The Six-House Deal That Pushed A Pilot To 100 Units

100 units sounds like a headline, but it’s really a paperwork moment, a spreadsheet moment, and a discipline moment. I’m sharing the deal that pushed my Milwaukee portfolio over the line: six single-family houses, all underwritten with a clear rent roll, a conservative pro forma, and the actual closing statement so you can see what I paid, what I financed, and what I brought to the table. If you’ve ever wanted real estate investing content that shows the numbers instead of selling a dream, this is that. 

We get into why I like three-bedroom single-family rentals, how tenant-paid utilities keep operating costs simpler, and why “not much room to raise rents” doesn’t automatically mean it’s a bad buy and hold deal. I also walk through my vacancy assumption, the expense buffers I build in on purpose, and the net operating income that makes the property work even when something goes sideways. 

Then we hit financing and risk: loan terms, payment math, and DSCR explained in plain language, plus a real-world example of paying to bring interest rates down and why that can matter over time. Finally, I break down the closing statement, including credits, fees, cash to close, and how 1031 exchange funds helped structure the purchase as part of a larger portfolio shift. Subscribe, share this with a friend who wants the real numbers, and leave a review, then tell me in the comments what you would verify first on a deal like this.

Transcript

Welcome And The 100-Unit Milestone

SPEAKER_00 0:00

My name is Cole. I'm a part-time real estate investor, full-time legacy airline pilot, and a part-time military instructor pilot, documenting my journey as a pilot by day and a real estate investor by night, growing a portfolio in Milwaukee, Wisconsin. And welcome to Tailwind Talks. Today is the day. When I first started this whole process, I was working at the post office delivering mail. And so things have changed drastically in that amount of time. But uh today's kind of a big deal because 100 units is hard to get to. We somehow found a way to do that. But what is the deal that put us over the edge? That's what we're going to talk about today. I'm going to show you the pro forma. So my indication on what I think the performance of the property will be, the expenses, the income, all that stuff laid out in a spreadsheet. I'm going to show you the rent roll. So that's going to be what the properties are actually making right now as it sits. And then the closing statement. What did I actually put down? What did the seller get when they sold it? You know, you get to see all that stuff when you get to the closing table. So I know how much I how much money I made the seller, and I get to see and show you guys uh what I put down on the property and how the whole structure of it works. The whole point of this channel is transparency. So I'm going to be absolutely as transparent as possible. Obviously, redacting tenant information and seller information. People that aren't involved in the transaction, people that are involved in the transaction, but did never ask to be on YouTube, they will be removed. But other than that, you're going to see everything. I would have killed for this information back in the day, and I still would kill for some of that information now. So I want to pay it forward to anybody that might be looking at doing this themselves. And then I'm going to do a video here soon about the hundred units and how we got there. How did we start? I started with a single family flip house. It was a HUD foreclosure. So I bought it from the government for a hundred thousand dollars. Well that was the whole beginning. And from there, it fed into the eight unit that I bought, which I later sold. We bought duplexes and it just slowly built, but it took years and years. So I want to show you guys there's a lot of people out there showing the quick money and selling courses and drop shipping and all this craziness. I'm trying to be the antidote to that. I want to show you the slow, steady grind, working full-time jobs, flying for the military, doing this stuff and showing that it is possible if you're willing to put in the work, if you're willing to learn as much as possible. It can be done. And it might not be overnight, but I promise you the foundation that you'll build doing it this way is significantly better than 99% of what else is being sold out there. So, and I'm not even selling anything. So you get all this for free. I'm here to try to help people. So drop some comments on your thoughts, uh, questions, things that you might be up to. I love to talk and interact in the comments. And uh we'll jump to my computer and we'll talk about it all over there. All right, here we go. Here's the rent rule for the properties as they sit right now. This is provided by the seller, uh, they use Appfolio as well. So, same software, very easy to read. As you can see, there's six properties listed here. We are buying all six of them. You might notice something common amongst all of them. There's nothing less than a three-bed uh in this purchase, and that's because I don't like two beds as much as I like three beds, obviously. The three beds get more rent. In this case, we also have one that's a four-bed. Uh, three beds do better, they have people that stay longer. It's just generally a better situation, and the resale value on these properties will be better too because they're larger, obviously. More bedrooms, more bathrooms. Anywhere in the United States, you'll see that the price trend follows uh those two key markers. So can't control the areas that they're in. They're pretty solid for the most part, but things change. You know, what was a good area to be in, you know, 10 years ago might not be what's a good area to be in 10 years from now. So you have to ebb and flow as far as that goes. But I like single family houses because they're generally pretty simple, low on the expenses, and the people that live there like to stay there for a long time. I mean, you can see in the case of some of these, they've been there for at least a couple of years. I don't think there's anybody that's been there for less than uh coming up on two years, so pretty solid. You'll see the rents right here:$10,294 with a market rent of$10.6. Not a lot of room to grow on the rents, right? We're pretty much tapped out, but that's not why I wanted this deal. First off, we had the 1031 money, so we had to spend the money somewhere, but I'll show you on my pro forma exactly why. So we'll start at the top. A lot of this is just blank because it doesn't really matter. What matters is six units, an average rent of$17.15, giving us$10,290, which coincides with this. It's slightly less, four dollars less, but that's okay. We'll call that conservative.