House Hacking Your Way to 97 Units (While Holding a Full Time Job!) | BiggerPockets Podcast 086

TL;DR

Cory Binsfield manages 97 units while holding a full-time job.

Transcript

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Key Insights

• Cory Binsfield began investing in real estate in 1998 and now owns 97 units. He started with house hacking by purchasing a triplex and living in one unit while renting out the others.
• Cory emphasizes the importance of networking and creative financing, such as using VA loans and seller financing, to expand his real estate portfolio.
• Investing in college towns can be lucrative due to consistent demand from students, though it requires careful management to handle potential tenant issues.
• Cory prefers multi-family properties over single-family homes because they offer more opportunities to create value and are less dependent on market comps.
• He manages his properties with the help of part-time staff, using property management software like AppFolio to streamline operations.
• Cory avoids partnerships due to past family experiences but considers working with IRAs for potential future investments.
• He stresses the importance of cash flow and advises against relying solely on property appreciation for investment returns.
• Cory finds potential deals by driving through neighborhoods, taking different routes, and building relationships with local property owners.

Questions & Answers

Q: How did Cory Binsfield start his real estate investing journey?

Cory Binsfield began his real estate investing journey in 1998 by purchasing a triplex with a contract for deed. He lived in one of the units and rented out the others, a strategy known as house hacking. This allowed him to cover his living expenses while building equity in the property. His initial investment was inspired by watching his brother succeed in real estate, and he believed that if his brother could do it, so could he.

Q: What financing strategies does Cory use for his properties?

Cory employs various creative financing strategies, including VA loans, FHA loans, and seller financing. He often structures deals with a 10% down payment from his own funds, 20% seller financing, and 70% from a bank loan. This approach minimizes his initial cash outlay and leverages the property's income potential. Cory also maintains strong relationships with local banks to facilitate financing for his multi-family investments.

Q: Why does Cory prefer multi-family properties over single-family homes?

Cory prefers multi-family properties because they offer more opportunities to increase value through improved management, higher rents, and reduced expenses. Unlike single-family homes, which are valued based on sales comps, multi-family properties are valued based on income potential. This allows investors like Cory to actively increase their property's value beyond market appreciation. He also finds that multi-family properties provide more consistent cash flow and are easier to manage at scale.

Q: What are the challenges of investing in college towns?

Investing in college towns presents challenges such as higher tenant turnover and potential property damage due to student behavior. However, Cory finds it manageable by enforcing leases strictly and maintaining open communication with tenants. He requires students to sign one-year leases and sometimes involves parents as co-signers. Despite these challenges, the consistent demand for housing from students and the ability to charge higher rents make college towns attractive investment locations.

Q: How does Cory manage his properties while working a full-time job?

Cory manages his 97 units with the help of part-time staff and effective property management software like AppFolio. He acts as the conductor of the orchestra, overseeing operations while delegating tasks to his team. This allows him to balance property management with his full-time job. Cory's approach emphasizes the importance of building a reliable team and utilizing technology to streamline property management processes.

Q: What mistakes has Cory made in his real estate investing journey?

One of Cory's early mistakes was relying on property appreciation for returns, which left him with some underwater properties. He learned the importance of ensuring properties cash flow positively from the start and making money when purchasing the property. Cory advises against banking on appreciation and stresses the need for thorough financial analysis and conservative projections when evaluating potential investments.

Q: What is Cory's view on partnerships in real estate investing?

Cory is cautious about partnerships due to negative experiences within his family. He prefers to invest independently to maintain control and minimize risk, fearing the potential for financial loss and strained relationships. However, he is open to exploring partnerships involving IRAs, where he could help friends or family achieve higher returns on their retirement funds. Cory acknowledges the potential benefits of partnerships but remains wary due to past experiences.

Q: How does Cory find new investment opportunities?

Cory finds new investment opportunities by networking and driving through neighborhoods to identify distressed properties or tired landlords. He takes different routes to work to discover potential deals and uses direct communication to express interest in purchasing properties. Cory believes in the abundance mentality and views networking as a lifestyle, constantly seeking opportunities to connect with property owners and explore potential acquisitions.

Summary & Key Takeaways

• Cory Binsfield shares his journey from buying his first triplex in 1998 to owning 97 rental units. He started by house hacking and emphasizes the importance of networking and creative financing.

• Investing in college towns presents unique opportunities and challenges. Cory finds success by enforcing leases and maintaining firm but fair relationships with student tenants.

• Cory prefers multi-family properties for their value creation potential and manages his portfolio with property management software. He avoids partnerships but sees potential in using IRAs for future investments.