dave Meyer?

  Okay, and this is all coming from savings, personal savings?

• 17:20Speaker 01

  It is coming from my W2 career and savings from living with my mom. So it was a combination of income coming in and savings that I had.

• 17:27Dave Meyer?

  So you did that first one for your sister. Did you just move on to the next unit right away? Was it vacant?

• 17:33Speaker 01

  So it took me a total of nine months to complete the second unit. And the only reason why I did was because after I had gotten my sister's unit renovated or livable, I went back to my first property that I was still living in and renovated one of the other units when that person moved out. And that took me about three months.

• 17:53Dave Meyer?

  And how's it performing now?

• 17:54Speaker 01

  So I got that second unit rented in September of 2024. I feel like it was a very pivotal moment in my investing career because it was at this point that pretty much canceled out all of my living expenses.

• 18:09Dave Meyer?

  Nice.

• 18:10Speaker 01

  At that point, I was making $1,900 a month in rent.

• 18:14Dave Meyer?

  That was your gross income, right? $1,900 in rent. And then after expenses, how much did that come out to cash flow?

• 18:21Speaker 01

  It was about $700.

• 18:23Dave Meyer?

  Wow.

• 18:23Speaker 01

  Yeah, total lawn care, water, sewer, trash, vacancy, repairs. All of that came out to about $1,200.

• 18:33Dave Meyer?

  So back of the envelope, you had $700 a month in cash flow times 12. That's like 8,400 bucks a year. You said that you invested all in down payment plus your renovation cost was about $60,000. And I'll just pull out my calculator here. That is a 14% return on equity, which is a really fantastic deal. I mean, that is, if you can find that in today's market in 2022, that is an absolute home run deal.

• 19:01Speaker 01

  That's good to hear from you, Dave. That means a lot. I question a lot of things as I'm covered in drywall and paint sometimes. So it's good to hear from you that I'm on the right track.

• 19:12Dave Meyer?

  Well, again, super cool second deal. I want to hear what you're up to now, but we do have to take one more 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 with SEO, website copy, and email marketing after launch. You get domain, website, email,

• 19:57Dave Meyer?

  all in one account. And right now, you can get Black Friday and Cyber Monday pricing through December 14th. So snag Hostinger's services at their lowest prices before the sale ends. Create your website today for just $1.99. Go to hostinger.com/realestate and use code REALESTATE for an additional 10% off Black Friday and Cyber Monday pricing. Investing in real estate has always been smart, but it hasn't always been simple. Now, it's both, thanks to the Fundrise Flagship Fund. The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low-fee access to blue-chip private market real estate. Today, the Fundrise Flagship Fund has grown to manage more than

• 20:41Dave Meyer?

  $1 billion of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its kind. For those who believe real estate has an important role to play in their portfolio strategy, the Fundrise Flagship Fund has positioned itself as both a simple and a smart option. Whether you're starting with $10 or $10,000, the Fundrise Flagship Fund makes adding real estate's unique potential for both passive income and consistent growth. Just visit fundrise.com/pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com/flagship.

• 21:30Speaker 02

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters so you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.

• 22:00Speaker 03

  New and exclusive holiday decor just launched online at The Home Depot. Check out the viral Grand Duchess collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the tap of your fingers. Even the man in red will be impressed. Shop the holiday decor you want online only at homedepot.com.

• 22:30Speaker 04

  Life is all about making decisions. Sometimes you make questionable ones, like buying a new TV that's too big for the wall because the electronics store employee was a little too good at their job. Then sometimes you make great ones, like protecting your home and auto with Progressive. You get customized coverage options so you can be sure you have the right coverage. Get your quote today at progressive.com. Progressive Casualty Insurance Company affiliates and other insurers. Not available in all states.

• 23:03Dave Meyer?

  Welcome back to the BiggerPockets Podcast. I'm Dave Meyer here with investor Justin Albrecht, talking about how he's building a small but mighty portfolio in Kalamazoo, Michigan. We've heard about your four-unit house hack. We've heard about your two-unit. Have you done anything since then, Justin?

