IF 100 - How I Made 28–34% Returns on These 3 Real Estate Deals I’ve Done Lately Without Using My Own Cash

In this episode, Kenny reflects on his recent Mother's Day celebrations before diving into a detailed analysis of his latest real estate deals. He shares insights into his decision-making process, deal structures, and the financial outcomes of three specific projects: 'Beverly Road', 'Broad Vista', and a 12-month seller-financing fix and flip. Kenny offers practical advice for aspiring real estate investors and highlights the importance of understanding the nuances of both residential flips and rental properties. He also discusses the benefits of group investing for those wanting to invest without the hands-on responsibilities of being a landlord.

00:00 Introduction and Mother's Day Reflections

01:18 Deal Analysis Overview

03:52 First Deal: Beverly Road

08:10 Second Deal: Broad Vista

17:09 Third Deal: Fix and Flip with Seller Financing

19:47 Conclusion and Final Thoughts

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Transcript

0:00

Hey, we're back. Um, we celebrated Mother's Day on Sunday. I hope all you invested fathers out there. Made your wife feel special. Every year there's a little bit of a debate that happens in my mind on Mother's Day. do we go all out for our wives on this or do we go all out for our moms? Bible talks about, leaving your family to cleave to your wife and become one flesh with her. So I've gotta think the biblical answer here is go all out with your wife. And, one of the traditions that we have carried out for the last maybe year or two has been whenever there is a celebration of mom. Or, Christmas Mother's Day birthday for my wife. I take the kids and we go to Dollar Tree, which that in itself was an experience. we find some good things, we meet some cool people, and, we get some, some things for mom, my wife. So we did that this time and got the balloons. the kids are just running around the aisles as I'm. Trying to find a gift bag for my wife or something or another. we made it and we celebrated and she was really happy. Today's episode's gonna be Deal Analysis. This gets a little trickier as you buy bigger things. So we're gonna start really simple today, and we're gonna talk about what numbers I run when regards to is this a good deal or not? And I'm gonna be sharing probably the last two or three deals that I have completed. To keep it fresh. I could show you my best deals to make, my numbers look good and feel like, all my deals are like this, but it's probably gonna be best for everybody, in the listening world to see, Okay, what are some recent deals Kenny has done? what made him buy those what was the criteria for those? And, I'm just feeling a little more comfortable sharing, and coaching, those that are interested in my experiences with real estate investing. I'm not gonna share things that I don't know about. I guess that's the key. So this hopefully gives you all, some guidance and some comfort in, what is Kenny talking about? Has he ever actually done a deal that we can see and know that when he talks about real estate, he's done it. he's actually experienced it himself. So I'm in a deal right now. So this one's actually not completed yet, but we're getting really close to the end. so what I'm gonna do is I'm gonna share with you how I found the deal, how I structured the deal. And the numbers that I used going into the deal to, to determine if this was a good move for me or not. and for anyone listening, the goal of this episode is, to kinda get in my head a little bit more and to know, okay, if you are trying to go down that road of being the active investor, here's some things that might help. I'm trying to actually deter some of you guys from saying, okay, everything Kenny said sounds great. I think I could do that, but I don't really wanna do that, or, that sounds like a little too much work for what I wanna do. And I would say, great, because there's ways to make money in real estate without having to be the flipper or the landlord. that is called group investing and there is a link on the show notes that says Schedule a call with Kenny. Schedule a call with me and let's just have a 20 minute conversation about what that looks like for you. I can send you over some pitch decks or some things that have been, that are rather live or old of deals that I've been a part of, and you can see, what that looks like in regards to returns and how everything works. All right, so the first deal, this one's on Beverly Road, so we're gonna call it Beverly. this deal was found through a wholesaler. Wholesalers are kinda like off market realtors. They're not realtors and they don't have a certification of any kind. They simply call someone that wants to sell their house, or send them letters, direct mail, and they're able to get the house under contract to negotiate a purchase price for the seller. And typically they tell the seller, Hey, I'm gonna assign this. This, house to an investor and they're gonna buy it from me and I'm gonna, make a finder's fee for it. And that's how they do their business. So I got this from a wholesaler. This is a guy I've known for, probably six years. He actually started the same time I did. And we've just, we swapped contact information at a local real estate investor association meetup. And, he's awesome. we got the purchase price for 1 47 and the closing costs on this one are$3,500 and I estimated a 50 K repair. I'm also gonna have about$10,000 in holding costs and I'm gonna have to close a second time, another$3,500. And then there's gonna be realtor fees with this'cause I'm gonna sell it, with a realtor. That's gonna be about 12 and a half. A thousand dollars. So I'm all in at 2 26, 500 on this deal. And the a RV after repair value I'm figuring is anywhere between the two 50 to 2 75 range. So that's quite a spread actually. So on the low end, I'd be making a 10% return. And on the high end, A 20% return. So it's