June 3, 2025 • 26 mins
In this episode, we sit down with Kevin Hutnik, a Realtor who took his career to the next level—and used it as a launchpad for financial freedom.
Kevin shares how he focused on mastering his real estate sales business, increased his income through commissions, and then took a disciplined approach: saving those checks to buy rental properties with cash.
We delve into the mindset behind owning properties free and clear, and why that provides Kevin with a deep sense of financial security.
He breaks down the numbers: how much rent he collects, what typical expenses look like, and what kind of cash flow he’s bringing in each month.
Recently, Kevin has shifted gears and begun using DSCR (Debt Service Coverage Ratio) loans to expand his portfolio more quickly.
We discuss why he made that pivot and what he's learned from the process. Plus, Kevin shares what he looks for in a solid rental property and how his strategy has evolved.
https://rentalincomepodcast.com/episode524
Thanks To Our Sponsors:
The Guarantors - Protect your property against losses rent defaults, vacancies, lease breaks, damages, and more. All without increasing your operating expenses.
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
Kevin shares how he focused on mastering his real estate sales business, increased his income through commissions, and then took a disciplined approach: saving those checks to buy rental properties with cash.
We delve into the mindset behind owning properties free and clear, and why that provides Kevin with a deep sense of financial security.
He breaks down the numbers: how much rent he collects, what typical expenses look like, and what kind of cash flow he’s bringing in each month.
Recently, Kevin has shifted gears and begun using DSCR (Debt Service Coverage Ratio) loans to expand his portfolio more quickly.
We discuss why he made that pivot and what he's learned from the process. Plus, Kevin shares what he looks for in a solid rental property and how his strategy has evolved.
https://rentalincomepodcast.com/episode524
Thanks To Our Sponsors:
The Guarantors - Protect your property against losses rent defaults, vacancies, lease breaks, damages, and more. All without increasing your operating expenses.
Ridge Lending Group - Making investment Mortgage process simple and stress-free.
MidSouth HomeBuyers – Turnkey Rentals In Memphis & Little Rock. Instant Cash Flow On Day One. (Priced between $100,000 to low $200's)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
The inspiring interviews with today is Top Landlords, This is
the Rental Income Podcast and now damnly, Kevin, tell me
what you're thinking was when you first started buying rental properties.
Speaker 2 (00:15):
So initially the goal was to take real estate commission
that I that I earned from being an agent, and
using my commission of selling real estate to actually purchase
real estate. When I got enough money to saved up
commission wise, I'd go and buy, you know, a single
(00:35):
family home. And it kind of spiraled over the past.
Let's say, let's see twelve years and you fast forward,
it's grown into something a little bit more considerable. So
that's initially what the plan was is just you know,
sell homes, collect commission, save and try to purchase rental
(00:58):
properties and build some type of portfolio.
Speaker 1 (01:00):
Kevin's really got an incredible story. He got really good
at his job and he took his active income and
turned it into rental income. And what's really remarkable is
that he never had to borrow any money. He was
able to buy rental properties with cash. And on the
show today, we're going to figure out how we did it.
Joining us on the show from Hobart, Indiana is Kevin
(01:23):
Huttneck will take a quick break to anchor sponsors. We'll
come right back and we'll talk to Kevin. I've had
ten instead of either broken their leases or stop paying rents.
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(02:07):
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(02:28):
The lender that I recommend is jay Ley Ridge from
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(02:53):
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(03:16):
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(03:38):
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(03:58):
at Midsouth home buyers dot com. Kevin, walk me through
your thinking. You would sell a house, a couple of houses, whatever,
get some commission checks, you would save them and then
use use that to buy a rental property with cash.
What was your thinking in using cash, Like would it
have been easier to just save a down payment?
Speaker 2 (04:21):
Sure? I think I'm a little bit more of a warrior.
I worry about risk and overhead and things like that.
And I was working for a company owner or a
managing broker that had showed me the way to just
pay cash, and he taught me that cash is king,
(04:43):
you know, just a slow grow, don't involve the banks.
He would always say, cash is king financing his queen,
and debt is the joker. So I just always kind
of stuck by that and just did a did a
slow purchase when I could, and that was it, really.
Speaker 1 (05:04):
And then did you have just a feeling of security,
knowing that no matter what happens, you can keep things going. Yeah.
Speaker 2 (05:14):
Absolutely. I mean I was flipping homes before that. So
my first rental was purchased on a home path Fanny
May site for thirty eight thousand, and it needed a roof,
so I sent the roof guys over cheap roof and
the roofer said, hey, I'll give you sixty thousand for
this right now. And I said, you know, me, being
(05:35):
a flipper, I'm like, oh my gosh, that's a quick,
quick bang. But I'm like, you know what, I'm dedicated
to this. I want to try it. I want to
get my first one under my belt. So I said no.
It hurt to say no, but that was kind of
how it started rolling. Was, you know, it gets something
under my belt, and try to keep the risk low,
try to keep overhead low. And you know, you always
(05:58):
hear people say, you know, the bubble was going to
burst some time, and I've been hearing that for gosh
twelve years now. But you know, I just was so
worried that it. You know, I wasn't gonna have income
or no commission or anything like that. So I just
told myself. Hey, I'll pay cash. I won't have to
worry about it. I don't have to involve the banks
or underwriting or any of that stuff. And when I
(06:18):
get enough money, I'll go buy a second one.
Speaker 1 (06:20):
And so you mentioned about that property that was thirty
eight thousand hour most of your properties, like, did you
get them like in that price range? No?
Speaker 2 (06:30):
I mean that lasted for a little bit.
Speaker 1 (06:32):
You know.
