Property operations
How $5,000 Unit Turns Took Rents From $500 to $1,250
A walkthrough of my 25-unit Stephenville deal: bought for $2M seller financed, $4-5K full unit turns, and rents more than doubled without displacing tenants.
This is the 25-unit property that got me into Stephenville, Texas (my first deal in that market) and we're deep into phase two, renovating the daylights out of every unit that isn't already ready for our new model. I walked the property on a Friday with a camera to show you exactly what we're doing, what it costs, and why these simple, boring renovations are the thing that actually makes money in real estate.
There's no secret here. No exotic financing trick on the renovation side, no contractor hack nobody's heard of. It's flooring, paint, cabinets, countertops, light fixtures, door knobs, and blinds, executed fast and executed the same way in every single unit. That's it. That's the whole thing. And on this property it's taking rents from $500 a month to $1,250.
Related reading: Inside a 44-Unit That Brings In $40,000 a Month in Rent
The Deal: $2 Million, Seller Financed, 4.5-Year Note
I bought this with one partner: my best friend Caleb Hommel. He brought in $275,000 and we bought the property for $2 million. That's significantly less than 20% down, which makes this genuinely low-down real estate.
The seller came out of a cold call. I was trying to break into the Stephenville market and started calling owners. He turned out to be 81 years old, and he owns a lot: a bunch of businesses, a bunch of farmland, a few apartment buildings, a few retirement communities.
He was in the middle of his estate planning, and that's what made the deal work. His kids want the law firm. They want the retail. They want the farms. They don't want the multifamily. And he didn't want to hand them a huge check: he wanted to hand them income streams.
So he's handing his kids the business, and he's handing me the multifamily.
They seller financed the whole transaction on a four-and-a-half-year note. Why four and a half instead of five? Because at five years he'd be 85, and he's convinced he might not be alive then. He wants to be alive when the note comes due. If we're still there and still in good standing at that point, his plan is to extend it so he can pass the note on to his family.
We're at 5% interest-only payments.
Speed Is the Real Renovation Cost
When I walked the property there were electricians working, plumbers working, and renovation teams going in pretty much every unit at once. That's deliberate.
The biggest cost you have on a rental renovation project is not materials. It's the speed to get it completed. You can't collect any income out of a non-renovated unit. Every day a unit sits half-finished is a day of rent you don't get and never will. So we put people all over the place and run units in parallel rather than one at a time.
The worst unit had wiring, plumbing, flooring, and smoke-damage problems. During my visit, the missing flooring made it look far from finished. The team still expected to reinstall cabinets and appliances, complete the electrical and fixture work, and repair the doors before making it available for rent. Those were the remaining tasks and the schedule at that point, not completed work.
That's the pace you want. It's genuinely wild how fast these come together once the team and the process are dialed in.
What a $4,000 to $5,000 Turn Actually Includes
Here's what we're doing in the units, and none of it is expensive on its own:
- Paint. We painted the walls gray throughout.
- Light fixtures. About $100 a pop. The originals were nasty before we bought them. Low-expense items that go a very long way.
- Countertops. The kitchen counters were destroyed, and instead of replacing them we salvaged them with a white coating that comes out almost like a concrete texture. We put it over everything.
- Cabinets. They were beat up and the stain was ruined. Rather than resand them, we painted them black. I've ended up liking the black and white aesthetic enough that I think we're keeping it for the rest of the property.
- Appliances. We were able to salvage the old stove on that unit, which is great.
- Door knobs. This is the one people skip. Every knob on the property was gold and none of them matched. You buy these in multipacks for $12. Get everything uniform and matching to the building so it doesn't look like a hodgepodge slapped together.
- Blinds. Take the blinds, make sure they fit the windows, make sure they go all the way down. Across almost the entire property they were beat up or just missing.
- Electrical. Replace the outlets, make sure everything's wired correctly, put GFCI plugs where they need to go. And we don't paint over switch plates like some slumlord.
- Flooring. In some units we could salvage what was there: unit 62 had nice tile we kept.
