He Started With Nothing and Now Has 37 Rentals with Greg Thompson (Ep 554)

Inspiring interviews with Today is Top Landlord, This is the Rental Income Podcast, and now.

Damnly Greg, So what happened? You were homeless? Like you lost everything and you were homeless? To tell me what happened?

Well, Yes, I was a veteran who got out of the military and really could not cope in society, and I did not know how to manage my money, so I made really bad financial decisions. So at the age of twenty five, I was sitting in a homeless shelter wondering how I got there.

You eventually ended up getting your life turned around. And how many rental properties do you have today?

I have thirty seven doors.

On the show today, we're going to hear the inspiring story of how Greg went from having absolutely nothing to building a rental portfolio of thirty seven units. Joining us on the show today from Alabama is Greg Thompson. We'll take a quick break to bank our sponsors. We'll come right back and we'll talk to Greg. It's a lot of work to find a really good rental property, and when you actually find that property, you want to make sure you're working with a lender that can get that

I made a lot of bad financial decisions. I had a car repossessed, all of my credit cards were in default, I owed back child support, and I had not filed federal taxes.

All right, So everything just kind of piled up. Everything kind of went wrong at once, and you end up like were you living on the street or were you in a homeless shelter.

I was in a homeless shelter, and from there I got an apartment in a really bad neighborhood. So the rent was not very high.

Okay, all right, So then like how did you turn things around? Like I gotta imagine your credit is probably shot. I mean you you owe money to people, Like, how did you turn things around?

Well? I started working two jobs seven days a week to pay back all of the money that I owed.

Okay, okay, So then then, how how did you go from there to actually buying your first property?

Well, through a series of jobs, I ended up overseas and it wasn't until nine years later that I bought my very first property.

How did you get the money to buy that property? Was it just just saving up money over time?

It was. I was a government contractor overseas and I was able to save up the money and invest it in the stock market.

Okay, So now you've got some money, and tell me about this first property.

I bought a three bedroom house that had a basement apartment for a teenager, and I had them at a bathroom and a kitchenette, and then I lived in the basement.

Okay, so you were house haacking. You were living in the basement renting out the upstairs. Did that feel like a sacrifice? You know, It's like you're living in the basement. You could have been living upstairs and maybe renting out the basement. Did that feel like a big sack sacrifice?

It did? Not feel like a sacrifice to me because I was single. I also when I lived overseas, I lived in a little one room apartment.

All right, so let's talk about your portfolio today. So what does your portfolio look like?

Well, mostly single family homes. They're all small multifamilies, duplexus and three units.

Okay, all right, so let's take a look at your numbers. Like, so if you were to add up what you paid for the properties, like, what's the total amount that you've invested.

The equity in the properties is one point three million. The value of the properties is three million, one hundred sixty two thousand, seven hundred and ninety three.

Wow, so you've created a lot of a lot of equity there. How did you do that?

Like?

Were you buying properties and fixing them up or was that the market just appreciating?

It was mostly the market appreciating. However, every time I refinanced properties from one bank to another bank, they would give me a property or two free and clear.

How did that happen?

As the properties appreciated, the bank would say, we only need ten of these properties to satisfy the loan, So you can have two of these properties free and clear.

Wow. Wow, that's pretty crazy. So how many properties did you get free and clear by doing this?

At the beginning of twenty twenty five, I had three properties free and clear, and I use those three properties to buy eleven more properties.

I walked me through that. So you've got three properties free and clear, and then you you, I guess, use the EQ and those properties to buy other properties.

Yes, you can use a property as collateral as a down payment on another property. And for example, one of the properties was worth forty five thousand dollars. However, I was buying a property for seventy five thousand dollars, so that free and clear property was fifty percent of the cost of the other properties, so I could use that as a down payment.

Wow. Okay, so that's how you've been able to buy so many properties is just by kind of moving equity around between properties. Yes, wow, wow, that's pretty pretty awesome. Now let's talk about finding the properties that you bought. How did you find your properties?