• 23:21Speaker 01

  At this point, it's coming up towards the end of 2024. So I had owned my duplex for about a year at this point, which means I qualify to move into another personal residence and would qualify for another personal mortgage. So this is where I actually found a Realtor on Bigger pockets and he was an investor himself. We're pretty good buddies, I would say at this point. And this is where we kind of took, I'd say, a different approach into looking at the numbers. I became more mathematical and overall just felt more and more confident moving into the next deal. And it was in September of 2024, I bought a turnkey property.

• 24:03Dave Meyer?

  Oh, nice.

• 24:04Speaker 01

  It was a triplex, another Victorian style house that's 120 years old, but this one was turnkey. I bought it from somebody who had owned the place for 30 years and they took immaculate care of this house. Within that triplex, there was a three bedroom, a two bedroom and a one bedroom. So I moved into a turnkey property that was fixed up, renovated, good to go, and I was paying $500 of the mortgage with room to grow.

• 24:29Dave Meyer?

  What made you turn to a turnkey property? You know, sometimes people are open to whatever best deal that they can find, or sometimes people say, I don't want to do a renovation again, which is totally reasonable. How did you come to decide on buying a turnkey after doing two value add investments?

• 24:46Speaker 01

  At this point, I was ready to not get into another handful years' worth of renovations. We ended up buying this $289,000 property for only $16,000 down.

• 24:58Dave Meyer?

  Wow. Wait, how?

• 24:59Speaker 01

  A 5% loan and seller credits.

• 25:02Dave Meyer?

  Oh, seller credits. Okay, that's awesome.

• 25:04Speaker 01

  So there was a little bit of work that needed to be done. Not really, we just called it out during the negotiations after the home inspection. And with the appraisal, with the home inspector, the closing costs and everything, I put $16,000 down into this property.

• 25:19Dave Meyer?

  That's awesome. I mean, that's an amazing deal and being able to pick up what sounds like a really high quality asset for that little down is fantastic. But I want to call out how you pivoted your strategy based on your lifestyle and what is sustainable for you, because it is pretty common, I think, for real estate investors to assume that you have to either.

• 25:48Dave Meyer?

  Do renovations for every property that you do, or once you pick some strategy or tactical approach that you worked for you, that you have to keep doing that. But Justin, I've done the same thing in my own investing. Like sometimes I have more time in my life and I'm like, I'm willing to take on a bigger project right now. Or there's such a good deal that you're like, I really need to do this one because it would be silly to walk away. But there have been other times in my life where I'm really busy and I will target turnkey deals or stabilized deals because that's just what is going to allow me to scale at that time. And it's not necessarily always about trying to maximize your return on investment. It's about making one step forward.

• 26:32Dave Meyer?

  And if your lifestyle means that you can only do that by buying a turnkey property, that's totally fine. Now, Justin, it sounds like you got the best of both worlds because you got a turnkey property and it wasn't additional money. But even, you know, for me, I am frequently willing to accept a slightly lower return on my investment if I don't have to do any work. And maybe that means I'm not going to have a grand slam on every single deal, but every deal I do still keeps me moving closer to my financial goals and I'm totally okay with that. It's better than putting yourself in a situation where you might buy a deal and not be able to put the time or money or effort that it requires to make that deal successful. And to me, that's actually a worse idea and is going to actually be a lot riskier.

• 27:17Dave Meyer?

  So just want to commend you for having that self-awareness to figure out what works for you and, and your lifestyle. So you moved in, which one did you pick? The one bed, the two bed, the three bed?

• 27:28Speaker 01

  I picked the one bed because it was worth the less. So I wanted to minimize my expenses while gaining the most amount of rent that I could. So I picked the smallest of the units. And it just worked out that way because that's the first lease that was up. So it worked out really well anyway. And it's honestly, that's the one I would have picked anyway because I could have gotten more rent for the other two units.

• 27:49Dave Meyer?

  Well, that's great. And how has, how has the performance been since you bought that? That's, I mean, less than a year ago, but how's it been?