difference between 3000 or$47,000. So the reason why I took this deal, because my criteria for flips is 20%. If I run my numbers and everything looks conservative, 20% is the number I. I would say is my minimum. However, on this deal, I haven't had a flip in a while. this one is really close to my house, about a 10 minute drive. And I had a lender recently approach me and say, Hey, I don't really wanna do a five year hold with you three year hold. I wanna do a 12 month hold, a short term hold. More or less, some money came available from an estate. Her uncle had died and the money would just be sitting there for the next 12 months anyway, and she's able to lend on this with this. So she funded the whole purchase price and rehab everything I just said. She has funded. so she has given a,$210,000 loan, more or less. That obviously covers all of my expenses that would be coming outta my own pocket. So she does make her, interest on this and her terms were a 12% interest only payment with a one percentage. point is what they call it. Basically at the end of the deal, she'd get one percentage of 1% of the total that she lended And I am fixing this with a crew that I've worked with for probably four years now. met this guy through Facebook Marketplace, needed some electrical work done, and then since then I've just kept adding to what he's done and he's been phenomenal. he can do everything. he's a one man show, but he brings, helpers as needed, and he's been great to doing a project just like this. So I got this about two months ago. So from the time it was purchased to now, we just got the countertops put in. We finished the interior painting, and right now we're just wrapping up like, electrical, like new fixtures and he's finishing the bathroom. So ending a project is always gonna take longer than you think. Always there, especially on a job like this, a$50,000 rehab. we've just done almost everything to it. If you're following me on Instagram, I've posted a few videos of what this is. This is the Beverly House, and, yeah, I'm excited to put this on the market, hopefully the next two weeks or less and see what it sells for. So that is my deal analysis on Beverly. Let's do one more. Okay. this one's gonna be broad vista. So this was a house that, a male courier actually approached me. She's a friend of mine, and she said, Hey, this house, it's been empty for a year. I think someone died. and the house has just been empty. You may wanna try to figure out how to contact the owner. So this was not a wholesale, this was me going direct to seller, which is always the best way to buy a house in regards to money. Sometimes it can be a huge pain in the buns, in regards to managing a relationship and follow ups, and time and offer and person changes their mind. And it can be messy. but this one, it was the brother I think Of the homeowner who had passed and I wanted to do one 40 and he wanted, I think 180. And we've landed on one 60. So that was the purchase price. I put about$25,000 into this, this house. So with the closing costs, And holding costs. This is a cool one. So after I fixed it up, I did what's called a refinance on it, and this was three and a half years ago. for those familiar with the RRR acronym, BRRR, it stands for buy, renovate, rent, refinance, and repeat. And the goal there is if you can buy it low enough. You're able to get your money back out from the cash out refinance, so that you basically have purchased a house at no dollars. you've broken even, but the house is still yours and there's still typically 20% or higher of equity in the house that is yours, but it's not something you can spend because it is equity in the home. that's how I did this house and. By buying it at one 60 and putting, I think at that time it was about$20,000 into it. it appraised for, I believe 2 65 and I was able to get, yeah, pretty much every dollar out of it that I had put into it and, put a renter in there. And the house has been somewhat on autopilot ever since. minimal updates and repairs needed. And the first tenant I had, was someone from OUTTA state. he claimed that there was bugs everywhere and was gonna sue me if I didn't, give him his deposit back of$1,700 or less. And, I did give it back to him and he disappeared. hey, every now and then, you get someone like that and let that be a deterrent for those that. Wanna be a landlord to know that there are some crazies out there and there's also some crazy landlords. So don't think every crazy is a tenant. There are some, slumlords or landlords that don't keep things updated, don't communicate well. expectations are off. They don't have good contracts, they don't have good screening, system, It is definitely a two-way street on it being a good connection between landlord and tenant. but after renting this out, a guy came in there, worked for an HVAC company and looked at it for about five minutes, said he'd take it, has faithfully paid early every month, communicates very well, and Oddly enough, kept it in great shape and said, Hey, we broke the, the microwave door handle, so, uh, just keep the deposit. we appreciate you letting us be here. So it was like a$1,700 deposit that he said, just go ahead and keep. So I did, and he has been out for about a month or two, and I decided, Hey, instead of getting another renter in here, I think just given my financial situation. With cash flow and the baby coming and just different bills here and there, we're gonna go ahead and sell it and just see what I need to do to put it on the market. Then with the realtor, he said I would do nothing to it, sell it as is and just lower your purchase price. I thought the kitchen was a little outdated. It had like wallpaper um. oh, and, cracked tile on the kitchen floor. So I spent about$5,000 updating the kitchen and just doing odds and ends, new light fixtures, little bit of painting here and there on the ceiling. painting the exterior foundation, just like little things. So we're gonna