Our biggest single expense on this property was plumbing, because a lot of it was plumbed wrong. We had a plumber in here fixing it, including a bathtub that was leaking into the floor. Fortunately we're on a concrete slab.
Add it all up (floor, paint, walls, cabinets, countertops, bathroom replacement, light fixtures) and a full turn runs about $4,000 to $5,000. That's a complete turn, not a lipstick job.
One more small thing worth stealing: black-and-white ranges. If you're matching appliances across a property and you spot one, buy it, because it doesn't look out of place next to either white or black appliances.
Charging Less Rent and Making More Money
Cheap turns don't mean we're being cheap. They mean we can afford to charge less rent for a better space.
Why would a landlord deliberately charge under market? Because I hate vacancy. I actually make more money making better spaces. If you don't suck at being a landlord, you can affordably create excellent housing for excellent people, stay under market, and still win.
Here's where the money actually shows up: every unit looks the same. You find something that works, something that's rentable, and you repeat it. Nice big clean rooms, clean paint colors, blinds that fit, fans that match, appliances that match.
On this property we took rent from $500 a month to $1,250. I think the unit I was standing in will rent for $1,350. More than double.
Before anyone says that isn't fair to the tenants: we did it as people moved out. Because rents were so low, a lot of these units had been rented to very low-income individuals, and we inherited cockroach problems and trash problems. Not every low-income renter is going to damage a unit, but the mix we had here included people who could barely afford even $500 of rent.
What we did was make affordable housing. We rent to a lot of students out here. We still rent to a lot of the housing authorities, so people who need help still rent these units at the same income level. What changes is the tenant mix gets nicer, and we stay notably under market rent.
Related reading: How Mike Newton Built 28 Units in Gary, Indiana and Owns the Market
That's true affordable housing that makes enough money to keep the rest of the property nice. It pays for landscaping, upgrades, amenities, park benches. We just finished trimming the trees, which were all over the place before. Now it's an actual campus, done the way it's supposed to be done.
For the record, unit 62 doesn't mean there are 62 units. That's building six. The whole campus is fourplexes on one parcel.
The Math, and the Two-Year Timeline
Today the whole property cash flows about $2,000 a month, and that's with six vacancies while we renovate.
Do the math from there. We're renting these for over $1,000 each. Once we're completely done with renovations and lease-up, this campus can cash flow significantly over $10,000 a month.
We bought it a little over a year ago, and the full turn cycle will take about two years. We could have sprinted. We chose not to, because doing it at a measured pace meant not displacing too many tenants and not being too aggressive on rent bumps. I'm genuinely proud of how it came out. We kept the great tenants we had, cycled out the ones who needed to leave, renovated the units to the right level, and built the right team.
For a lot of people, $10,000 a month is enough to retire on. You could do this in one deal in two years.
One Deal Became Four
The team and the track record we built here are what unlocked everything else in Stephenville.
Seller financing got me into the market. The relationship with that 81-year-old seller got me the second deal: a 26-unit down the street, from someone he knows. Then a broker who watched us buy both of those came to us and said, in effect, "Wait a second, you're the most active buyer in town right now. How about a 44?" We bought it. It was a low-income property under LIHTC: low-income housing tax credits.
Then, because we now owned a LIHTC building, the next conversation was: you're buying LIHTC, want to buy the 76? We bought the 76, on the other side of town, in the last year.
That's how you play this game. It's a relationship game, and it compounds. This one cost me no money out of pocket, and we're buying a deal like this roughly every quarter.
Key Takeaways
- Seller financing with an estate-planning seller can get you in for far under 20% down: here, $275,000 from one partner on a $2 million purchase at 5% interest only.
- The biggest renovation cost is time, not materials. Run units in parallel and get them rent ready fast.
- A full $4,000 to $5,000 turn covers flooring, paint, cabinets, countertops, bathroom, fixtures and electrical. Don't skip the cheap uniformity items like matching door knobs and properly fitted blinds.
- Cheap, high-quality turns let you charge under market, kill vacancy, and make more money, not less.
- Renovate on natural turnover rather than pushing people out, and the whole cycle can take two years without displacement.
