The Basic, Starter Rentals That Cash Flow Me $120,000/Year
BiggerPockets Real Estate Podcast Podcast Recap
Published:
Duration: 36 min
Guests: Greg Rodesheimer
Summary
Greg Rodesheimer shares how he built a real estate portfolio that generates $120,000 in annual cash flow by focusing on basic, starter rentals. He emphasizes the importance of understanding local market needs and partnering strategically to overcome financial barriers.
What Happened
Greg Rodesheimer began his real estate journey in 2007, becoming an accidental landlord when his property's value dropped. After a 14-year hiatus, he returned to real estate in 2021, driven by concerns of working in corporate environments until 65. Greg's strategic focus was on homes that attracted optimal tenants, and he formed partnerships when he lacked the necessary capital.
In five years, Greg acquired nine paid-off properties, generating over $100,000 in annual cash flow. His first post-hiatus purchase was a condo bought for $172,500, which he converted into a profitable rental by raising the rent from $1,100 to $1,500. To finance this, Greg and his partner secured a commercial loan, contributing a total of $50,000 as a down payment.
Greg's household could survive on his wife's income alone, allowing him to use his consulting income for real estate investments. His second property was another condo in the same complex, purchased for $173,000 using his consulting earnings. He identified a gap in the Richmond market for small starter homes with decent-sized lots, which guided his investment decisions.
His first single-family home was a rancher bought for $245,000, initially rented for $1,600 and later increased to $2,200. Greg self-manages all his properties, which are conveniently located within a 20-25 minute drive from his residence. Over five years, he has experienced only three vacancies, showing high tenant satisfaction and demand.
Greg sources properties through the MLS and wholesalers, focusing on ones that need some work. He partnered with a contractor to buy a wholesale property for $180,000, intending to flip it but ultimately deciding to keep it. His strategy includes buy-and-hold to defer capital gains, while his contractor partner prefers flipping.
Greg's portfolio consists of nine properties - two condos and seven single-family homes - collectively cash flowing around $120,000. This success has afforded him personal flexibility, enabling him to coach a little league team and teach guitar lessons. He advises new investors to aim for at least cash flow neutral deals and to trust their instincts about local market needs.
Greg underscores the importance of defining a 'buy box' based on market demand and acquiring the best assets within that framework. Throughout the episode, he shares insights on how strategic partnerships and understanding market demands were key to his success.
Key Insights
- Greg Rodesheimer's strategy involves targeting properties that appeal to optimal tenants and partnering when lacking funds. This approach allowed him to acquire nine paid-off properties in five years.
- Greg's first property after returning to real estate was a condo bought for $172,500, where he increased the rent from $1,100 to $1,500, demonstrating a keen sense for rental market dynamics.
- Understanding local market needs was crucial for Greg. He noted a gap in Richmond for small starter homes on decent-sized lots, which informed his investment choices and contributed to his portfolio's success.
- Greg's self-management of properties and strategic partnerships, such as with a contractor for off-market deals, have been essential in minimizing vacancies and maximizing cash flow, resulting in $120,000 annually.