Robert Hammond’s 36th Property of 74: Video Case Study

Real estate investor and Lifestyles Unlimited member Robert Hammond bought an amazing 74 houses in less than two years! He bought 10 houses on his own, and bought the rest through partnerships.

He takes us on a tour of his 36th property: a 3 bedroom, 2 bath, 2 car garage home in Houston.

All in

$72,000 Purchase Price
$6,000 Two Closings
$10,000 Rehab
$88,000 “All In”

Equity

$115,000 After Repair Value (ARV)
$88,000 “All In” (Purchase + Rehab + Closing)
$27,000 Equity Capture

Cashflow

$1,075 Monthly Rent
$ 825 Monthly Expenses
$ 250 Monthly Cashflow

Portfolio

$2.5 Million Total Equity (with partners)
$1.5 Million Total Equity (Robert’s Share)

$22,000 Total Monthly Cashflow (with partners)
$10,000 Total Monthly Cashflow (Robert’s Share)

Comments

  1. Matthew B. says:

    Amazing, how adding property by property, now you have 74 and your couple millions on equity.

    What is holding you to go to the multifamily’s route or its just simply a personal preference? at this level (74 houses) the volume of work (maintenance) can be a part-time job depend of the season.

    Congratulations
    Matt

  2. Robert Hammond says:

    Great question. It was a lot of work finding, buying, renovating and leasing all the properties. We want to ‘realize’ all of our projected or unrealized equity capture, so exit strategy is to wait till it’s more of a seller’s market before selling.

    In the meantime we get to enjoy the cashflow, possible appreciation, principle paydown, and depreciation. And yes, there is some maintenance work, especially with turnover, but it’s subcontracted out, and tenants cover most of those costs.

    All that said, I do have an interest in multifamily and am thinking of ways to do it without having to sacrific current cashflow.

  3. I must say Robert has done a good job of being innovative, finding a solution to whatever has come up. Robert also picked up the phone every step of the way asking questions to anyone and everyone that was successful in real estate. He never thought he knew it all. He is a solution maker!

    Good job Robert I am so happy for you and Lisa.. So how is it working together now?

  4. Jim Hall says:

    I’m a new investor and you are truly an inspiration to have donw all this in a year! I have a couple questions I’m having trouble getting past and would really appreciate the help!

    Are all of your properties bought with hard money free and clear or do you refi and get mortgages on them? If you get mortgages, how do you qualify for them?

    Thanks for all your help!

  5. Amazing!
    Very inspirational… I look forward to follow Robert’s footsteps…

    By the way, really nice job on the rehab, property looks gorgeous.

    I am curious how you only spent $6K on two closings, that seems quite low. Either that or I am being robbed by the mortgage brokers I have used. :-)

  6. Robert Hammond says:

    Natalie,
    Thanks. You’re right, putting my ego aside and asking for help is the way to go. And it is so much more time and cost effective than reinventing the wheel all the time. I still talk with Jeff at least a couple of times a month, as well as others. It’s good business to stay in the loop.

    Working with Lisa has had it’s challenges and we’ve worked out some things… it’s very good now.

  7. Robert Hammond says:

    Rui,

    The 6k in closing costs is low. Today I can’t get that, but at the time I was getting 1k closing costs with my hard money loan. It was Active Finance Group.

  8. Robert Hammond says:

    Jim Hall,

    Step 1 – Get prequalified for your exit strategy (refi loan).

    There are some great products out there right now, even after you get past the Fannie Mae 4. Start with the Lifestyle vendors.. they are very investor friendly and can help you.

    A lot of your questions can be answered by getting basic education, start with the lifestyles weekend.

  9. Jason Gage says:

    $10k a month cashflow, that’s amazing! Are these theoretical numbers or actuals? What cashflow do you actually realize, taking into consideration vacancies, turnover and maintenance costs?

  10. Great work Robert. With the money market the way it is I’m doing, what I think, is my last conventional loan. They take too long to process and the rules keep changing. I’m looking into the hard money lenders with a new offer today. Any insight on pitfalls or hidden costs?

    One thing you didn’t mention that I always look for is that brick siding. Not sure how many of those you have but it’s the only way to go. Also, that was some good looking tile in the bath room, was that vinyl or ceramic?

    Buy ‘em while the prices are low and the equity is high,

    Randy

  11. May I ask who you are partnering with – the company you use for financing – hard and “normal” loans. I have been burned twice by 2 different lenders that were “on the list”

    also, what are taxes on the property, and what is the rate on your final loan?

