Second Deal: My Journey in Rental Property and Real Estate Part 3

My Journey In Rental Properties and Real Estate Part 3 Second DealSaving Money Sucks

If you haven't read Part 2, read it here!

After finally saving up over $30k in approximately 18 months as a down payment, I took the leap and purchased second a four-family residential apartment building. Saving this amount of money was no small feat. It was absolutely the most arduous achievement I have ever been a part of and I have run a marathon before with virtually no training.  Saving money sucked worse than that.

Sacrifices were made. Mental anguish ran rampant. Forcing yourself to not go out to eat, ever, is just one of the numerous choices made. It was more of a trudge and a grind through a marsh, than a triumphant king returning to the castle type of event. Trumpets and coronets blaring, streamers billowing in the wind; drive that image of grandeur from your mind.

Imagine living with a parent again after having your own place.  Does it pain you to even think about?  Well, for me, that is what I had to do to save money.  Limiting yourself to not purchase anything, and I mean anything.  No new shoes or clothes, no vacations, no new vehicle.  As the eldest of all of my cousins on both sides, and I have over 10 cousins, every single one of them bought a vehicle before me.  In fact, I still haven’t, even after my second property purchase.

If you want to get to places where others aren't, you have to be willing to do things others aren't willing to do.

Financial Independence

The road to financial success, not just financial independence, is made with these types of choices. Read The Millionaire Next Door by Thomas J. Stanley. The book lends better perspectives toward who the affluent really are. They aren’t the people who drive luxury cars for the most part.

$30k was the largest sum of money I had ever had the privilege of seeing in my bank account and I put it all on the line to buy a second piece of real estate.

Looking For A Second Property Was A Pain

Looking for a second property was much tougher than 18 months before. All the properties I found that I liked, were under contract in less than 10 days. There were over 15 multifamily properties that I went and personally went inside with my realtor. Double or triple that 15 and that is the number of properties that I drove past without going inside. A year and a half before was much easier. At the time when I was looking for my second property, I had no knowledge that a company was buying up properties in my market area. This was found out later.

My process for finding new properties was that I would find them on and contact my realtor, which is weird, I know. He would schedule the showings and we would go walk through them. My first realtor had no knowledge of multifamily or rental properties and was generally not helpful.  DO NOT BE AFRAID TO MOVE ON!


The first realtor and I got along great and he was a nice guy, but he just wanted to be paid with little effort on his part. Once I got this through my thick skull, he was fired and I went searching for a new realtor.

A couple months later, I found a work friend of a relative, who was a realtor on the side. He was a night and day difference in helpfulness and knowledge from the previous realtor. When searching for the second property, there were several items I learned from him.

 Continued Learning

For example, a vast majority of property owners want 24 hours-notice before you can see it, so that they can give their tenants notice. Vacant units do not require this. This made it challenging to find the property listing early, schedule the showing, and make an offer on the property before other buyers. Finding the properties took some work, but beating the other offers to the punch was the hardest part.

After making offers on 8 different properties, I finally realized that getting the offer in before others was just about the most important part. It had a much higher chance of being accepted. This is not to say that any of the other offers were not accepted, because two were and just didn’t work out because of foundation issues that I did not spot before a home inspection.


Losing Out

More than 4 properties that I lost out on were because investors were making offers on the property sight unseen. My realtor told me this and it baffled me.

Why would anyone make an offer to buy a $100k+ property that they had never seen? Did people just have that much money lying around that they didn’t care about? Apparently, the answer to this was yes.

At this point in time, the search for the second property had been going for about 5 months with two accepted contract offers that eventually fell through, due to the properties failing the home inspections. They were both bad picks due to land grading issues and at the time I still not well versed enough on what to look for in a property.


Best and Worst Investments Made

The two failed home inspections were the best investments and the worst investments I made. On one hand, I paid them way too much money only to have to find another property. On the other hand, they saved the rest of my wallet.

More than that though, they encouraged me to follow them around and ask them questions about what they were looking for and why they were looking for it. Several months later, I can still tell you their names, Troy and Mike. Not only were they extremely nice about me playing 20 questions a million times over, they expanded on each and every one in the report. On my first inspection of the property, I should have made a list of questions and questionable items for the home inspectors to answer.

This was a knowledge breakthrough. I had never learned so much about properties and maintenance as I did when I followed them around the two failed inspections. What I thought was a waste of money at first, helped me in the long run more than I could have imagined.


Another Dumb Decision

Eventually, I became fed up with spending so much time trying to find the right property, only to have it pulled out from under my feet at the last minute when the seller informed me of them accepting another contract. This led me to make an insane decision.

I made an offer on a four-unit multifamily property without seeing the inside. Driving past the property twice was my only visual, but I had researched the property extensively. It was a four-unit building, each unit had one bedroom. It had a poured foundation that did not leak at all and was built in 1943. The real problem was that the rents were low, like $100 too low per apartment per month and one unit was vacant. The low rent could have made an extra $3600 per year, including the vacant unit’s rent.

Pretend either Harry of Lloyd were myself...

Second Property Info

The property was listed at $120k and had been on the market for less than two hours before I found it on It had replacement windows, an old water heater, and a pitched asphalt shingle roof. I thought it could easily be worth $125k-130k with no upgrades. The boiler was also newer and in great shape, but I only knew about the items on the outside and what the listing pictures showed on the inside.


Loan Process That I Forgot About

My realtor informed me of a loan officer who he had worked with in the past and I did not have anyone worthwhile at the time, so I contacted him. The loan officer got my pre-approval letter out to me. Once I had that, I could finally make an offer. My previous letter had expired because it had been longer than 90 days.


Accepted Contract

I offered $112,500, which was the same price as what I bought my first property for. The seller countered at $117,500 and we came to an agreement on $115k. This all happened within 3 days of it coming on the market. It had now been secured under contract and I was not getting my hopes up after the last couple debacles.

A home inspection was ordered and scheduled. This was not something required by the bank this time, because it was an investor loan at 25% down. I ordered it either way for the peace of mind and because of how much I learned on the last two.  

After spending three hours following the inspector around picking his brain, he said it passed his inspection and I started to become excited that this may actually become my second property.


Insurance Agent

Roll forward a month and closing is just a week or so away. I totally forgot to seek out an insurance agent. Once the bank contacted me about who I would chose, I kicked into high gear. My local real estate investment association had someone they used and I contacted them. She was extremely helpful and the quote was a low price, but high coverage.



The seller and I finally received our closing disclosures and were scheduled a closing time and date. Although, between the reception of the disclosure and the closing, the bank figured out that they had forgotten the tenants’ security deposits in the calculations. The seller was then informed to bring a check to closing for the difference. There were a few minor issues incorrect on the closing documents, but nothing to stop it. Two hours later, I was having a beer in celebration.

All the unknowns, the questions from the bank, and stress was suddenly gone. I was the proud owner of two multifamily apartment buildings. They were small, but they made money. Together, they now gross approximately $50k per year and net well over twice what the year over year average of the stock market, which is historically anywhere from 6-11%. Check out an IRR calculator or MIRR calculator for your own calculations.


Part 4 can be found here!


By Trey Stevens

Learn what I did wrong or right from My Journey in real estate and rental properties OR check out other articles on my Blog.

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