- One well-executed deal in a small market generates the relationships that bring you the next three.
Watch the Full Walkthrough
Seeing the units in their various states of finish tells the story better than a list of line items: watch the full walkthrough above to see the rough unit, the finished unit, and the campus landscaping side by side.
If you want to copy this strategy, our free Skool community is linked in the description. You get a free calculator, you get connected with thousands of investors around the country, and I post there all the time. There's also a free course on getting started in multifamily at multifamilystrategy.com/get-free-training, and if you want to go deeper, my mentorship is at mentorship overview.
Read the episode transcript
0:00 25 unit first deal that I bought in 0:01 Steamville. We're coming in on phase 0:03 [music] two and we are rening the 0:04 daylights out of every unit that is not 0:06 ready for our new model. Bring in a lot 0:08 of student housing [music] and we are 0:11 making these next level. This was the 0:13 grossest unit. This was a hold over 0:14 tenant. Wired wrong, plumbed wrong. 0:16 Flooring was bad, smoked in. Everything 0:19 was wrong here. We're actually closer to 0:20 done than it may appear. The flooring's 0:22 out, so it looks like a construction 0:23 zone. Cabinets are painted by the end of 0:26 the day. Cabinets will be back in. 0:28 Appliances will be back in. Light 0:29 fixtures will be up. Electrical will be 0:32 restored. Doors will be fixed. Door 0:33 knobs will be changed. Crazy how fast 0:35 these come together. By Monday, this 0:36 thing should be rent ready, which is 0:38 wild. Yeah. Welcome to 25 units. My name 0:40 is Christian. Welcome to the YouTube 0:42 channel. Like, subscribe, do all the 0:43 things that you're supposed to do to 0:44 help us grow this and share with you 0:45 guys how you can buy more real estate. 0:46 This was bought seller financed. We did 0:48 this with one partner. They brought in 0:51 $275,000. We bought it for 2 million. 0:53 So, this was, you know, significantly 0:55 less than 20% down. uh relatively low 0:58 down real estate. I'll walk you through 0:59 a few of the units and the projects that 1:01 we're doing. There'll be some people 1:02 around because we have teams everywhere. 1:05 So, 1:08 hello. Hello. Yeah. Welcome. Welcome to 1:09 the channel. This is these are my new 1:11 friends. 1:12 Yeah, it will be. [laughter] 1:17 Got electricians working in. We got 1:18 plumbers. We got renovation teams. 1:20 You're going to see this in pretty much 1:21 every single unit. Uh the biggest cost 1:24 that you have in doing a rental project 1:26 is the speed to get it completed. You 1:28 can't get any income out of a 1:30 non-rennovated unit. So we have people 1:31 all over the place, which is epic. 1:34 Working on all sorts of different units. 1:35 Those are the two roughest. I'll walk 1:36 you guys across the the walkway here. 1:38 It's all forplexes. I'll tell you a 1:40 little bit about the deal. So we found 1:41 this. This was someone who I called 1:43 trying to break into the Stevenville 1:44 market. He happened to be 81. He owns a 1:46 bunch of businesses, a bunch of 1:47 farmland, a few apartments, a few 1:49 retirement communities. He's doing his 1:51 estate planning. His kids want the law 1:53 firm. They want the retail. They want 1:55 the farms. They don't want the multif 1:56 family. He doesn't want to pass them a 1:58 huge check. He wants to hand them income 1:59 streams. So, he's handing his kids the 2:02 business. He's handing Christian the 2:03 multif family. And at this point, I took 2:05 out with my best friend Caleb Hmel. So, 2:08 the two of us came in. They seller 2:10 financed the transaction on a 4 and a 2:13 halfyear note. Why not five, you ask? 2:15 Cuz you'll be 85 and he's convinced you 2:17 might not be alive then. He wants to be 2:18 alive when the note comes due. Cool. 2:20 Now, if we're still there and still in 2:22 good standing, his plans to extend so 2:23 that he can go ahead and pass that on to 2:25 his family. So, we have 5% interestonly 2:28 payments. We're renovating