The Best Ways to Grow Your Real Estate Portfolio

It doesn't matter what you're buying. There's going to be some kind of a growing pain that comes with it. Whether you're growing by 1 unit or growing by 100, there's going to be an adjustment period either way.

Hey YouTube, welcome back. My name's Cody. I am joined again, and this will be our last episode for a while with Jesse Lee, the Jesse Lee. And today we're talking about scaling. Jesse, welcome back to the channel.

Thanks for having me again.

Can you tell us how many rentals you have today and what your objective is as far as scaling?

I've got like 38 units total, I think, and that's several RV pads, but, you know, it's a mix of both small multifamily, you know, 2 to 4 unit things, and then single-family homes. Out of that 38, I'm probably going to sell a few of them. But the idea is going to be adding more RV park, mobile home type of property, maybe more small multifamily. But I really like the, the RV pads and the mobile home stuff. So far, it's, it's been a good experience owning some of that.

Okay. And what's your plan of attack for actually scaling up? Because I know you love the creative finance. Methods just like we do, how do you actually go about acquiring more deals without selling some of your current stuff? Because I know you're always in the market to buy good deals. How are you funding those?

You know, the last probably year or so, almost everything I bought has been some sort of seller finance involved, whether it's seller financing completely or seller finance mixed with hard money, whatever it is. It's been something like that. It hasn't— I don't think I've had a straightforward, we're just buying the house kind of thing for a while at this point. When I really started looking at these seller notes and the, you know, different ways of putting that together, it— I mean, I've known about this for years, right? I've had someone I talk to often now who guides me a lot of this. He's been telling me to do this for 20 years basically, and I just— 20 years ago I'm sitting there looking at him laying carpet, like, what do you know? You're laying carpet. What? What? And here I am, you know, some— what was I, 20, 20, 21, right? Think I know everything, but I know nothing, right? And this is someone trying to give me keys to the castle. He didn't even know me. I should have listened then, right? But I finally, finally listened and took a little bit of advice of what he was telling me to do. And it worked out really well. And, you know, at this point, I, you know, it's been for a while now, I'll do whatever he tells me to do. But the seller finance and the deal structure and it, I watched a few of these deals close that other people have done. And one day it just clicked to me that you can literally do anything that you want if you and the seller agree. There is no limit other than whatever you can imagine. There's no limit. So if that means you're buying this person's property and you're seller financing the entire purchase and you're securing it by a different property and you come in with this one free and clear, you can do stuff like that. Or if you want to seller finance this property and they You know, they want however much down, but you're going to put that much down over the course of time. You can do it again. You can just— we can talk about this for a month probably and not be done. But no, I think what we're going to be— what we're really focusing on now is just finding property that matches what we want, which is cash flow, finding property where sellers are open to the idea of being creative. And it seems like the bigger scale and the bigger properties we find, the sellers are more and more at least open to the idea or even understand it better than I do and can kind of help me figure out how to structure it the way that I want to. And so, as far as trying to scale, I think I don't necessarily want to sell a lot of what I've got, but I think selling some of these smaller, maybe single-family places where I do have a good amount of equity and we can use the money toward some of these bigger purchases is probably stuff we're looking at now. If I can, you know, if I can have my cake and eat it too, then I'm not going to sell anything, right? But absolutely, but I'm prepared to if the right thing comes along, right, and the right property. And what I think we're going to try and focus more on is something, uh, I want I do believe affordable housing is an issue. Not maybe necessarily the same way as we see a lot of people talk about it, but I do see a need for more affordable options. And I think the most affordable options, and I think the stuff's gonna get more and more popular, is some type of RV pad or trailer pad, whether it be tiny homes or RVs or single wides or whatever it is. So that's going to be more and more popular, at least where we're at. It seems like it's getting more and more popular. I have— like, I don't want to say I have a waiting list for RV pads, but I have a lot of people who contact me regularly and they're asking for it. I'm just, I'm just very selective of who I'm letting in, but I'm also not as selective as a lot of some of the parks around here where, you know, they have 10-year age restrictions on their, their, their mobile home, or they have age restriction on the community because it's retirement only. Like, things like that, I'm not— I'm more lenient on. So I think this is just going to get more and more popular as housing gets more and more expensive.

