How We Went From 1 Rental to 15 Units In 5 Years

5 years ago Mrs. C. and I owned 2 houses; our primary residence, and the house we previously lived in that we just couldn’t sell.  In 2018 we had two drivers that came together to have us start investing in rental real estate.  Over the last 5 years we have consistently worked on buying and rehabilitating properties to where we now have a total of 10 properties with 15 units.

Buying these properties has been life changing.  The original goal was to put these properties on 15 year mortgages so that we would get a big raise in early retirement (I’m 37 now, was 32 when we started), and to have positive cash flow of around $5,000 per year per property.  Some properties have failed to reach that mark while others, most notably our Airbnb 6 unit property, have greatly exceeded it.


Getting Started:

In July of 2018 a good friend of Mrs. C. died along with 5 of her 6 children in a terrible fire.  Two of those children were best friends with two of our children.  They had struggled with housing in our area.  She was married and her husband and the baby survived the fire.  Both parents worked.  They had been living in a large rental house for years which had an electrical fire (no fault of their own) and everyone got out.  Because the house was a loss they needed to find somewhere else to go.  With a family of 8 staying with a relative or friend is almost impossible, and they didn’t want to split their family up.

In our market there are very few large rental homes.  Typically only 2 or 3 come up a year.  They ended up temporarily moving into the only place they could keep their family together, into a motel that had been converted into apartments.  Virtually all of the other people in this motel were single.

In July there was a fire that started in this motel in the middle of the night.  Several reports state that the smoke detectors didn’t go off. They were on the 2nd story.  When they woke up to smoke filling the unit the mom and boys went one direction and the dad and the baby another.  The mom and the boys died of smoke inhalation. No one else died in the fire.

A couple months later a friend of ours who is like a sister to my wife was in a very serious domestic violence situation in a city about 4 hours away.  Mrs. C.  brought her and her kids up here and they were living in our house for a few months.

Between these 2 events we decided to get into providing rental housing in the Benton Harbor area, with a specific goal of large 3 to 5 bedroom rental houses.  We would buy houses that have been on the market for months, that no one wants, fix them up, and then rent them out to increase the rental housing supply in the area.  Our first rental would be to Mrs. C.’s sister who was in the domestic violence situation.

First 3 Houses: No Income

Our First house: We purchased our first home in 2006 and lived there until 2011.  We purchased our current home in 2011 and were unable to sell our original home.  2011 was the worst time to sell a house.  In our market there was over a year of inventory on the MLS.  We had 2 deals fall through to purchase and ended up becoming accidental landlords and renting the place out far below market rent, because we didn’t know what market rent was.  We rented out our 5 bedroom 2 bath home for $500 a month. At the time we should have been getting closer to $900 a month.  We were just concerned about covering the mortgage.  When that tenant finally left we moved Mrs. C.’s mom into that house and she took over at $500 a month.

Home Equity Line of Credit:  Before we purchased our first purposeful rental house, we got a home equity line of credit in 2018.  We had been aggressively paying down our mortgage and had made a 20% down payment to start.  We got an initial heloc of $60,000.  We used this to buy our first rental property.

The first one we bought was this house.  We paid $19,000 and ended up all in at $23,000 on it.  Our friend who had been living in our home with us with her 3 kids moved into this house once we got it ready. We gave her a really good deal on rent to help we get established, and then after 2 years increased it to roughly 3/4 of market rate rent.  This property barely cash flows, which is OK.

Once we were done with that house we began looking for a more practical house for Mrs. C.’s mom.  She lived alone in a 5 bedroom 2400 square foot house was not the most practical.  Stairs were getting more difficult for her and half the house was upstairs.  This house also lacked privacy.  The next door neighbor’s house was maybe 10′ away if that. While I was working out of town Mrs. C. and her mom found our next house and we paid $20K for it in the spring of 2019.  This house was a 3 bedroom, 1 bath that needed some love on a private lot.  Rather than being surrounded by 3 houses, it only has a neighbor on 1 side.  It’s on a less busy street and is all one level.  This house would probably rent for around $850 a month, compared to the house she was in having a market rate of well over $1,000 a month. We had a deal with her when she was in the first house that once her total rent paid off the balance of the house, we would only charge her for taxes and insurance. This was a less expensive house so after a couple years we hit that threshold.  So this one also does not produce any cash flow.

We spent most of the summer rehabbing this house then moving Mrs. C.’s mom into it. Once that was done we needed to rehab our first home, the house she had been living in.  We painted all the rooms, replaced some flooring, added central air, and upgraded some plumbing.  We also added 2 doors to the old dining room to turn it into a 5th legal bedroom.  (One of the 5 bedrooms I’ve always counted is technically a “sleeping area” because it is below the sq. footage of 72 sq. ft. to qualify as a bedroom.). We initially rented this house out at $1,200 a month.  That tenant only stayed a few months, paid no rent after the first month and security deposit, and caused a lot of issues and damage.  We had to evict her and go for a money judgment.  Once she was out we had to repaint the house again and do some more repairs.  In February of 2020 we rented it out to a small business that needed employee housing for 4 workers, and they are still our tenant.  Over time the rent there was increased to $1,400.

