$6,800/Month Cash Flow with 4 Small Multifamily Rentals

0:00Today's guest is a full-time filmmaker, but has a side hustle. It's bringing in$6 ,800 a month in pure cash flow from four rentals, all within walking distance of his house. Ryan Allsop didn't start with a trust fund or real estate experience. He bought a duplex to stop paying rent. Then he used HELOCs, local lenders, and even email-only deals to grow a full portfolio.

0:28This is the Real Estate Rookie Podcast. I'm Ashley Kerr. And I'm Tony J. Robinson. Okay. Well, let's give a big welcome to Ryan. Thank you so much for joining us today, Ryan.

0:40Real Estate Rookie:Happy to be here. Thanks for having me. So you're a filmmaker by day, but what made you start investing in real estate? Yeah. It's a long story. Going back, I grew up in a large family. I'm one of seven and kids. So, you know, we had a very nice, modest home. I remember growing up with three of us in one room. And so it was tight. And I remember in high school and middle school, my dad actually started to read. I remember rich dad, poor dad. And then he bought a fourplex. And I just saw, you know, we got a boat and we were able to do, you know, I think more things than I remember growing up. And that always stuck in my mind.

1:16Real Estate Rookie:And so when I finally got to the age of 26, I hated paying rent. And I said, I want to buy a duplex and have someone else pay for it. And so that's kind of how it all started. So you had this big realization that rent money could actually go towards ownership. So what year was this that you ended up buying this property and tell us a little bit about it? Yeah, this was April of 2017. And it was a duplex. And I just could see, okay, I did the numbers and I could figure it out the rent that I could get for the upstairs. It was a duplex. I was going to live on the first floor, had renters up above and that rent would pay for the mortgage insurance and it would pay for the taxes.

1:56Real Estate Rookie:So I knew I'd break even, but in my head, I was already paying$600 for rent at the other place. So I was like making 600. And it worked out really well. I got a 30 year fixed loan and it was a first time home buyer. So I only had to put 10 % down and it had no PMI. So it was a very affordable loan to get into my first rental. And Ryan, I guess I'm curious. I mean, it sounds like a pretty solid deal, but how did you find it? Was it listed on the MLS? Were you walking around the neighborhood? What was your secret to finding this first house hack? Yeah, I knew nothing. I knew nothing about real estate.

2:33Real Estate Rookie:So I just went on Zillow and I found the first duplex and I typed in my information and they paired me with a local lender totally out of the blue. And I went and toured it and it was a dump. It was terrible. Even the realtor was like, you don't want this house. And it's funny because that short interaction of happenstance now led to, she actually paired me up with her daughter who was just starting to be a realtor, amazing realtor here in the local Milwaukee market. And I've now used her to buy five separate homes since then. She is my go-to and it just all happened. And so for the first home she showed me after that dump, that was the one.

3:07Real Estate Rookie:It just happened to be, we had showed other ones after that. And I was like, no, no, no, no. That very first one that you showed me, that was the one. I was not expecting you to say that at all. I still can't believe it. The very first house that Paris is her name that she showed me was the one that I ended up buying. And that was the one that I lived in for many, many, many years. Brian, you say that your realtor said it was a dump and that you shouldn't buy it, but yet you bought it anyway. Why? What did you see? I apologize. I'm sorry. That very, very first place was a dump. And then the second one, which was the first one with Paris, that was the one I ended up buying.

3:43Real Estate Rookie:And that one wasn't a dump. It was distressed and it was definitely needed some TLC and some love, but it was within my price range. And so I ended up buying that second one I toured. Going into it, your goal was to house hack, but did you run any analysis to say like, okay, the numbers make sense on this? Or was it more just emotional? Like I like the way that it looks and I see the potential. How did you analyze that deal to know whether or not it was worth pursuing? Going into that, I knew nothing about real estate. I really didn't know numbers. I didn't know. I didn't even know house hacking.