So you've done quite well in the small resi space, small residential, small multifamily, and the homes. We've talked a lot in the past about scaling up into multifamily. Do you see yourself in the next 2 to 3 years scaling more so into mobile home parks rather than apartments because of what you just shared?

Yes, I think so. Out of all my tenants, the ones that— and none of my tenants are difficult, right? I have very little maintenance requests overall, mainly because I've already remodeled the house before people move in. But I think the amount, the type of tenant that you can manage in scale with least amount of people working with you is an RV pad, right? Because there really isn't a whole lot of stuff that you maintain, right? You build the pad out and you're in it for the most part, you're done. As long as utilities are on and working, there's power, there's water, there's a sewer hookup, That's it. There's not much else I need to maintain other than making sure the grounds themselves are maintained. They don't look overgrown. They don't have, you know, I don't want to, I don't want a bunch of broken-down cars in front of it kind of thing, right? Just making sure that the place is clean and presentable. And a lot of that comes with just screening tenants properly. But aside from that, those are really the most hands-off management unit that you can really look at, for me at least so far, right? But they've been, they've been really good. And the people who I have living in them right now, I feel like, are happy with their space and they're happy with their rent. Because all I did was look at the other places that are available and figure what they're charging. I just undercut everybody because most of my RV pads, for the most part, are just kind of you know, I don't want to say they were an afterthought in the property, but I bought a lot of these properties not even really thinking about RV Pad. It just happened to be something I was able to add on. And then several— yeah, exactly. No, it's beautiful cash flow. But for the property I have now, it's kind of just icing on the cake because the properties, we didn't buy it for that, right? I didn't really even think of the concept until just in the last year or so. So It's been a nice extra. It's been worth spending a little money putting these together and kind of learning how it all works and, you know, dealing with the city and the county at different levels for this kind of thing. So it's been, it's been a good experience so far. Now I do realize, of course, that if I go from, you know, the how many pads I have now to having like a 300-pad park somewhere in another state, Yeah, that's going to come with a little bit of a learning curve, but that's not going to stop me from doing it. This is just something that comes with the territory. It's going to be a different type of property. If it is something that ends up being out of state, that's something I haven't really done yet, is managing from another state. So that'll be a learning curve. But I do think that the trailer parks and the RV pads are what we are going to start moving toward. Completely.

Okay. So in the next 12 to 18 months, where do you see your portfolio being at as far as just the size, what you've got, and what are your next logical steps to get there?

So I'm thinking I need— if I'm going to be doing this, I want to dive really headfirst into it, right? And I don't want to buy a park far away from where I live and it's going to be, you know, 5 or 6 pads or something. No, it needs to be something worth buying and worth doing and worth the extra effort that comes with managing it from afar. So I'm hoping something along the lines of 100 or even a 200-pad mobile park, something that is large enough that we could potentially potentially have an on-site manager there in the park. And this is likely going to be something in another state, mainly somewhere with a little bit better tenant-landlord law, a little bit more balanced than what we have here, but somewhere that's still a place where people want to live at the same time. So there's, there's a few different areas we've looked at, a few places we're looking at, but, you know, I'm in the process of stabilization on several things we've got right now, which is kind of taking up majority of time. Also in the process of finishing a couple rehab projects that were a little bit intensive. So that stuff's going to be done relatively soon, so I can dedicate more time to looking at further acquisition of what we really want, which is this bigger park. So if we can figure out a 100 or 200-pad park Ideally something that is managed poorly, right? Something that is going to be value-add because no matter what we're buying, I want it to be value-add, right? And most importantly, something where a seller understands seller finance or different creative terms that we're going to want to do and be willing to do that, and there's going to be a compelling reason for them to do that. We can find those type— that type of property That's, that's what I'm hoping we can end up with.