We did a cash out refinance on our first house in order to repay the heloc. We had a lot of equity in it and went from having a roughly $20,000 loan balance to a $70,000 loan balance.  We effectively put the debt of the other 2 houses on this house.  This opened up our heloc for the next purchase.  At this point between the 3 properties our total monthly positive cash flow was in the ballpark of $500/mo due to providing discounted rent on 2 of the properties.

The next 3: Beginning Cash Flow

In the fall of 2019 we had just rented out the house mentioned above to the first tenant and we purchased our fourth rental property.

This one was a foreclosure with significant mold damage in the basement and the house and garage were full of trash.  This was a major rehab project and took a ton of time and life energy.  We removed all the basement drywall and reinstalled new.  We added an egress window and framed up a large bedroom in the basement, turning this 2 bedroom house into a 3 bedroom.  We sanded and refinished the hardwood floors and replaced a massive picture window.  We initially rented this house out for $900 a month and after our first tenant increased it to $950.

As we were finishing up this house around February of 2020 we picked up the next house. This was a 3/1 with the potential to be a 4/1.  This house didn’t need nearly the rehab the last one did.  We negotiated a really good deal and the majority of the work was turning the back bonus room into a fourth bedroom.  This room had some issues with the subflooring, so we had to pull the subflooring out and replace it. Other than that we didn’t have to paint or replace any other flooring.  We also had to replace the well pump and bladder tank at a cost of around $3,500.  We were all in on this house around $40,000 and rented it out for $1,000 a month.   We finished this house in about 2 and a half weeks.  We signed a lease the day Michigan was shut down due to Covid.

We had a 7 month break at this point. No foreclosures were hitting the market and we needed to wait until the fall when I was back at work to cash out refinance both houses.  The first house went well, however we got a criminally low appraisal on the 2nd house. The appraisal came back at less than what we had paid for it, despite us getting a good deal on the purchase price, adding functioning water, creating a 4th bedroom, and renting it our for $1K/mo.

Although few foreclosures were hitting the market, 1 fell through the cracks, and due to being over priced sat on the market for 90 days. It was originally almost $60,000 then had 2 price drops getting to $44,000.    At roughly day 89 We put in a low ball offer of $32K and the bank accepted it. We closed a week before Christmas in 2020 and had it ready to rent in March of 2021.  This one needed relatively little work compared to others.  We did deep cleaning, painted everything, and redid flooring in 3 rooms.

At the start of 2021 we hit a rate of roughly $2,200 per month in cash flow across the 6 properties.


Tax Auction: Adding Risk

In the Fall of 2021 we looked at several properties that were hitting the tax auction. At the tax auction all the properties are bid on without the ability to see in them.   I had briefly entertained the idea of buying multiple properties, however the way the tax auction changed due to Covid made this a difficult task.  Historically properties were auctioned in order.  Item #1 would be auctioned, someone would win, then Item #2 would start.  Now it is all online and every property is being auctioned for the entirety of the auction.  Bidding on every item goes from 8AM to 7PM.   At the auction all of the properties we were interested in went out of our price range about 30 minutes before the auction close, then we found this one.  This large house in Benton Harbor was at around $12,000 and I had Mrs. C. drive by to see it.  She did not see anything terrible about the house and we ended up winning the auction at $19,000.

When we got possession we learned that there was A LOT wrong with this house. It was full of trash, needed all new flooring, wall patches, plumbing upgrades, and a new roof and furnace.  We spent 3 solid months and around $25,000 fixing this property up.  It is a 3/4 bedroom 1.5 bath house with a full basement.


Bigger Things: 6 unit:

We had a few months off from working on rental houses in the spring of 2022.  This 6 unit opportunity popped up and we jumped on it with a vision of turning it into short term rentals.  The property showed fairly well and we ended up buying it for $171,000.  The rehab was much much more intensive than I expected.  All the units except 1 needed a large scale rehab that took several weeks each.  We also did a lot of work to the overall property, included installing a new furnace, central air, tankless water heater, internal wall insulation, a laundry area with 2 stacked machines, an arcade, and the addition of 6 parking spaces.   We’ve spent over $60,000 on this property since purchasing it and thousands of hours of our labor.  The property is certainly worth over $250,000 now.   Last year we slowly added units to short term rentals, with only 1 available at the start of summer and the 3rd one becoming available towards the end of summer.  We finished the 4th short term unit early this year, and our current numbers are showing total cash flow for this property at around $36,000 for the year.  This will improve substantially as we reduce debt.  When our next long term tenant moves out we may convert that unit to a short term as well.


