Landlording
Just another straight white property-owning mail boy self-congratulating himself on a job partially well done. I’m a semi-seasoned buy-and-hold real estate investor gobbling up small multifamilies in the south city area of St. Louis as fast as my Buy-Rehab-Rent-Refinance-Repeat FHA house-hacking strategy will allow. I went from deep red to financial independence in 30 months and have officially become, as my friends would put it, “somehow more annoying.” It’s still a scary thing, but when everything’s scary nothing is? Real estate is no contest the best wealth vehicle for those unable to dip into their parent’s coffers. I started by eating and breathing BiggerPockets. The books, the podcast, the blog. I stalked the local REA meetups. I got some good advice from great people. This wasn’t an epiphany. This industry has instructions for everything.
Winona
I bought this little lady in the summer of 2018 for $195,000 and started living for free. The only thing I knew about money back then was how to spend it. I had $70,000 in debt, $12,000 of which was on the cards from seeing if I could wear that strip on the back clean off.
I had bad credit, was loaned the seasoned down payment, and used my 401k as collateral for reserves. Turns out you don’t actually need money to acquire income-producing assets.
I moved in to that bottom left unit to satisfy the requirements of my 3.5% down FHA loan, put good tenants in at market rent, replaced a sink here and a fridge there, and refinanced into a conventional loan in the summer of 2020. It’s now valued at $320,000.
Little known secret: when you convert out of an FHA loan, you can go get another one, which is how we get to sweet Oleatha.
Oleatha
This pretty gal was named by the wife of the real estate developer who built the area. She named it after herself and then Marquette after her children’s school. She’d grown up on Delmar and reversed the syllables to name Mardel. Delmar had been named by two landowners, one from Delaware (Del), the other from Maryland (Mar). So that’s fun.
For the past year I lived in this top left unit, again so that I could acquire it with FHA owner-occupancy at 3.5% down. After a failed sloppy seller-financed attempt, I purchased this at a bit of (what I thought was) a premium at $360,000. I redid some bathrooms here and patched some damaged walls there, and refinanced into a conventional loan this past summer. It's now valued at $450,000.
As with these first two properties, once you get rid of the FHA you can go grab another one, which is how we get to miss Lindenwood.
Lindenwood
I closed on this little cutie in September, and yes, Oleatha also named this street after her college alma mater. You’re supposed to live in these FHA owner-occupied properties for 12 months, but if after that 6 month/210 day gridlock period you can refinance into a conventional loan through some strategic sweat equity, favorable appreciation and a little luck timing the market, the restrictions don't travel.
After closing, I’ll have 60 days to occupy the lone bottom right unit and will still have officially surpassed (with the dozen garage units rented to separate tenants as long-term vehicle storage) 20 rental units.
I got this spot for a fat $330,000 with 3.5% down, but after all the lender and seller credits, what I brought to closing was much less. I’m still figuring out what updates I’ll make to this one in the coming months, but my next stop will be a summer 2022 refinance to sneak in one more FHA loan (a special loan with 30 grand in rehab costs baked in called a 203k loan), this time for a quiet single-family house, and finally pivot from this back-breaking serial mover strategy into seller-financing and short term rentals.
Lessons learned
I don’t have a lot of money. I’m definitely doing better than I was before Winona, and I’ve learned to padlock my wallet a bit better, but the point is if a swiss wallet fella like me can in 3 short years own and operate 3 four-families with a net monthly passive income of just over $3,000, I’m pretty sure anyone can.
I found all my properties by asking a multifamily realtor to run the rolodex on those he’d previously sold to until we found buyers who wanted to sell but didn’t want all the hassle of putting it on the market. Sellers don’t typically like FHA financing and the inspections that accompany them, but even so, if someone in today’s market tells you it’s too competitive to find a place, punch them in the fucking ear and get creative. You’ll need to, because I hear assault’s expensive.