For someone who's watching this that's got 1 or 2 small rentals, maybe they're duplexes, maybe they're houses or a fourplex, they want to scale into the mobile park or the RV pad space. What would be considered scaling too quickly for someone like that? Maybe they've got a W-2, they get a little bit of cash flow. Is jumping straight into a 50 or 100 unit going to be too much too fast, or would you start with something like 10 to 20? Where would you start if you were in that position?

You know, it's easy for me to sit here and say if they've owned one rental and that's what they own and they have a regular W-2, yeah, it probably is too much too fast. But I'm also the person who just, you know, I don't look before I leap kind of person. So I'm not going to fault someone for wanting to do it. I just want— I think people need to be aware and make sure it's clear to understand that it doesn't matter what you're buying, there's going to be some kind of a growing pain that comes with it. Whether you're growing by 1 unit or growing by 100, there's going to be an adjustment period either way. So, you know, just be prepared for whatever that adjustment period might be. I do think that going from, you know, 1 or 2 rental units to trying to buy something that's got 50 or 100, that it's going to be a little bit difficult. I would say just for that person, and this is another thing that I, you know, kind of throwing stones in a glass house, but make sure if you're going to buy something like that, you do have an adequate reserve where you can make a couple mistakes and then be able to cover that mistake.. But other than that, I don't think there's any wrong way to do this as long as people are doing it, right? And this is something that I've actually been talking about a lot with people is, you know, we see a lot of people that, you know, this person got 100 units, this person got 1,000 units, right? And you kind of look at what you've got and you're like, well, shit, I'm twice this guy's age, I have a third of how many units he's got. That's the wrong way to look at it, right? You got to look at it like, that's great, this person has that, I wonder what they're doing, this is— and he's here, I wonder how they're going to do it, and I'll talk to them and learn a little bit about it, then I can apply it to what I'm doing too. But at the end of the day, really, you buy one extra property in your entire life, by the time you retire, you're already way ahead of most people that haven't bought anything because just, you know, again, one one more house, single-family, duplex, whatever it is, one more extra piece of property, not the one you're living in, but one additional property in your lifetime, you're way ahead of most people already. So just keep that in mind. But I'd say yes, if you have one extra or you have one, you have two rentals, it's probably, unless you've been doing this for a while and you have at least some experience in management or something, Buying a 100-unit building right off the bat might be a little challenging.

Awesome. Do you have anything you'd like to share before we wrap up our final episode with the real Jesse Lee on scaling?

Yeah, I think I kind of went into that a second ago. It's just, again, just don't— I don't want people getting caught up in the unit count necessarily because someone has more units than you, period. Forever. That's just how it's going to be, right? No matter what, somebody's going to buy more or have more than you. So it's not really a, at least for me, it's not necessarily competition. It's, I just, I want to buy real estate. I want to buy as much real estate as I can and just for myself because I want to do that, not because of, you know, you have 100 units yourself, right? Or someone's got 500. I just, I want to have, I just want to buy them. I want to see how many that I can end up with before it's time for me to stop and hopefully I have enough where they're cash flowing. That's really, that's the main thing, just buy stuff with cash flow. But, you know, that's it. And again, just try to buy something. I had a friend who was on the fence about buying rentals for himself. This is a little over a year ago, but they had managed hundreds and hundreds of units through their property management company. We were at lunch one day and I'm like, "Just go buy something. What are you worried about?" And now he ended up, I think he's got like 60 or 70 units at this point. It's only been a year. Yeah, you know what I'm talking about. So I'm really glad watching him do it. It makes me happy seeing him just buy stuff and he's buying them all over the place. It's great watching them do it.

That's awesome. Well, Jesse, appreciate you sharing everything that you've shared on the channel over the past 4 weeks. Yeah, you're awesome. You're an OG real estate baller. You've been through a lot, and we appreciate getting to live vicariously through you. Sounds good. All right, well, Jesse, appreciate you. And for those who are watching, make sure to subscribe, hit follow, and we'll see you next time.