Ep. 248 - (Re-Air) Why Most Investors Stall after 1 Rental

1 Rental to Freedom Podcast

Host Chad Harris explores the common phenomenon where real estate investors fail to scale beyond their first rental property. He identifies

Key takeaways

• Using personal funds for down payments and closing costs creates financial frustration and limits the ability to acquire more properties.
• Successful scaling requires using Other People's Money (OPM) for the purchase, rehab, and refinancing stages.

Main topics

• Real estate scaling
• Deal structuring with OPM

Notable quotes

As long as we're using our own money in the deal, we're going to get frustrated.

Conclusion

By mastering debt-based deal structuring and implementing rigorous man

Transcript preview

Speaker 1 (0:00) Welcome to the True Wealth Investors Real Estate Podcast. Creative investing strategies to help you build true wealth. I'm your host, Chad Harris. Speaker 1 (0:16) So why is it that most investors, one, struggle to buy the first rental property, or in my mind, even worse, they buy that one rental property and they stop there. They never buy more rentals. It is very few that actually are successful in building that portfolio. And even if the portfolio is just five houses, Getting those five houses will drastically change your financial future. All right. So why is it people can get so close to accomplishing what will drastically change their future and stop? And in my experience, it comes down to two things. All right. Now, this is the person who's already bought a rental property. And they stall at one rental property. And there's really two reasons for that. One, they're structuring deals wrong and they're using their own money in the deal. And that could be the down payment. That could be closing costs, whatever it is, maybe even part of the purchase money. Right. As long as we're using our own money in the deal, we're going to get frustrated. So when you put $30,000 down and then you pay for closing costs and then maybe you refinance and you're paying money for the refinance, it's going to be frustrating, right? Your life is going to get in the way. If that rental costs you $40,000 of your own money, suddenly you say, you know, I've got... Kids, I've got vacations. I've got other things going on. I don't know what's going on in the market. All of a sudden, that becomes very risky to put $40,000 into this rental property. And how many of those can you do, right? How long will it take you to save the $40,000 for the next rental property? And so as long as we're structuring deals that way, we're destined to fail. I know nobody who has built a large portfolio of rentals and used their own money in the deal, deal after deal after deal. Anybody who's ever built a portfolio of rentals learned how to structure deals correctly so that you're not putting money in the deal. All right. So to correctly structure that deal, you're going to use other people's money for the purchase. for the rehab, for closing costs, and that's on the