Cameron and Alexis Cathcart. Cameron Cathcart.
- Cameron and Alexis Cathcart sold their home and used the money to pay a down payment on the rental property.
- After their first sale, they were able to reevaluate the home and receive refinancing.
- He then used personal and bank loans to buy more rental units in less time.
Cameron and Alexis Cathcart has 30 rentals. By summing up the total rental income, you enjoy financial freedom. However, this was not always the case. Before getting to this point, the couple lived in Denver, Colorado, where Cameron served as a pastor at a church. They used to live from month’s salary to month’s salary. Every unplanned overspending threw him off track.
The final straw was the $15,000 medical bill. Her daughter suffered an allergic reaction and had to be treated in hospital – but without the health insurance companies covering the costs. “We didn’t know how to pay for it. I miss my wife and I was sitting there one evening. We talked and we both came to the conclusion that this isn’t the way we want to live,” Cameron said.
So they looked for alternative sources of income. Cameron has always been interested in the real estate industry. He thought this area would be a good place to generate passive income. However, his previous knowledge and experience was based on TV shows or influencers in the area. “That has always interested us. When we decided to get into real estate, I bought every real estate investing book I could buy. I listened to every podcast I could listen to and every newspaper article. I could read what I could find. Learning the stories from people I have read and heard has given me inspiration and inspiration. I made my choice,” Cameron said.
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how did they start
Once made up their minds, Cameron and Alexis faced the first major hurdle: Denver real estate was too expensive. According to Zillow, the largest US online real estate marketplace, a standard single-family home cost around $467,000 as of early 2019. Today the value is even higher; The cost of such a house is approximately $563,000.
To avoid the high prices in Denver, the couple decided to sell their house in June 2019 and move to another city where house prices are cheaper. Eventually they moved to St. Louis, Missouri. There, the value of a simple single-family home is $161,000.
Just three months after selling his home in Denver, he made his first real estate purchase at a profit. The cost price of the first item was $150,000. He used the proceeds from the Denver home sale to make a 25 percent down payment. His original plan was to spend $15,000 to renovate the house and then rent it out for a good price. Unfortunately, things didn’t go as smoothly as Cathcart had hoped. Modernization works should cost closer to $75,000 if they hired professional businessmen. However, that amount is too expensive, Cameron said. If the renovation cost had been $75,000, they would have suffered a loss. So the couple decided to work alone while staying at home.
“We had a one-year-old daughter and a younger daughter who was just two weeks old. We bought a portable crib for our youngest,” Cameron said. “We put a mattress next to it, on which we slept with our one-year-old daughter. We stayed there for about a month. We painted the house, put new floors, and renovated the existing closets. We did everything ourselves. ,
This young couple has three apartments, they bought their first apartment in their mid-20s – a simple house ledger helped them get a real estate loan
After the couple renovated, Cameron and Alexis were able to refinance their previously taken out mortgage based on the higher valuation of the $200,000 home. They were able to cash in $160,000, or 80 percent of the appraised value, which the bank paid for. The house was then rented out for $1,700 a month.
After paying monthly payments, including mortgage, vacancy and insurance, the couple made a profit of $220 a month, he said. “We certainly didn’t do everything right, we certainly put money into the property, which an experienced real estate investor wouldn’t do. However, we learned a few things. And more importantly, when we finished the property, we were already inspired to continue on this path,” says Cameron. “As soon as we finished the first article, we started looking for the next one.”
Extension by 30 properties
A month after renting the first property, they were able to move on to buying the next two properties. While the couple could use the money from the payment to pay for their next purchase, Cameron quickly realized he didn’t need to use his own money to expand. So he kept the money he earned as a cushion in the bank and instead used the money from a family friend’s private lender to buy another property. He then took out a loan from the bank for the third property.
The personal loan had a term of two months and an interest rate of twelve percent. The interest rate on bank loans was also 12 percent, but there was an additional processing fee of 1 percent. This equates to $750. In addition, there were two percent at the end of the term, a total of 1,500 US dollars.
Cameron and Alexis repeated the same process as with the first property for the next two. He refinanced the payout on the basis of the newly increased values. He then used that money to repay his original lenders. The classic mortgage was then paid off from the rental income. This method is also known as the BRRRR method in the US. The letters stand for buy (buy), renew (reha), rent (rent), refinance (refinance) and repeat (repeat). After three articles, the couple say they made a net profit of about $1,000.
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“We made real money with the rent without taking any money out of our pockets. My wife and I looked at each other and were like, ‘This is amazing!'” Cameron said. “I don’t know why more people don’t do that. We thought we would do it forever. Over the next few months, Cathcarts repeated this process several times until they had acquired 30 rentable properties in less than two years. Public ownership documents and registration records reviewed by Business Insider attest to the size of their portfolio.
One of the main things Cameron says has really helped her along the way is attending meetings with people who have done the same. He met other real estate influencers including Sam Prime. He himself owns 167 rental units. Cameron and Alexis were able to learn from Prime’s approach, especially when looking for good real estate and obtaining credit.
Cameron recommends that beginners take a look at free online guides like Bigger Pockets. Bigger Pockets is a website for educational materials, tools for finding offers and a network for meeting other people. He also recommends the SamFasterFreedom YouTube channel, which he followed in the early days.
Cameron told Business Insider that the hardest part is making the first move. Once you get the hang of it, the rest becomes easy, says Cameron. Mistakes are okay too because you can learn from them and get better in a future situation. “The most important thing for us was to overcome the fear of the unknown because we had never done anything like this. We had no real estate experience and were scared to death when we did.
This article was translated from English and edited by Julia Knopf. You can read the original here.