• 27:55Speaker 01

  It's been good. The only thing I've really had to do to it is trim some trees that are hanging over the house. There's been a couple of broken dishwashers that I've had to call a repairman to, but it really was a low maintenance property. With upside, there's actually room for rent growth in that property. There's room for rent growth in all of my properties at this point, but at the same time, I wanted to, in my eyes, minimize the risk of having vacancy at this point. So I kept the rents the same. I tried to work with all of the tenants to keep them there so that less money out of my pocket, while also maintaining good relations with the tenants that were there. That was a huge win-win for me.

• 28:34Dave Meyer?

  Well, you are wise beyond your level of investing experience, Justin. I think a lot of investors learn the hard way that vacancy really crushes deals. When you have a good tenant, someone who's paying and likes living in the property, is worth keeping them happy, keeping them in the property because vacancies can really hurt you. And they're often worse than it is just keeping rents the same or having a more modest rent increase. So I appreciate your approach there. All right. So we've gotten you, tracked you to nine units. That's all in just three years, which is incredible. Congratulations. Is there anything else in your portfolio now?

• 29:10Speaker 01

  So ever since I bought the move-in ready property, I was kind of anxious to do something else. And I ended up actually just last week buying a fixer-upper duplex that I'm going to move into as my third house hack.

• 29:26Dave Meyer?

  Oh, wow. Cool. And how'd you find that one?

• 29:30Speaker 01

  I have found this one just like I found all of the other ones, and that's just on the MLS, good old fashioned Zillow.

• 29:36Dave Meyer?

  Love it. So Justin, you started investing in 2022 when rates went higher. And I think some people think that it's not possible to find good deals now. Well, so you found great deals. Can you tell us what the rates are on your mortgages?

• 29:51Speaker 01

  Yes, I can. The first quadplex that I bought, my mortgage rate was 5.7% and that was at the end of 2022.

• 29:59Dave Meyer?

  Pretty good.

• 30:00Speaker 01

  I have nothing but great things to say about my lender. He was awesome, but the rest of my mortgage rates were 7.125%.

• 30:06Dave Meyer?

  Oh, wow. Okay. So just showing, I mean, not a bad rate for the last couple of years. It's basically what everyone's getting, but just showing that you can find cash flow and good deals even when your rates are in the five, six, or even sevens.

• 30:19Speaker 01

  Yep.

• 30:19Dave Meyer?

  So now that you've done this, super impressive. Congratulations on all your success so far. You know, you joked at the beginning saying you're an accidental investor, which happens to a lot of people, but you now seem to be doing this pretty deliberately. What goals are you working towards?

• 30:35Speaker 01

  The goals that I would say I'm working to would probably be about a nice round $5,000 a month in cash flow. I estimate that I need about six to seven properties to get there. Right now, I'm just trying to stabilize this last property. The last duplex that I've just recently bought is going to take a long time to fix up. There's going to be my biggest renovation projects to date.

• 30:59Dave Meyer?

  So the pendulum has swung back. You did, you tried the turnkey and now you're just going to take a big swing again.

• 31:05Speaker 01

  Yeah, I was bored with the turnkey. I needed to do something. I was under contract looking on Zillow for additional properties. I'm like, I needed, I need something to focus my energy on.

• 31:14Dave Meyer?

  Yeah, you're learning your style. That's good.

• 31:16Speaker 01

  Yeah. So it was about a year later that I just closed on this duplex. It's going to be, you know, new kitchens, new bathrooms. There is some flooring that needs to be leveled out that I'm currently in the process of having quoted, slash looking on YouTube to figuring out how to do it in a safe but cost-effective way. But yeah, it's going to be the third house hack. The margins are going to be similar to the other duplex that I had as investment property. So my mortgage is about $1,050 per month. And I think when I'm all said and done, well, if it was totally rented, I would expect $2,000 a month in cash flow. But since I'm moving in, I'm going to rent out the other unit for about $1,000 a month.

• 32:01Speaker 01

  So that should pretty much pay for the entire mortgage while I live there.

• 32:05Dave Meyer?

  Very cool. That's amazing. And I love the goal, $5,000 a month in passive cash flow. Life-changing amount of money. Do you plan to keep working once you hit that? Is that like a fire number? Or do you like your W2? What's the plan on that side of things?

• 32:22Speaker 01

  So Dave, you're catching me at a very interesting point in my life.