Well, my competitive advantage is my property manager. My property manager brings me deals whenever he hears about them, either properties from people where he manages the properties, or if he hears about other owners that he doesn't manage the properties. He brings me those deals.

Okay, so how did you How did you work that out with him?

Well? I met him through calling every property manager and asking if anyone wants to sell their properties. I was told that that was a good way to market for properties.

Yeah, yeah, I mean that's that's pretty good. I mean, you figure a property manager knows a lot of other investors. There's probably always people that need to sell for whatever reason, and you know they're probably a good property if he's managing them. So, like, is that the way it worked out?

Like?

Were the properties all good properties? Or did you have any problem properties?

Well? I did not have any problem properties because I trusted my property manager, and my property manager would tell me what repairs were needed on any given property that I bought.

Like, so, you know, I understand that the property manager is bringing you deals, But with you living in the same town, would it be difficult for you to manage the properties yourself or do you just not want to get involved in that?

I would never ever want to be a landlord property manager again, because renters tell you sad stories such as, if I pay you the rent in December, my child won't have Christmas, right right?

Yeah, that makes sense. That that makes sense, all right. So let's get back to the numbers a little bit here. So you've created over a million dollars in equity by buying these properties. Let's take a look at your cash flow. So, like, how much rent do you bring in every month?

Well, in now, because I bought eleven more properties in twenty twenty five, I bring in twenty four thousand dollars a month, okay.

And how much are your mortgage payments?

My mortgage payments with insurance and taxes and everything is sixteen thousand a month.

Okay, so you've got like eight thousand dollars leftover. Now, what about I mean, you've got to pay your property manager, repairs, whatever else comes up. How much cash flow do you typically see in a month.

Well, typically it's only one thousand dollars a month in cash flow. However, I'm expecting that to increase over.

Time as rents go up, both as rents.

Go up and as I refinance, especially with interest rates coming down.

Yeah, so you bought eleven properties in the last year, so your your rates are a bit higher. But as those rates come down, your plan is to REFI and that'll lower your payments.

Yes, And I want to tell you about the best deal that I've ever done, which was in twenty twenty five. My free and clear property was worth three hundred and fifty thousand dollars and I used that to buy six properties for five hundred thousand dollars and those six properties were worth eight hundred thousand dollars.

Wow. All right, you got to walk me through that. I'm a little bit confused on this, Like, so, like, explain, explain what you did there.

Well, I used one of my free and clear properties, which was a three unit, so it was worth two hundred and fifty thousand dollars. I used that as collateral to buy six properties that my property manager brought me that were sold for five hundred thousand dollars, but the appraisal was eight hundred thousand dollars. Wow.

Wow, I mean, so that's a ton of equity that you created?

Did it is? I made three hundred thousand dollars in one day?

Wait, so, like how did you do that? Like what were you Did you just buy the properties at a really good discount or did you improve those properties?

Well, the sellers of the properties were doing a ten thirty one exchange, and so they needed to sell those properties. My property manager already managed those properties. So my property manager brokeer the whole deal.

Wow. So there wasn't really anything to do. And I think what's great about the property manager you're managing those properties, is like you really just signed some paperwork, Like there wasn't really anything that you needed to do, Like the tenants were already in place, like the rent was already coming in, Like it was it really just that simple that you signed some papers.

Well, it wasn't that simple. The first bank that I went to denied my loan. They said that the rentals did not bring in enough income, so they wanted me to put down one hundred thousand dollars in cash in addition to my rental property. Well that was the first bank. I've never gone to a second bank. So I went to a second bank and they only wanted me to put down ten thousand dollars in addition to my rental properties.

Wow. Now let's talk about the cash flow. So you know, some people might think a thousand dollars cash flow isn't enough, But it seems like that's not like the biggest thing. I mean that you're obviously doing creative deals. You've created a ton of equity, So like, do you think that cash flow is important? But you got to look at the whole picture that you've created one point three million dollars in equity in your portfolio.

Yes, And I'm not living on the cash flow. I have multiple screens of income. So I have a PhD, I teach in colleges as an adjunct, and I have a federal government pension, So the rental income is not my primary source.