4:14Real Estate Rookie:I did. All I knew is, OK, the mortgage is going to be about this much. And I think I can get about this much in rent because I'm paying this much for rent a couple blocks away. And so, you know, I was I was a rookie. I didn't I didn't do much calculations, to be honest, besides that. I had a good feeling about it. But a big thing for me was I just hated paying rent. I hated I'm a very frugal guy and I just hated paying rent and losing all this money every month and having nothing to show for it. So that was a driving factor for me. And it was kind of one of those things of this. I got to take I got to take the first step and I'm going to figure this out along the way.

4:48Real Estate Rookie:I don't know how to be a landlord. I don't know how to manage all this. I think the numbers are going to work, but I just took a leap of faith. I love that you used the phrase leap of faith, because I think where a lot of rookies get stuck, Ryan, is in the dreaded analysis paralysis, where they listen to the Real Estate Rookie podcast. They watch the YouTube videos, they read the books, but they never actually get to a point where they're able to take action. What fears or limiting beliefs did you have, Ryan, before you got started? Because we all have them. And how did you actually overcome those to secure that first deal?

5:24Real Estate Rookie:I'm a frugal guy. And that down payment was$27 ,000. And nowadays, maybe that doesn't sound like much, but I was 26. I was scrapping and I was working a W-2 and I was also So a server, I saved up that money for years. That was my entire life saving. So it was a massive decision. And it was so scary to put that down. And, you know, I knew I had to do something. And this felt like the most calculated way to take a risk, but still be confident that the outcome will be very beneficial for me and for the future. And I'm a big person for being able to do something for myself in the future. And so I knew my future self was going to appreciate this move that I took now.

6:13Real Estate Rookie:And I know they're just saying that, it appears a mile wide, but only an inch thick. And it's all about taking that first step. And I just knew, I just had a feeling this was going to pay off in the long run. Where did this property end up? So did it actually pay off? Were there struggles? Did you have to sell it? Tell us what ended up happening with this property. Yeah, this property honestly will be the one that I will remember forever as being the best decision of my life. It was great. Everything was great. The first year I got a great group of girls that lived above. My girlfriend at the time moved in with me below.

6:48We were like very friendly with each other.

6:51Real Estate Rookie:They ended up living there for like four years. It was the best situation. No turnover in four years. That is like a landlord's dream. You're telling me. And it was the best case situation, which I know often on many podcasts, you don't hear from the very first interaction to step into real estate. But those tenants were amazing. We would even split the cable and internet bill. So even other aspects of my life got even more affordable. It was so great. And we'd leave for the weekend and they'd make sure the house was good. And it was a great, great decision because now since then, I've used that house as collateral to get a HELOC, which then I pull out more money and I get another property.

7:29Real Estate Rookie:And now, you know, I've since left that property. But before leaving, I refinanced it as a owner occupied 30 year fixed rate at 3%. And that was in 2021. And so now and then I moved a couple months later. So, you know, I locked that in for 30 years with a super low payment. And so that one is, you know, kind of the cash cow. That one's doing really good and set up long term. I think it seems like one of the things you may have realized is that even though this was a great deal to start with, the real power of this property is the long-term play. You just explained exactly what you have been able to do with it besides just having cash flow.

8:11And I think that is something I definitely learned over the years that it's not just cash flow. As you hold these properties longer, there is so much more value to them that you can tap into and that the equity, the appreciation, the mortgage pay down, all of that can give you longer term benefits of the property. Like I look at some properties that I've owned and, you know, I've had them for 10 years now and it's like, wow, that is a lot of money that is in these properties that I have access to. I could do the HELOC, I could do a cash out refinance, or I could sell the property. and we see in the BiggerPockets forums all the time that dilemmas, but the thing with these dilemmas is that these are opportunities.

9:00No matter which one of those options you picked, it's going to have some kind of benefit to you. These are good choices. These are good options to have. And so I think that's just such a great, wonderful realization of real estate is that at the buy can be great, the buy can be okay. But like what the real power of these properties is, is that long-term play of what you realize what else you can do and what other opportunities become available to you. And actually, I think it's, it's harder for rookies to understand that because we live in an age where everything is sensationalized and things only get traction if they're, you know, attention grabbing and the hook has to hit and social media paints a certain picture of why we invest in real estate.

