How I Started In Real Estate by Hal Cranmer
 My first interest in real estate came in the year 2001 when I was an Air Force Guard pilot in New Hampshire. I was enjoying a beer in the squadron bar one night after a flight. My flight engineer starts telling everyone about his cousin who buys houses, fixes them up, and resells them for $30-$40,000 profit in a couple of months. I was also a major airline pilot at the time and thought it sounded like a great idea to do in my free time (airline pilots have a LOT of free time).Then 9/11 happened. Suddenly I was out of my airline job. Nobody was hiring pilots at that time, so my only options were to go back in the military full time or find a job in the corporate world. On top of everything my wife announced she was pregnant. Real estate was the furthest thing from my mind as I looked all over the country for a ‘real’ job. |
After about 8 months we wound up in Minneapolis, and I found a job as a financial auditor for a big public company. Quite a transition. I am still in the corporate world to this day but even when I was starting out as a corporate employee I kept thinking about real estate investing. Certainly my corporate salary was not letting me get ahead, and the stock market was more of a casino for me than a solid investment.
So What’s This Real Estate Thing All About?
Early in 2006 I saw an ad for the ‘Minnesota Real Estate Investors Association’ (MNREIA). I thought I would go to the meeting to see. Most of the meeting was taken up with some guru trying to sell his high-priced training, but it seemed like a good place to network.
In the beginning of the meeting, they have a session called ‘Haves and Wants’ where people can stand up, take the mic, and either pitch a deal or advertise for deals. One realtor stood up, provided a few deals, and then said he likes working with new investors and helping them.
I tracked that realtor down, met him after the meeting, and told him I’m a new investor. He said he would be happy to talk to me.
He and I became good friends, and are still friends to this day. He introduced me to a good mortgage broker, and title agent as well.
Then the mortgage broker called me one day and said he knew a house that was going to be foreclosed on. Would I like to buy it and flip it? I ran the numbers and said it sounded good.
I bought the house, cleaned it, carpeted it, added some countertops in the kitchen and repaired some ceilings. Then I sold it in a month for a $29,000 profit. I was hooked!
My Dive Into the Rental Market
After that my realtor asked if I would be interested in renting. He told me about a duplex he had that was around $200K that would rent for $2400/month. I ran some quick numbers and liked the cash flow. So I took the proceeds from my flip and bought it. It was also by the University of Minnesota, so I thought it would be easy to rent.
I fixed it up with the help of a handyman and some contractors that my realtor recommended and rented it out. It was a 100 year old house, so there was a lot to fix up. I think I put another $30K into it.
I also wanted to flip anything that moved thanks to my first flip. Unfortunately that greed led me to buy another foreclosure from another realtor that was not such a great deal. It needed a lot more rehab, but was only 2-3 miles from my house. I asked my neighbor who is very handy to help me fix it up, which he did.
Trouble was, it was mid -2007 and the market was about to crash. We didn’t get the place fixed up until the end of August and by then we missed the prime buying season. I couldn’t get anyone to buy it at the price I wanted, so I figured I would rent it out.
One of my handymen wanted it for his family and I agreed. They moved in and within a couple of months had trouble making the payments. I tried to work with them, but they also started destroying the place. So I kicked them out.
I also like the duplex thing up in Minneapolis, so I bought several more. It was during the real estate crash and I was picking them up pretty cheap.
I’ve bought 10 properties in the same area of Minneapolis, but sold 4 of them. I currently have 6 properties that are cash flowing reasonably well, but could be doing a LOT better. They are mostly duplexes and triplexes. The trouble with these properties though, is that they turnover a lot. I only have one tenant who has stayed longer than three years. I don’t think it is me. I think it is because they are mostly young kids who are roommates and they decide to go their separate ways after a while.
Through all my rental buying and selling, I used bank financing, realtors, and the ‘conventional’ methods.
Time for Cash Flow Depot!
I discovered CFD about a year or two ago and it has really changed my perspective on real estate. At the time I found it, I was trying to do a little wholesaling. I found someone on another forum (BiggerPockets) that would send out all these ‘Yellow Letters’ to absentee owners. He charged me $3,500 for 3 mailings. Pretty much all I got out of it was a owners calling me wanting full market value for their properties. I found one deal out of it that I gave to my realtor for $1,000.
When I asked Jackie about mailing to out of state owners, she told me it doesn’t really work – Boy was she right.
Since subscribing to Cash Flow Depot, my profits have gone up considerably. I have put my properties in trusts or LLC’s and put more protection around them as well. CFD helped me do some other things as well that added to my profitability.
I changed my and my wife’s IRA’s to Self-Directed IRA’s and have bought mobile homes or mobile home notes in them (sold to me from park owners at a discount) that are yielding 14-20%.
I sold that flip that went bad near my house on a Contract for Deed (the first time I ever did this) and am making about a $15,000 profit compared to a $8,000 loss if I sold it with a realtor.
I went to David Tilney’s master leasing class and really enjoyed it. Even if I don’t master lease, it gave me some great ideas for property management.
I’m about to use a Highest Bidder Sale to sell a house I am flipping and (hopefully) saving the realtor commission if I am successful.
But what I am really interested in is Assisted Living Facilities (ALF’s). I took a 3 day class in Phoenix with Gene after Jackie’s conference call. The class was full of CFD members. Now I have Gene’s realtor actively looking for and ALF for me down in Phoenix.
My daughter is a Freshman at ASU, and my son really wants to go there when he gets out of high school. So my wife wants to move down there too (not to mention getting away from Minnesota winters!). I am hoping to 1031 my rental properties into ALF’s in Phoenix, and live off the income from those.
I would really like to thank Jackie for all she has done for me, to get me on the right track in real estate. Although I have a full-time ‘corporate’ job still, I plan to quit it once I have my first ALF up and running, combined with the income I have from my rentals, to make the life I’ve always wanted.
