EP14: Scaling Quickly? Focus on These 3 Things with Amelia & Grace
Welcome back to episode 14 of the podcast. This week we’re going to focus on how to scale your REI business quickly. This is another question we hear quite often from our followers on Instagram and since we each scaled our businesses quickly, having gone from 0 to more than 20 units in only one year, we’ve learned some hard lessons along the way. We’re sharing our best tips and practices for scaling quickly.
For Amelia, the realization of needing to scale quickly came when she purchased her first triplex on her own, had it rented out, and it was cash-flowing well. She had been bitten by the REI bug and turned around and purchased her next property rather quickly. She used the money to purchase her triplex from her first deal, which was a flip. She had planned for her next buy to be a buy-and-hold, so she already knew what she was looking for in the market.
We frequently talk about how real estate investing really isn’t hard. It’s actually a simple concept, but can be hard to put into place. However, at the same time if you can do a decent job and have a decent product it could bring you a lot of success.
Grace realized she was going all in on REI when she realized that it could literally be an end to a means and allow her to quit her job. Two deals in, Grace and her partner (Brandt) decided they were going to keep buying and not let a lack of funds stop them. They would find good deals, and the money for each buy, along the way. They did each of their first 10 deals very differently but her first most people would find the most interesting. Keep in mind they have never sold any of their properties. It was a BRRR and they put down 20% bank loan and then used cash to pay for the rehab.
Grace’s second deal was two duplexes and was split evenly between herself, her boyfriend, and her sister. They paid $255,000 and they convinced the bank to let them put 10% down, drastically reducing the amount of cash they would need to pay upfront to get this deal. Eventually, Grace began to get super creative with her financing so she could continuously purchase value-add deals so she could re-access the capital out of it to pay off private money, etc. Simply said, Grace got scrappy with her financing and it has definitely worked out in her favor.
We both have decided to see our goals and design how we want our future to look around those goals. Then, we go for it. For both of us, real estate investing is “passive”. We have built out our systems and put them into place which allows us to continuously move the needle forward.
Another way we have been able to scale so quickly is to find good partners to work with along the way. With constant buying, the money will eventually run out and in order to continue to scale we have figured out ways to not use all of our own money to tackle every single buy. When we first met a year and a half ago, we decided to partner up, and look where it has brought us! Partnering can be absolutely amazing if done the right way.
One more important detail when it comes to scaling is financing. Grace used different lenders for her first three buys and has since stuck with the 3rd. It is a commercial lender which means their terms aren’t as favorable but the financing is easy to get. Plus she got in good with this lender by building a relationship with them and proving to them time and time again that she will under-promise and over-deliver on what she says she can/will do.
Amelia has also built a good relationship with her lender and while they do still occasionally ask for her tax returns, they also know the level of return they can expect from her.
Best Practices for Scaling & Building a Relationship with Your Lender:
Be flexible/easy to work with
Perform well: under-promise then over-deliver
Show them you’re a professional, don’t be a mom-and-pop shop
Have a strong mindset
Know your buy-box (good-deal criteria)
Spread the word - you never know who is looking to sell a property!
That’s all for this week! Thank you so much for listening, we really appreciate you all so much and we will catch you in the next episode!
Resources:
Join the Property Management Academy
Grab our MTR Starter Guide