MB 092: From Teacher to Fulltime Multifamily Investor – with Todd Dexheimer

Todd Dexheimer always wanted to be a multifamily investor, but he got distracted by single-family rentals and fix and flips. When he stopped to take a hard look at his portfolio, Todd realized that when it came to return on investment, the rentals were destroying the flips. Worse yet, he was still in a holding pattern—waiting to ‘graduate’ to multifamily. What would his cashflow look like if he stopped wasting time and shifted his focus to apartment buildings? Todd began his career as a high school teacher, but the meager pay and lack of job satisfaction had him looking for other opportunities. In 2008, he and his wife used their savings to purchase a rental property as well as a live-in flip, and before long he had a significant rental portfolio and 150 flips under his belt. But Todd never stopped dreaming about multifamily, and in 2016 he got back on track and purchased a 22-unit building in Cincinnati. Now he has a total of 106-units and the ambition to grow by another 800 units in 2018. Today Todd explains how fear, distraction, and a lack of resources held him back from pursuing his multifamily dreams. He shares the details of a 15-unit deal that didn’t go so well, yet taught him several valuable lessons and set him up for future success. Todd discusses how a hard look at his portfolio got him back on the multifamily track and offers an overview of his last two apartment investments. Listen in for Todd’s advice around being taken seriously in a new market and learning from other investors to go big quickly, rather than waiting to ‘graduate.’ Key Takeaways The Cliff’s Notes version of Todd’s story High school industrial tech teacher Developed interest in real estate Invested in single-family, duplexes and fourplexes ‘Graduated’ to multifamily The problem Todd was trying to solve with real estate Little job satisfaction in teaching Liked interaction with students, but disliked politics Income not there, not fulfilled by work Todd’s initial investment strategy Wanted to do multifamily, but lacked resources Found house for $60K, rent at $1,500/month Financed with savings Refinanced properties to buy more Started flipping houses, built rental portfolio  Todd’s first multifamily deal Bought 15-unit with passive investor in 2013 Building had plumbing issues that renovation budget didn’t cover 80% of profits went back into repairs Made money, but didn’t reach expected return What Todd learned from his first multifamily deal Understand what type of building you’re buying Budget for necessary repairs, replacements Provide investors with appropriate financials Mind your books, understand expenses Don’t get distracted with other projects What inspired Todd to pursue multifamily again Parted ways with business partner Realized rentals destroyed flips on ROI Conducted market research on multifamily Todd’s second multifamily deal 22-unit off-market deal in Cincinnati 10% down payment, owner financing Equity, renovation financed through investor Todd’s approach to being taken seriously in a new market Find commercial brokers through LoopNet, local sites Call to discuss specifics of what you’re looking for Follow up with email asking for recommendations Contact referrals (property managers, lenders, attorneys) Show up face-to-face, spend three days Todd’s first syndication deal 84-unit building in Lexington, KY Heavy lift value-add ($9K/unit) 88% occupancy, rents low Improving C+ neighborhood 11...