9:47But what it really comes down to is exactly what you just said. It's a long game in the same way that people invest in the stock market, in the same way that people put into their retirement accounts. Real estate is a long-term vehicle for wealth, not just a, hey, let's try and get rich overnight, because most of the time that doesn't work. So Ryan, thank you for illustrating that point so strongly.

10:10Real Estate Rookie:Yeah, I see it as, and I don't know if others will, but I think real estate is just the most simplest form of self-love. You know, it's embracing, you know, delayed gratification. And it's living below your means so you could build up some equity. And, you know, it's not a sacrifice. I think it's more of a strategy. All right, coming up, Ryan's going to share how he negotiated an entire duplex over email and how he used very little of his own cash to get his next two deals. Most deals don't fall apart because of the numbers. They fall apart because of the financing. You find a property that cash flows.

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13:14Real Estate Rookie:If you want to do the same, visit biggerpockets.com slash retirement to learn more. I do want to talk about my first rental. I thought collecting rent would be the hardest part, and I was actually wrong. The admin never stops the expenses, the receipts, tax forms, tenant issues. I didn't expect the behind-the-scenes work to take up so much of my time and headspace. Every night was another round of paperwork, and I started thinking, If it's like this one, how do people handle five or 10? Baselain helped me get out of the weeds. It's the official banking platform of BiggerPockets that handles the whole backend for me.

13:50Expense tracking, financial reporting, rent collection, even tenant screening. It's the first time I've felt in control and now that I'm not drowning in admin, I finally see how my real estate business can scale. So do yourself a favor, sign up at baselain.com slash VP today and get a$100 bonus. All right, guys, we are back with Ryan and he just told us about the deal that changed everything for him. The best deal, the best decision that he's ever made was buying that first duplex. But Ryan, you don't stop there. You keep going. And I hear that you bought a second duplex by negotiating entirely over email, which is every introvert's dream.

14:29So what's the story? How did you do that?

14:31Real Estate Rookie:Yeah, this was two years after that first duplex and I was itching to get another. I still at this point was still a rookie. I didn't know much. So I was touring new ones, trying to find a new one. This was in 2019. I was asking around and it just so happened that my now wife's friend's friend from college had a friend whose dad had a property on the campus who went to Marquette University and put me into contact through email. And one thing just led to another to another to about a hundred emails later. You know, I probably wouldn't have done this nowadays, now that I know what I know, it sounds like a scam, but it worked out that we just kept going back and forth.

15:08Real Estate Rookie:And he said, I want this price. And I would email back, I'm more on this price. He would email back this, this, this. And we got to a work, kind of a middle ground. And he had an attorney and I had to figure out, I needed to hire an attorney too, to represent me and do all the paperwork. And it worked out. I tell that story to people nowadays and I just thought I was thinking, but it worked out. I just took the leap of faith and I went for it. Ryan, what was a big difference from buying a property on the MLS, having a real estate agent to now negotiating a deal without an agent? A lot of people wouldn't know what to do because a real estate agent does really hold your hand and walk you through those steps.

15:47So if a rookie is in a similar situation where they have a deal that's off market, what are some of the things they should do right away to actually move this deal forward without a real estate agent?

15:57Real Estate Rookie:Yeah, it was definitely nerve wracking because I was still new to this. I didn't quite know everything, the ins and the outs. And I'd only gone through one and it was property and that was two years ago. So I toured it right away. I just wanted to make sure, okay, I'm talking to this guy via email. Is this legit? Is this real? I go there and he has a property management company. So I meet with the manager, ask her a bunch of questions. I came prepared with a bunch of questions, verified the leases, verified the rents, verified everything that he was telling me, saw it for myself in my own eyes, toured the property and everything checked out.

16:27Real Estate Rookie:All the boxes were checked. you know, you have that feeling in your stomach. Is this real? Is this, you know, am I getting scammed? But no, everything checked out. So it's just about doing your due diligence, making sure the numbers check out, you know, the leases are accurate, talking with the property manager, and really just going through everything to make sure it's real. I think we've all heard the story of like the Nigerian prince who, you know, they need you to wire X number of dollars and they'll change your life. So I'm glad that didn't happen to you. But I wanna go back to you just getting connected to this person in the first place.