list this in the next probably two weeks, and we're gonna list this for 2 75. Might even go a little higher, but if we get 2 75 on this, With the realtor fees and everything else, we're coming out at a 40% return. Which is like$80,000. So to me, that's a really good deal. pretty minimal work put into this property. Bought this back in 2021. That first tenant was rough with the bug thing. but then put a great tenant in there and then just let it sit and then at the very end put$5,000 in updates and then we're gonna list it. We will see if that sells for 2 75. even if it goes for two 50, which again is, pretty big drop. But the market is cooler than it was, so it may not be too far off. that's a 28% return on investment at,$54,000. And this is something that's cool. I want you guys to catch this return on investment. ROI. What did I do to put in this money? the way I calculate ROI is I put in what I, what I spent over, what I got back. But if you think about it, I didn't really spend 1 95. I purchased this one through a private money lender. And then when I did a refinance on it, I paid everyone back. So I really only borrowed my risk was borrowing that money for six to nine months hoping that it appraised at the amount that I needed it to. It did. actually exceeded what I thought it would appraise for, and I paid everyone back, and now I am$0 outta pocket. So at this point, they would call that infinite returns, so like$0 making money every year. Yeah, so that's what's really cool about real estate is you want your money working for you in different places, but it doesn't have to be your money. And then even when you pay back people, it's like still your property, but it's no money. It's your time and energy that's kinda what you're spending. in that way I do love rentals, but I think what hurts in my situation as a 37-year-old with three kids is. When you get your rent every month, you're only making about 200 maybe ish dollars, in cashflow, which is a fine number. that's not nothing, but it's not necessarily gonna pay your bills to pay everything. You have to have like maybe 20 or 30 of those to actually see something move in the bank account and, Yeah. And then when something breaks or there's a leak or the tenant doesn't pay you, or it's all that profit that you thought you were making goes away. so you really realize the money through these rentals when you sell. at least that's in my situation. making$55,000 from selling the property, okay. That. That's a pretty big deal. that's pretty cool. making$200 a month, that's cool until you, have to repair an HVAC or roof or something. And, that number grows obviously each year through appreciation and the mortgage being bought down. I'm a hybrid between wanting to fix and flip and buy rentals. my mindset has shifted dramatically on buying more rentals. To buying more multifamily, apartments. And even in that world, I don't want to manage the leasing and repairs and maintenance and taxing all the things that you know are required in that. I want to be able to invest money or other people's money through building a fund and grow my wealth that way. And as a, as a limited partner to anyone listening out there that likes the idea of making money without being a landlord. let's talk, let's look at what those returns are. I just gave you, 28% return. If I spent all my own money and manage this whole deal, I'd be making a 28% return on that last deal. If it sold at$250,000, the returns on these. Apartment complexes that I have, range between, I would say 20% on the low end to 35% on the high end. the last two deals I've put out are targeting a 28% annual average return, which means if you invest a hundred thousand dollars, you would make$28,000 a year over each year that this deal. was in operation, which most of these deals are five years, so you're making that much money every year. So pretty cool stuff. let's see here. this next one is gonna be, a fix and flip. So this one was cool because, for those that are familiar with seller financing. Real estate doesn't always have to be, these large amounts of checks, put out in the beginning. It can be negotiating. they've called it, subject to where you can buy a property or assume someone's mortgage without having to, buy the whole thing outright in the beginning. So this was a 12 month seller financing play where the seller agreed to, For me to buy the house at$95,000. we've put in about estimating$120,000 of work here. So pretty big rehab. We're about 70 K into this, so we're not even done yet. with closing costs at 2,600, holding costs 12,000, and then second, closing costs and taxes, another's 7,500, realtor fees at a 5%. which is 17,500. I'm all in at 2 59 on this deal. And I'm pretty sure when this hits the market, we're gonna sell it for between three 50 or more, which returns at 34% ROI or$90,000 in cash. So this is about a 12 month play. This one's actually crawling. It's going pretty slow. I was thinking it'd be done in six months, and I think we're at month like 10. Right now. So I think it will be close to 12 months that we get this done. and this one's different in regards to the rehab. you use a one man show to do a$120,000, rehab. It might be while I decided to work with a project manager who basically manages all the work. electricians, tile cabinetry. plumbing, et cetera, et cetera, et cetera. And, I just pay him in draws. Unfortunately, this specific crew has taken a very long time. There's been gaps. We had a permit setback where I did not apply for certain permits, and a neighbor called and, that's been a frustration actually. But, those are my last three deals. they're all local, so they're all, within 15, 20 minutes from me. some of my flips are farther away. I did one flip that was three hours away. But that's something that you gotta pick and choose, where am I gonna go to fix this house? anyway, that is it for today. Deal deep dive with Kenny. that's it. Thanks for listening today, guys.