the last six 2:30 units. So, here's the office, the 2:33 laundry room. Walk you through a couple 2:35 of these that are closer to completion 2:37 so you can see what we're actually 2:38 bringing these things to. Flooring comes 2:41 in on Monday. I'm filming this on a 2:42 Friday, so take that into account. All 2:45 right. This is how you make a bunch of 2:46 money on affordable living. So, you come 2:48 in. Flooring again is coming in on 2:50 Monday. It's the only thing not really 2:52 done. We came in, we painted the walls 2:54 here this gray. Redid all of the light 2:56 fixtures. Those are $100 a pop. You're 2:59 talking low expense things that go a 3:01 long way. Those things were nasty before 3:02 we bought them. Came in here. Kitchen 3:05 countertops were destroyed and we 3:07 salvaged them with this white coating 3:09 here. This is almost like a concrete 3:11 like texture. Put it all over 3:13 everything. Actually totally revived the 3:15 cabinets. We're able to salvage the old 3:17 stove, which is great. Cabinets were 3:19 beat up. The stain was ruined. Instead 3:21 of resanding, we painted them black. I'm 3:23 actually liking the black and white 3:24 aesthetic in this one. I think we're 3:26 going to keep it for the rest of the 3:27 property. Here's one of the things 3:29 people skip out on. These doorork knobs 3:30 are all gold and none of them matched. 3:33 Come in for the simple stuff, the 3:34 inexpensive stuff. You get these in like 3:37 multiacks for 12 bucks. Get everything 3:40 uniform and matching to the building. 3:42 Not a hodgepodge of stuff. It's not 3:44 slapped together. take the blinds, make 3:46 sure they fit the windows, make sure 3:47 they go all the way down. These were 3:49 beat up or just missing in almost the 3:51 entire property. Our biggest expense 3:53 here was the plumbing. It was plumbed 3:55 wrong through a lot of it. So, we had a 3:56 plumber in here. Bathtub was leaking 3:59 into the floor. Fortunately, we're on 4:00 concrete slab. But, you end up with 4:03 these bathrooms that look like this. 4:05 Nice vanity. We're actually going to 4:07 swap this out. We tried to salvage it. I 4:09 like our newer ones better. I'll bring 4:11 you into one of those, too. But this is 4:13 the type of stuff we're doing. It's 4:14 affordable fixes, but the switch plates, 4:16 we're not painting over them like some 4:18 slim lord. Replace the outlets, make 4:20 sure everything's wired correctly, but 4:22 GFCI plugs where they need to go. Do the 4:25 flooring, do the paint. Overall, these 4:27 actually don't cost very much to turn. 4:29 Total turn is like $4 or $5,000 on like 4:31 a floor paint, walls, cabinets, 4:34 countertops, bathroom replacement, light 4:36 fixtures. We're doing a full turn here. 4:38 And it's just not that expensive. Which, 4:41 by the way, that doesn't mean that we're 4:42 cheap. What that means is that we're 4:43 actually able to charge less rent for a 4:46 better space. That's right. Landlords 4:47 who charge less. Why would we do that? 4:49 Cuz I hate vacancy. I actually make more 4:51 money making better spaces. Go figure. 4:53 If you don't suck at being a landlord, 4:55 you actually can affordably create 4:57 excellent housing for excellent people. 4:59 Let's check out unit 62. 5:01 This one's fun cuz we were able to 5:03 salvage the floors here and they have 5:04 nice tile. So, welcome in to unit 62. 5:08 That doesn't mean there's 62 units. This 5:10 is building six. They're all fourplexes 5:12 on the whole campus, all one parcel, in 5:15 case you're wondering. And we did the 5:17 thing where we're matching all of them. 5:18 This will be a white fridge to go with 5:19 the white range to go with the white 5:21 stove top. Though, I do like these cuz 5:24 if you have a black appliance, the black 5:27 and white ranges, they don't look out of 5:29 place on either of them. That's a little 5:31 hack if you're looking for if you see 5:32 them, buy them. Come on in here. Nice 5:36 big clean rooms, clean paint colors. 