Recent 2: The Large Trash House and the Brick House

I purchased a large house in the fall of 2022. At the time we had a lot going on, but the price was really good and I wanted to secure a deal, as I was afraid inventory would be getting even more scarce.  This project has been put on hold several times as other units have had a quicker path to return to service and bring in positive cash flow.  Most of the rehab on the apartment building and 4 tenant flips have occurred while we have owned this property.  Recently we decided rather than renting this house out we would sell it.  Several factors brought us to this decision:

  1. This house is more practical for an owner.  It has a massive 30X40 attached garage with 13′ ceilings.  This adds substantial value to the right buyer, but little to the average tenant.
  2. This house required more total work than we initially anticipated and with our costs increasing, the ROI on renting it out drops.
  3. The BRRRR method is less reliable right now than it has been, especially in our area.  Home sale appraisals tend to appraise for what they should or at least close to it, but often cash out refinances appraise low.  Couple that with increased closing costs and the massive increase in interest rates, and the cash flow we could get from renting this property out is very low.
  4. We have invested so much cash in the last 18-24 months that we really need a liquidity event.  Getting a cash out refinance on our apartment building would be an option normally, however commercial lending is difficult to come by at all, and when available the rates are also very high.  Selling this property will replenish the cash we have invested so far, as well as pay back a substantial portion of what we have invested in the rehab of the apartment building.
  5. We are right at the 1 year mark to benefit from long term capital gains tax rates.

More will be written about this house in a future article.


I purchased the brick house in the Spring of 2023.  Mrs. C.’s friend who is like a sister that we bought our first rental house for has a biological sister who is also family to us.  We found out she was in a bad situation in a city a few hours from here.  She was several months pregnant and although she worked full time, was facing homelessness.  Although she was willing to move up here, she insisted we did not buy a house specifically for her.   For the past year I had been looking for a 3 bedroom house to move her sister into and we found this 3 bedroom house.  The plan was to move her sister out of our first 2 bedroom house into this 3 bedroom brick house and move her and the new baby into our first rental house,  which we did.

This brick house did not need nearly as much work as it looked like. To be honest I was shocked that it stayed on the market for 30 days.  We picked it up for $35,000.  This house has a full basement, a large living room, 1 bedroom down stairs and 2 bedrooms upstairs.  It also has a small scuttle attic that could be turned into finished space in the future.   We repainted the whole house, did quite a bit of drywall patching, and a few substantial plumbing repairs.  We spent a total of around $40,000 to be all in on the house.  We then moved sister #1 into this house and did a quick refresh on our first rental house before moving sister #2 into it.


Effectively we have continually reinvested virtually all of the rent money.  We withdrawal $1,000 a month to pay Mrs. C. as the property manager, which we have done since the beginning to offset her quitting her job in 2019.  The first 2 years total profit was not $1,000 a month, so I did subsidize this a bit from my W2 earnings.

I have spent thousands of hours and have not received a dime in my pocket from these endeavors.

Appreciation: We get appreciation in 2 different ways: Sweat equity and long term.  Sweat equity is from our work on the properties to make them better. A house we recently did we bought for $35,000 and spent under $5,000 fixing it, plus 2 to 3 weeks of our time.  That house is now worth $70,000.  That is major sweat equity gain.   We also benefit from appreciation over time.  Our first rental house we didn’t force much appreciation into it, we maybe took it from being worth the $19,000 we paid for it to around $30,000 in value right off the bat, but over the last 5 years it has increased in value to around $55,000 to $60,000.  That’s the long term appreciation.

Inflation Induced Debt Destruction:  I love this term.  I borrow money on these properties for 15 years.  The fixed amount of money is paid back over time.  Over time inflation erodes the value of that debt. In addition to the inflation induced debt destruction, our properties are getting paid down at a rate of around $20,000 a year right now just from our regular mortgage payments.

Cash flow: We have created a cash flow machine that if we stop investing right now, our average yearly cashflow would be right around $75,000.  With average yearly expenses for our household at around $50,000, this gives us an additional $25,000 in cash to invest each year going forward. This extra buffer is important to be able to cover any unknown big expenses that could come up.

Next Steps:

Sell the large trash house: This house is no longer a trash house.  We did an extensive rehab and I think we will have a sale price north of $125,000 on it.  This sale will pay don roughly $100,000 on our heloc after closing costs and taxes.  This will increase our monthly cash flow from rental activities by around $700 per month.  Factoring in taxes, insurance, and utilities will actually give us another $200 a month benefit.  The larger benefit is that we will free up space in our heloc for the next investment.