• 32:25Dave Meyer?

  Did you just quit your job?

• 32:27Speaker 01

  I put in my two weeks on Monday, so about two days ago.

• 32:31Dave Meyer?

  Seriously? Like three days ago?

• 32:33Speaker 01

  Yeah, I did. Yes.

• 32:34Dave Meyer?

  Wow.

• 32:34Speaker 01

  And it's not the, it's not the expectation that I'm going to live off my cash flow. I understand that that is not feasible at this point in time. But I love doing these renovations of the house, so I've built up a solid amount of cash reserves where I'm going to do a lot of these renovations myself over the next few months. And then when I get closer to stabilizing that property, I'll find another job.

• 32:58Dave Meyer?

  Was it just not satisfied with this job and wanted to take a little bit break?

• 33:02Speaker 01

  Yes, it was a high-stress, fast-paced sales career in the technology industry where if anyone's in the technology industry, you know that if things are going right, you get no credit. That's how it's supposed to go. But if things go wrong, everybody's barking up your tree, wondering what the heck's going on, and the world's on fire.

• 33:22Dave Meyer?

  Yeah.

• 33:23Speaker 01

  And that happened pretty much every day. So it's a terrifying moment, I will, will admit that, because I've been doing that career for about eight years now. But what I've realized, and I didn't know what exactly what I wanted to do growing up, and over the last few years of investing, I've pretty happily found a passion fixing up properties, managing tenants and managing the property, that this is what I want to do in some way, shape or form. So I'm going to spend the next few months renovating this place and then find a different job, even if it's not, you know, a dream career moving forward, because I feel like my dream job slash career is managing my rental portfolio. So there's less stress.

• 34:05Speaker 01

  Finding that next dream job, because I don't need to find the next dream job.

• 34:09Dave Meyer?

  That's awesome.

• 34:10Speaker 01

  Because my expenses are low. And then when this last duplex gets renovated, I will have cash flow coming in. That's going to help minimize the cash that I actually need to live and support my lifestyle. So it's pretty cool.

• 34:23Dave Meyer?

  I love that. It speaks so well to the flexibility that real estate investing offers you. A lot of people talk about FIRE, financial independence, retire early. But you don't actually need to retire early. Real estate investing, if you do similar things to what Justin has done, allows you to have a lot of flexibility. Maybe you do want to retire early, or maybe you want to work part-time, or you want to work in a less stressful job, or you want to be able to take six months off and just work on a property and not have to worry that much about getting a new job immediately. I think as a community, a real estate investing community, BiggerPockets community, we should celebrate those wins as much as possible. Because for some people, like, I don't personally

• 35:07Dave Meyer?

  want to retire early. But I love the idea of having the flexibility to take some time off if I needed to and do stuff like what Justin's talking about. So I love that you're just figuring out a way to make real estate work for you, your personal goals, your lifestyles, the things that you like, and not just following the goals of other people that you hear either on this podcast or on social media or whatever. The whole point of real estate is to make your life and your lifestyle better. And Justin, congrats on finding a way to do that for yourself.

• 35:36Speaker 01

  Thank you. I appreciate that, Dave.

• 35:38Dave Meyer?

  Absolutely. And thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you next time. If you want to share your story like Justin just did, don't forget you can apply to be a guest on the BiggerPockets podcast. Just go to biggerpockets.com/guest. That's biggerpockets.com/guest.

• 35:57Speaker 02

  At Edward Jones, we believe rich is more than caring about the latest and greatest. It's also taking care of what gives your life meaning. That's why your dedicated financial advisor meets you where you are with personalized financial strategies that help protect what matters. So you can preserve your progress while creating a path forward. The key to being rich is knowing what counts. Let's find your rich together. Edward Jones. Member SIPC.

• 36:26Speaker 03

  New and exclusive holiday decor just launched online at The Home Depot. Check out the viral Grand Duchess Collection with smart holiday lights you can control from your phone. Easily customize the twinkle across trees, wreaths, and garlands to match your holiday vibe. Create stunning light effects, then switch it up with the tap of your fingers. Even the man in red will be impressed. Shop the holiday decor you want, online only, at homedepot.com.