    Best,

    Andy

  12. If you refinanced, got $5000 out, are you then all in at $93K?

    Best,

    Andy

  13. Robert Hammond says:

    Jason,
    Great question. Theorical. One partnership, as you know, has been hit hard with some turnover/vacancies and some repair costs that were things missed in the original rehab, because of the speed and volume at the time.

    Three partnerships are cashflowing, but all cash flow is being channeled into accounts to build contingencies and savings for year end taxes. We ended up using already built up funds towards actual rehab costs because refinances shifted dramatically near the end of 2009, so lots of capital was used to close refinances.

    Right now, we realize about 6-8k cashflow. In January we should be up to 10k because the accounts will be caught up.

  14. phillip says:

    Robert, OUT STANDING!! Like Rui said, you are turly a inspriation. I,m new at this and will be attending my first simmanare with a future partner. I will always keep you in my mind,and tell my self that if you can do it!so can I!! i,ve declared it, and now i will make it so!! Keep it up!!

  15. Robert Hammond says:

    Andy,
    Sorry, I don’t have the rate info on the final loan readily available. I believe it was one of our fannie mae 10, and that it was around 6.3%.

    We’ve used quite a few lenders for various loans. And the products each lender has constantly changes, because the financial market constantly changes. So, I recommend using investor friendly brokers/lenders and staying in touch with what each has. That’s where staying in the loop is useful.

    That being said…For hard money, I recommend Red Door Funding. They also have some refy products as well. We’re working with Blake at Capital Concepts on a few refys as well.

    The “all in” numbers are 88k for the property on the video.

    Randy,
    Brick is nice .. I agree, my market was brick dominant, but I didn’t mind other sidings if the numbers were right.

    With hard money there are going to be some costs, but the way I look at it, it is “Cost of doing business”. They provide a valuable service.

    On the bath flooring you saw, that was vinyl that went very well with the carpet. Typically, we put in tile, unless the bath is upstairs.

  16. Robert,

    This is a great story. 72 houses in 2 year, averages about 3 houses a month?

    1. How did you find, evaluate, close on, and rehab 3 houses a month?
    2. How are you financing them?

    Thanks!

  17. Charles P. says:

    You at you, Keep it up. It’s great to see that your moving along. I should be join this soon.

  18. Robert

    How do you structure your partnerships – does one of your partners get the mortgage in their name, and then deed the property to an LLC in which you have an interest?

    Who typically puts up the cash required for each deal – your partner? What is the typical split assuming the partnebr gets the mnortgage and puts up the cash?

    Many thanks

  19. Chris Pace says:

    Robert I am trying follow the same model of managing others properties while building up my own portfolio and I was seeing if you have a model that is available for others to view and follow.

  20. Steve Fromm says:

    Robert,
    Like Mark W. I am also interested in how you formed your partnerships. Do you think partnering with people in another state is a good idea? Great job on your acquisitions your an inspiration.

  21. Robert Hammond says:

    Gentlemen,
    No short answer to your questions. Generally, you set up an LLC and this serves as the governing document to cover all the ‘what ifs’ and it lays out the nature, expectations and percentages as well.

    Then a lot of the rest depends on many variables including the lead partner’s credit and ability to sign on a loan, bank/mortgage guidelines, and a few other things. Bottom line is you need to structure it so that you can close the deals on the front end and back end (refy).

    And set it up so that people’s interest are reasonably protected.

  22. Robert Hammond says:

    Keith,
    3 was the average. Some months we did 6-8 and some 0 or 1. Looking back.. it was a pretty frenetic pace. The adrenalin probably kept me going, also exercising and that I did this full time helped too.

  23. Brian Carter says:

    Robert,

    Great job! However, I was wondering how the 170% ROI was calculated. By my calculations using the information you provided and the standard ROI formula:

    ROI = [(Return – Investment)/Investment)]*100

    Your ROI would look more like this:

    80% = [($27,000 – $15,000)/$15,000)*100

    Now, please don’t get me wrong, I don’t know of another investment that will generate an 80% ROI, but I was just wondering if I was missing something.

    Thanks for the submission, great video, and really nice house.

    Brian Carter

  24. Brian,

    Thank you for the comment.

    The confusion lies in the calculation of ROI. The $27k return does not include the initial investment. The $15k initial investment is part of the $88k “All In”, meaning that the loan was for around $73k, allowing for $15k out of pocket.

    That means that the $27k equity capture is above and beyond the original $15k investment. So.. at the end of the day, the deal will return the original $15k, PLUS $27k in profit.

    That’s why the deal is at 170%.

Speak Your Mind

*