5:38 Again, blinds fit. fans match. Here's 5:41 where you actually make all the money in 5:43 real estate. Every unit looks the same. 5:46 You find something that works. You find 5:47 something that's rentable. We took rent 5:50 here from $500 a month to $1,250 5:56 a month. I actually think this one's 5:57 going to be renting for $1,350. More 6:00 than doubled rent. And before you're 6:01 like, wait a second, that's not fair to 6:02 your tenants. We did it as people moved 6:04 out. A lot of these units because it was 6:06 very low rent was rented to very 6:09 low-income individuals. We had cockroach 6:11 problems. We had trash problems. Not 6:14 every low-income renter is going to 6:16 damage the unit. But the type of tenants 6:18 that we had in here, we had a rough mix 6:20 of people who really could barely even 6:22 afford $500 of rent. All we did here is 6:25 we made affordable housing. We rent to a 6:27 lot of students out here. We still rent 6:28 to a lot of the housing authorities. So, 6:30 some people who need help still rent 6:32 this unit at the same income level. But 6:33 what we end up with is a nicer tenant 6:35 mix. We're able to serve our tenants and 6:37 we stay notably undermarket rent. So we 6:40 have true affordable housing and it 6:41 makes enough money to keep the whole 6:43 rest of the building nice. That means we 6:44 can spend the money on landscaping, on 6:46 upgrades, on amenities, on park benches. 6:49 I mean, just look at the landscaping we 6:50 did here. These trees we just finished 6:51 trimming up. Those things were all over 6:54 the place. Now we actually have an 6:55 actual campus done the way that it's 6:57 supposed to be done. This is how you 6:59 make money in real estate. Now, this 7:01 whole property today cash flows about 7:05 $2,000 a month, but that's with the six 7:07 vacancies. Do the math here. We're 7:10 renting these all for over $1,000. This 7:12 is a campus that can be cash flowing 7:15 significantly over $10,000 a month when 7:18 we were completely done with the 7:19 renovations and the lease up. We bought 7:21 this a little over a year ago. It's 7:23 going to take us a two-year to fully 7:25 turn cycle without without displacing 7:28 too many tenants, without trying to be 7:30 too aggressive on the rent bumps, 7:32 getting through everything in a measured 7:34 pace. We could have sprinted through 7:35 this one, but I'm actually really proud 7:37 of the way it came out. We kept the 7:39 great tenants that we had. We cycled out 7:41 the tenants who needed to leave. We 7:43 renovated the units to the right level. 7:45 We built the right team for this. And 7:47 that allowed us to do the same thing on 7:49 our 26 unit down the street, the 44 unit 7:51 right down the street from that. And on 7:53 the other side of town, the 76 unit that 7:55 we bought in the last year. Seller 7:57 financing got me at Stevenville. The 7:59 relationship with the seller got me the 8:01 second deal. It's from someone he knows. 8:03 The next deal was from a broker who saw 8:05 us buy both these deals and was like, 8:06 "Wait a second. You're the most active 8:08 buyer in town right now. How about a 8:09 44?" We bought that. It was a lowinccome 8:13 property. It's called LITC. Lowinccome 8:15 housing tax credits. Another building on 8:16 the same program. So, wait a second. 8:18 You're buying LITC. Want to buy the 76? 8:20 Bought the 76. This is how you play the 8:22 game. It's a relationship game. You can 8:24 get in. This cost me no money out of 8:26 pocket. The cash flow on this. Again, 8:29 we're going to be cash flowing about 8:30 $10,000 a month, which for a lot of 8:33 people, that's enough to retire on. You 8:35 could do this in one deal in two years. 8:38 And just remember, we're buying a deal 8:40 like this just pretty much every 8:41 quarter. You want to copy this strategy? 8:43 Check out our free school community down 8:45 below. Click the link there. Dive in. 8:47 You get a free calculator. You get 8:48 connected with thousands and thousands 8:49 of investors all over the country. and I 8:50 post there all the time. So, if you want 8:51 to learn free stuff, check it out. 8:53 Follow the channel. We'll see you guys 8:54 on the next episode.
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