Of venia, right, Okay, So yeah, I think that's an important thing to keep in mind that you know, you're you're playing a different game here than just cash flow, where you're creating equity. And like you said, as the rates come down, you're going to REFI that cash flow is going to go up, and then you know rents are going to go up over time. Let's talk about the neighborhoods, Like, so, what are the neighborhoods like that your rentals are in.

All of my rentals are in C minus neighborhoods, However, in the future, I want to move up to be neighborhoods.

And why is that? Like, have you had any have you had a lot of trouble with the sea properties?

I have not. My property managers and I have not had any problems with these properties. I just want higher rents.

Now, take me back to when you were first getting started in Alabama. Did you have any any trouble with some of those early properties.

I did. My second property that I bought was a four unit and I have since sold that one. That one had nothing but problems. The water was everybody shared the water bill, So what I like is separate units paying their own electricity in their own water. That was a problem, and there were always people moving out. So one of the four apartments I could never ever keep rented.

Well, was there a reason why people wouldn't stay?

It was a Victorian building that was separated out into four apartments, and so one of the apartments was on the upstairs on the rear, and it was just very very hard to get furniture in and for people to stay.

Yeah. Yeah, So was that hard to make money? Like if like, how often were people leaving?

People would just disappear and if you have a low income rental, you know that sometimes people just disappear.

Yeah, so they would be there, would they pay rent for a few months and then leave or were they even paying rent?

Yes, they would pay rent for a few months and then they would just disappear and no one would even know they were gone.

Oh my god. Yeah, that's that's the worst. So what was it hard to make money? I mean, when you think you have you have rent for a couple of months, they leave, then you know, you've maybe got to fix the property up a little bit, You've got to find someone else to move in. That person says, for a few months, the same thing happens again. Well, was it was? It just challenging to make money?

It was, and it was even more challenging to sell that property.

Uh yeah yeah. So did you end up losing money on it when you sold it?

Well, I sold it for exactly what I paid for it, where there was no appreciation over the course of three or four years.

Yeah, that's so tough. So, like, looking back on it, are there any signs that maybe you should have picked up on or stuff that you would pick up on today, like to avoid buying a property like that?

Well, my philosophy in the beginning was to build a relationship with the property manager. So I bought that property from the property manager. Every other property after that has been a home run.

Like it's like the property manager is doing good by you, that he's selling you good properties. Why do you think he passed that one off when he obviously knew that that property was going to be trouble. I mean, like, I doubt that they had great tenants before you bought it, and all of a sudden there was a bad tenant in that unit, Like, don't you think that was probably that turnover was probably going on for years.

That is true, But I wanted to establish a relationship in this town, so I bought a bad property to establish a relationship, which turned out over the years to be very profitable.

Yeah yeah, yeah, So did you end up? I know you sold it for what you paid for it, But on a monthly basis, was that property losing you money?

Absolutely? It was the dog of my portfolio.

Wow. Wow, at least you're done with that now. And so the other properties are all doing good. You're attracting good tenants and they're all fairly simple.

Yes, And more importantly, is that they're all staying for a long time. I have about twelve Section eight rentals. If someone is on Section eight when I buy the property, then they stay. But other than that, I do not rent to Section eight. But any property that I buy that does not have have a Section eight tenant in Alabama, you do not have to rent to Section eight.

So why is it?

Like?

Why? Like why is that that a tenant that is already there on Section eight is good? But adding a new Section eight tenant isn't good? Like, what's the difference there?

The difference is the amount that you can charge for market rent. And if a Section eight tenant is already there when I buy the property, that is pretty much a permanent tenant with very low turnover.

What an inspiring story to go from homeless to creating over a million dollars in equity. It really just shows you anything is possible with rental properties. I'd like to thank our sponsor jayey Ridge for making today's episode possible. If you're looking to buy a rental property, whether you're just getting started or you want to add to your portfolio, reach out to Chailey. She's a nation I lend her. She has a ton of different loan programs and she