Buy another Airbnb property:  I would like to get either a single family house or a 2 unit for a short term rental.  We have learned a lot through our 6 unit apartment and I am confident we could apply this to a single family house. It would be great to buy a house that needs very little rehab and mostly just furnishing.  We would get a 20% down conventional loan on this property and not follow the BRRRR method.

Refinance the Apartment:  We have added a stupid amount of equity to this building.  I would expect it to appraise at around $300,000.  We currently owe roughly $110,000 on it.  Our loan has a 5 year balloon so we must refinance it by April of 2027.  I am hopeful that interest rates will fall and spring of 2025 will be a good refinance opportunity.  We will have 1 more year of solid cash flow to demonstrate the value of the property.  If we borrow at 75% LTV we would get a new loan for $225,000.  By the time we get this loan the debt will be around $100K on the property so we would get a check for $125,000 to reinvest in the next deal.  I would expect this debt would decrease our cash flow by around $800 a month.

Refinance the Brick house:  Currently the brick house is fully on our Heloc.  I would like to get this secured on long term debt in early 2025 when rates go down.  I have a hard time stomaching 9% interest rates on a 15 year mortgage with $5K+ in closing costs right now.


Skills Learned:

Rehabbing houses for 5 years is a great way to learn new skills.  The best way to learn is by doing.  I’ve been able to greatly improve my skills in the following areas:

  • Plumbing
  • Electrical
  • Flooring
  • Painting
  • Roofing
  • Carpentry
  • Door / Window Installation
  • Driveway sealing

Trade Offs:

This has certainly been a “choose your hard” adventure.  Managing the properties and tenants takes time and effort, but that time and effort pales in comparison to the rehabs on these properties when we first purchase them. The rehabs consume a lot of time and life energy.  I was off work from my W2 job from mid November of 2022 to the beginning of August 2023 and I had only a handful of days off.

For the last 5 years we have almost consistently had a project to work on, with the last 18 months being the most hectic.  Most people complain about working over 40 hours and that it isn’t worth it to get ahead, so they don’t.  For those who do work extra hours, most will get a 2nd job.   A small amount will create their own job, and even fewer will build a business that takes years to pay significant cash and does not pay based on a hours in cash out system.  Most rational people would not work thousands of hours for no immediate cash benefit.  That’s what we did.  Rather than us both working a part time job in addition to our primary employment to trade our time to make someone else wealthy, we traded our time and life energy to build our own business that long term will require minimal inputs while providing significant cash flow and equity building.

But John, You’re lucky!, Everything went your way!

No, no it did not.

  • We had appraisals come back WAY low.
  • We had 3 houses that needed well replacement, as well as 4 that needed new furnaces.
  • We had to replace a roof on a house that I certainly hadn’t budgeted for.
  • We didn’t borrow enough money when rates were low.
  • We got a heloc on our principal residence, rather than maxing out a fixed 30 year primary residence loan when rates were at 2.75%.  I’m paying $1,360 a month right now interest only instead of $783.
  • We had to clean mold, paint on sketchy ladders, reroof, and put up siding in a rain storm.
  • I’ve had dozens if not hundreds of drop down redneck arguments with my wife.
  • I’ve injured myself countless times,  some more severe than others.  I’ve broken fingers, I stabbed myself with a broken window pane in the wrist, requiring several stitches, I chemical burned my hands cleaning mold (incorrectly of course), I ended up covering my hands and forearms in severe poison ivy.
  • We gave up weekends, evenings, and my structured time off between nuclear contracting jobs.
  • We had to go through the court eviction process with 3 tenants.
  • We had one tenant destroy as house, costing us around $7,000 in repairs, $3,000 in lost rent, and hundreds of hours to fix.
  • We had given our first tenant permission to paint 2 bedrooms.  She painted THE ENTIRE HOUSE, including ceilings a dark gray.  She also painted all the windows shut.  To make matters worse, she only lived there about 3 months and caused a ton of drama.
  • We didn’t get over a half dozen properties that we made offers on.
  • We’ve had to replace 2 furnaces inside of 2 months.

Overall I am ecstatic at how the last 5 years has turned out.  We set a goal and executed.  These 5 years have certainly changed the trajectory of our lives and given us a large selection of options.  Our rental properties have allowed me to feel much more comfortable at work, as I am not longer “job scared”.  Our world will still function if I lose my W2 job, which is not something most 37 year old Fathers of 4 with a stay at home spouse can say.  Although I plan to scale down on rehabs, We have plenty more real estate adventures coming over the next 5 years!

John C. started Action Economics in 2013 as a way to gain more knowledge on personal financial planning and to share that knowledge with others. Action Economics focuses on paying off the house, reducing taxes, and building wealth. John is the author of the book For My Children's Children: A Practical Guide For Building Generational Wealth.

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