17:01So you said it was your wife's friend of a friend of a friend whose dad did this thing. Like how did, you know, this is someone who's, you know, maybe five, six degrees of separation from Ryan. How did they know that you were a real estate investor and how did it make it all the way back to you?

17:16Real Estate Rookie:Yeah, and so I got the email, it was actually at a party. It was like a birthday party and we were just talking and my wife talked to her friend and she's like, I know this person. And I got his email. So I reached out to him directly. And I said, this is who I am. I'm a real estate investor in Milwaukee. And the story was he had wanted to sell it because he bought for his daughter. But he lived in Seattle and the house was here in Milwaukee and he had had it just under management and now just didn't want it anymore. But it was a beautifully fully gutted and renovated home only three years past renovation.

17:44Real Estate Rookie:So it was flawless, didn't need anything. And he said, yeah, you know, I thought about putting on the market, but I've just been so busy. What would you give me for it? And that's how the conversation started. And we just snowballed from there and finally got to a price that was mutually agreeable. I think about that as far as like, I was going to put it on the market, but then I just got too busy. And I can see a lot of investors or even just homeowners in that same situation. It is a lot of work to list a property, to have the agent come out, schedule photos of the property for the agent to tell you, you need to change this, change this, change this because the house is going to sell better.

18:25You need to do these things, uh, set up showings on your property. Like it isn't sign the paperwork, get all of the information to the agent, fill out all the disclosure forms of what's wrong with the property, what's not wrong, all these things. So like, I can totally get that. And I think another thing to point out too, is that, you know, your wife must've been talking about what you're doing for somebody to know about this and word of mouth referrals of just saying what you're doing, not even saying like, Hey, I'm looking to buy a deal if you know someone, but just talking about what you're looking for.

19:02I have gotten, when I first started, probably 50 % of my deals were from word of mouth, like a friend's sister whose brother-in-law was, you know, sick of tired of being a landlord, you know, I bought their property. So I think that is such a good lead generation. It shouldn't be your only way that you're getting deals, but it's definitely, it can be a really big beneficial one. So tell people what you want to do or what you're currently doing. And Ashley, I just want to add to the point too of why this person sold to Ryan without listing. And I think the takeaway from Ricky should be, you should never assume the motivation of a seller because there are a million, an infinite number of reasons as to why someone should sell.

19:48But I think what you should do is try and understand what that motivation is. And in this seller's instance, it was the convenience of being able to talk to one person and to be able to get the deal done. And I think the more you know about their motivation, the better you can position your offer to solve whatever problem they have. I've shared this story on the podcast before, but we've actually had multiple guests who have had similar situations, but someone that we knew or that we interviewed got a really great deal on a home from this lady because she had been in that house for like 40 years and she didn't know how to move.

20:24She had never moved before. And she was like, look, I'll give you the price if you can just help me move. And all they had to do was pay a moving company, you know, a couple thousand bucks to help this lady move and they got a killer deal. So anyway, understanding the motivation of the seller, I think is super important. But Ryan, going back to your story, you find this amazing deal. You said it was turnkey, but have you matured or I guess progressed, maybe is a better word, onto taking on projects that did need some renovation? And if so, how many of those renovation type projects have you done so far?

20:55Real Estate Rookie:Yeah. I like to do a renovation project every year per property now. And that one is definitely turnkey and they're kind of smaller. But at each one of my properties, I like to at least invest one to 3 ,000. When I first acquire a property, I like to put at least around$5 ,000 into it. And I just think it's going to increase the rent. It's going to show the current tenants, I'm here. I care about this property. I want a great home for you to call home. And it's just a little aesthetics around the house to really help improve the quality of life for the tenants and then set that property up long term.

21:30Real Estate Rookie:I'm all about setting the property up. If something's broken, I'm going to fix it right away, get it going. And then hopefully it's nice and it can kind of coast for a couple of years. Now, Ryan, how are you financing these properties? You did the first one as a primary residence to house hack it. What about these other properties that you have acquired? Yeah, so for that second property, that was the scariest moment of my life. And so for that one, the purchase price was around$337. And I looked around for rates and low down payments. I couldn't find anything less than a 25 % down. So I needed to come up with around$80 ,000, and I didn't have it.