22 Nov CREPN #119: School Teacher Turns Full Time Real Estate Investor with Todd Dexheimer
Real Estate Investor Todd Dexheimer quit teaching once his real estate investing side hustle provided more than his teacher paycheck. [x_audio_embed][/x_audio_embed] His original real estate investment strategy was to own 1000 units. He jumped in fast. He bought rentals until he ran out of money. When he needed more money, he started flipping single family homes. This gave him more money needed to buy more rentals. The flipping business grew fast. There are only so many hours in the day, and the flips consumed most of his time. In order to make money flipping, you have to sell. If he was going to grow his portfolio, he had to answer a question: was he a Flipper or a Real Estate Investor?
Real Estate Investment StrategyHe had lost focus on his real estate investment strategy of 1000 units. When he looked at the return on investment comparing the flips to the rentals, there was no question on which way he needed to go. The rentals “destroyed” the flips. This “aha” made him question how was he going to grow his portfolio. When he looked closer, he recognized that single family rentals were difficult to scale. He realized that if he wanted to achieve his goal of 1000 units, multifamily was the answer.
Real Estate Investor QuestionThe question he needed to answer was “where” to invest? The local market Todd lives in is extremely competitive and CAP rates are compressed making it tough to find opportunities locally. Todd took the next 18 months analyzing markets. He looked at:
- What is the Population? He looked for an MSA of 500,000 minimum with positive prospects for growth.
- What is the Employment forecast? Are there any new employers coming to town?
- What are the Value add opportunities in the market? Are there multifamily properties available in the market? How affordable is rent for tenants? What is the cost to buy a home?