$10,290 in gross rent. I don't really care about the rent per square foot or the loan per square foot, so I don't do anything with those. Don't care about the square feet. What I care about is this stuff, though. This is the rent, 12 months in the year. This gives us$123,480 that we're bringing in for the year. 5% vacancy, that basically accounts for somebody moving out. And if you see here, there's about a$6,000 gap. So the way I look at this is this is people that aren't gonna pay me rent. This is people that are gonna move out, whatever. There's six thousand dollars in play money here because something's gonna go wrong. Um, and I want to be as conservative as possible. Some people bump this up to 10%, but I'm running like less than a six or less than a five percent vacancy rate right now. So I leave it here, it gives me a little bit of a buffer, a little bit of playroom. In a perfect world, this would be zero, and this stuff would just be, you know, 123 would just carry down here. But this is not a perfect world. So property taxes$13,853 is what the taxes are. That's the actual bills for 2025. They'll be different next year, but they'll be within a range close enough that I can confidently say that we'll pay, you know, let's say$14,000 next year, and we'll be prepared for that. Management fees, this is just eight percent of this number. I don't use this number because again, this pro forma, the spreadsheet is to be conservative. I want to conservatively guesstimate my expenses for the year so that way I have some fluff built in. So 98.78 is eight percent of this number. Continuing down, advertising. We don't pay for advertising, but when this spreadsheet was made, you'll see they say to estimate$25 per unit. So I just do it anyways. It doesn't hurt to have more conservative numbers, it doesn't really matter. This is all just a pro forma. What really matters is the performance in real life. So maintenance and repair$1,200. That could be light if somebody moves out to reset one of these houses that somebody's lived in for years. It could be three, four, five thousand dollars easily without blinking. So this could be light, but you'll see later that I have it made up for later in the spreadsheet. Building supplies again, that's just fluff money. We don't pay for the water bills, we don't pay for trash because that's rolled into the property taxes. We don't pay for electric and gas. So you can see all this is just fat zeros on duplexes, four families, 12 units, whatever, these would not be zero and they would be extremely high. So it's a one huge benefit of single-family houses, in my opinion. Legal and accounting, this really should be about$350. If somebody gets evicted, that's what's gonna cost you in legal fees. But I put in$150,$60 for the credit and uh collection fee, which we don't really pay. So it just kind of wraps into this. Insurance, this is my actual quote:$5,600 a year is what I'm paying in insurance. Pest control, again, am I gonna pay a thousand dollars a year in pests? Probably not, but if I don't spend it on pest control, I'll probably spend it somewhere else. So a thousand bucks right there. Lawn and snow removal, I should I'm not responsible for either of those, but I put a thousand dollars in again to help compensate for some of the lower numbers here.$2,000 for replacement reserve and$2,000 for painting and decorating. So if you add all this up, this is about six thousand dollars. So that should cover one move out. Plus, we got the vacancy rate built in, and that gives me a total expenses of thirty-seven thousand two hundred and fifty-one dollars or thirty-two percent of the income, right? So it's thirty-two percent of this number. If you divide this by that, it's thirty-two percent. So what does that mean? Normally I build in a 40% expense ratio before paying for your debt. In this case, it's coming in lower, and I think that's accurate. I think that that is what we can plan on paying every year, which leaves us a net income of$80,000 a year. So now we want to figure out okay, how much am I how much am I gonna have on the debt? I paid$128,000 per house times six houses. 20% down leaves me with$614 on the loan. I'm at 5.75 with Summit Credit Union. They are awesome. Best lender for commercial uh in Wisconsin, as far as I can tell. 30 years on the loan. I think this actually might be 25, but we'll run it at 30. It's not gonna change it a whole lot. And that's gonna mean my payment to them for principal and interest every single month is 3583. And again, just like the income up here, you multiply that by 12, you multiply this by 12, and that gives you$42,996 in loan payments every year. So all I do is take what is left over after expenses, which is all covered in here, subtract that from this, and it gives me my debt service coverage ratio. All that a DSCR debt service coverage, all that means is how much money am I left with to pay for my bet to service the debt? So I've got 80,000 coming in, I've got 42,000, almost 43,000 in debt to pay for, which leaves me with you know$37,000 left over, and that equates to a 1.86. And so what you'd be what you do basically is$80,000 divided by the$42,000 that you have to pay, and you'll get your debt service coverage ratio. It says it should be greater than$1.15. A lot of lenders won't lend on it unless it's like a$1.2. And as you can see here, we're well above that. Even if we have some fluff expenses up here, you know, let's say we had somebody move out and they just tore up the unit, let's say we have 10,000. So now we're at a 1.68. We still have a healthy, you know,$30,000 on the spreadsheet, and we just like you know, 5x the expenses there. So the point is this is a pretty solid deal, I think, especially for the long haul. If we just set it and forget it, this is this is where I want to be. The single family houses are always gonna be valuable because no one's making three-bed, one-bath ranches anymore. The builders can't make money doing it, so no one's doing it. And I am gonna be sitting on these bad boys waiting for the time to either sell them, refinance them, whatever the case may be. And I'm locked in for five years on this loan. So 5.75 is what I've got for the next five years. If rates were to come down to mid-fours, of course, I would want to refinance that and get this payment down even lower. But as I can see it right now with what's going on in the world, I don't anticipate that to happen. So I'm gonna sit on my hands and expect nothing good to happen. And if anything good does happen, then I'll be the first to strike and get this uh get this interest rate taken down. And one interesting note on that, I actually had three notes that were on 6.75. I paid$500 each to bring the rate down from 6.75 to 5.75. It saved a lot of interest, almost a thousand over a thousand dollars a month in interest payments that we saved. Anything can change, but for the moment, I'm pretty comfortable at that 5.75, especially with these numbers. And uh, we'll let it ride. All right, so now we're on the closing statement. I redacted the information that was sensitive, and we're gonna scroll down here. 768, we'll start with the seller side. 768 is what I paid them for the property. They only owed 142 grand on these six single-family houses. I can tell you right now, when they bought these, uh, it was right after the financial crisis. So they got an amazing deal on these, and you'll see what they're clearing here in a moment. So I'm gonna get prorations for them. You'll see a debt for them, as far as this stuff goes, is ends up as a credit on my side. So they're giving me the city taxes based on last year's bill. They're giving me a proration for the portion of the year that we're in, water and sewer charges, even though these are tenant paid. I'm still getting credits for those ice and snow removal rents for the month. So it's just saying from the 19th to the 31st uh for the remainder of the month based on the market rents or the current rents of 10-2. So I'm getting$4,300 for that, and all the security deposits of uh$10,493, which if we go back over here, we can see that should line up. Uh deposits actually show less. Somebody moved into this house, so that's why this number doesn't coincide because this was generated before 2026. Go back over here. Uh, seller is gonna get charged for a lot of title stuff. Um, you know, there's no way you're getting around all this. You're gonna pay the title company their money, they paid a commission to themselves to it through our brokerage, uh, state taxes for stamps and title recording, and then these are all uh city of Milwaukee charges for their taxes, more than likely, waterworks charges, and then you'll see at the very end here they got charged a thousand dollars for Starker fee. A Starker is a 1031 tax-deferred exchange, and they are netting, they're seeing hit the bank account$584,514. So they're getting paid on this transaction for just selling six houses, they're getting half a million dollars. So, no joke as far as that goes. I paid$768 for these places.$614 is what I'm getting uh on the loan to um summit, and I talked about that here. That coincides with the$614 over here. So we'll jump back to the spreadsheet.$614, I'm getting uh all these credits like I've talked about before. The debt for them, as far as these are concerned, become credits for me that goes towards my closing costs. Uh, appraisal fee,$2,200 to appraise six properties. Honestly, not terrible. Tax uh fee, review fee for the appraisal and origination fee.$1,500. If you guys have been paying attention,$1,500 for this size loan is like pennies compared to what other lenders charge. Some lenders would charge you tens of thousands of dollars to underwrite a loan this size. That's nothing, and they're so easy to work with. So some of his amazing, if you ask me. Got some debts here for my title portion. Got some recording fees, AOR fees, and then you'll see at the very bottom what I'm bringing.$140,389 is what I had to bring. And like I mentioned, we had$111,000 or so in a 1031 exchange. So I'm bringing the difference. It's about$29,900 or so. We're filling the gap on this one. It gets us more exposure to the market, and we effectively traded all those properties I mentioned in and past videos. We traded all of those for 20 units of multifamily and another six single-family houses. So we effectively got 26 units, much higher quality construction, much higher rents as a total, and obviously much larger loan balances, which is exactly what we wanted to do. We wanted to grow the portfolio, and that's the way we chose to do it this time around. So this is the transaction that put us to 100 units. The next video will be talking about the 100 units, how we got there, what did I do to start, and what did that look like? It'll be a little bit longer video, probably just trying to break that all down step by step. And then um we'll be talking about the future transactions. We got a lot going on, a lot of possibilities. Right now, we're just kind of sitting on our hands and waiting for these transactions to close. This one was a big one to get off our plates, and we'll go from there. There's a lot of things going on. Cash flow is always a concern because we've got a lot of expenses every month, uh, but we're trying to clean that up, get things running efficiently, and uh keep growing. So appreciate all of you uh spending the time talking with me and listening to me talk mostly. Um, if you have any questions, any thoughts, anything, please reach out to me in the comments. I really look forward to talking to you guys there, and uh, we'll talk to you soon. See ya.