Speaker 2 (06:32):
I got my real estate license in twenty twelve, so
it wasn't the crash, but we were slowly kind of
creeping up. And I look back at that, and I
mean that home I still own it. I still have
the same tenants in it. But that home now, even
like a foreclosed version of or a hut or a
home path is probably one fifty to buy and probably
(06:57):
two fifty retail. So those thirty eight dollar houses aren't
around anymore. And I do have five that I had
purchased in that subdivision, ranging from twenty nine at the lowest,
and I believe, let's let's see here, I think seventy
five at the highest, and that doesn't even exist anymore.
(07:18):
I mean it's hard to find that. So now I'm
purchasing rentals. My most recent rental was a great deal,
and it was one forty five in my hometown here,
So the mindset has definitely changed. It's crazy that one
forty five is a good deal now when just twelve
years ago, thirty eight was a good.
Speaker 1 (07:38):
Deal, right, right, So basically, you got really good at something.
In this case, it was selling real estate. You became
a really good agent, started making money, and then you
were living below your means to save that money to
buy more properties. Correct.
Speaker 2 (07:54):
Correct, Me and my brother and my mom have a
children's clothing store that we bought into in two thousand
and eight, and I was working there probably sixty hours
a week to just kind of keep that thing running.
So I told myself, Hey, any commission I get is
just icing on the cake. I can live off of
selling baby clothes, and you know, we'll see where this
(08:17):
real estate stuff turns into. And you know, it grew,
It grew quickly, and it grew fast. But the goal
was to save every penny I had from selling real
estate to purchase really lif Wow.
Speaker 1 (08:31):
Okay, so you weren't spending any of those commission checks
like that was all going towards buying rentals.
Speaker 2 (08:37):
You know, I rewind to one of my final years
at that brokerage. It was year five on that brokerage
and two conversations. The first conversation was my managing broker
and they used to have these little cubby holes that
they put your checks in. He's like, Hey, are you
going to come and pick up these checks. I'm like, yeah, yeah,
I've just been really busy. He's like, you have sixty
thousand dollars in here, and I'm like, oh, I'm coming,
(09:00):
you know, I'm coming to get it.
Speaker 1 (09:01):
Yeah.
Speaker 2 (09:01):
And the second conversation that same year was his wife,
and I'm really close friends with them still to this day.
She said, do you have any idea what you made
in real estate this year? And I said, I have
no idea. I've just been running my tail off right
just to sell houses. She's like, you made seven hundred
and fifty one thousand this year.
Speaker 1 (09:20):
Wow? What Like I'm doing this crazy wow as.
Speaker 2 (09:24):
A side hustle. So that those are two conversations that
I'll never forget.
Speaker 1 (09:29):
Yeah, so how many properties was that? Like the year
you made seven fifty how many houses did you?
Speaker 2 (09:35):
I was there, I'm selling everything anything I could. I mean,
people in my area They're like, it's northwest Indiana. They're like, oh,
I don't mess with Gary, or I don't mess with
Lake Station or East Chicago, which are typically you know,
a lower, lower price point. I said, I told all
my competitors, Hey, I'll take any of it. I'll if
I can make a commission, I will sell it. So
that year, my final year at the brokerage, we sold
(09:58):
two hundred and forty two homes.
Speaker 1 (10:00):
Wow, two hundred and forty two homes and you're working
full time at the at the clothing shop, Like, how
did you have time to do that? Like that just
seems like a ridiculous amount of work.
Speaker 2 (10:14):
Me and Holly looked at each other. Actually, the year
before I had sold one hundred and nineteen homes, and
I basically told Bart I said, I don't think I
can do that anymore, Like I need some type of
system because one hundred and nineteen was brutal. I don't
remember anything. It was like every day I looked up
(10:36):
it was Friday.
Speaker 1 (10:37):
Yeah.
Speaker 2 (10:38):
So Holly's like, look you, I think you aged like
ten years this year. And it was true, Like my
mind was so at capacity and it's hard to explain,
but like things that you remember as a kid that
you would never forget. I was forgetting things, Like when
I was in third grade, Kirk Gibson hit that walk
off home run in the World Series. I couldn't remember
(11:01):
the team or the name. Like I was just so
honed in down work that I just had no more
room for anything. Another story from that exact same year,
I was in a cruise to Alaska with my wife.
I had forty two pending deals at the time, and
we lost Wi Fi on the boat and I had
to go seven days without WiFi with reactions and it
(11:24):
was just my phone lit up like a cherry where
we got off the got off the ship. But it
was a crazy year and I look back and I'm like, man,
that was a that was a crazy, crazy time.
Speaker 1 (11:36):
You know. I got to hand it to you that
you're you're selling all those houses, you're working at the
clothing shop, and you're you're living way below your means.
I mean, if you're making seven hundred thousand dollars selling properties,
like you could have just been living like a king.
Like it's like, but it sounds like you were really
(11:57):
focused that that you really wanted to build this for.
Speaker 2 (12:00):
I mean, I bought a car that year. My tax
said he's like, look, you know, go and buy some
you need some business expenses here. And I was driving
around a Honda Ridgeline with over three hundred thousand miles
on it. And but you have to think I had
no admin or no process or I was entering listings
at night. I was doing price adjustments and century lack
(12:21):
of stuff. And you don't have time to shop for
a car. You don't have time to look at a car, right,
I mean it was It was so crazy at that time,
and the market only got crazier. I got out of
that because I, you know, started my own company. But
transaction wise, I mean, I couldn't even imagine how it
would have been during COVID Because COVID, I don't know
(12:44):
about the rest of the country, but here it was nuts.
We were selling houses forty fifty sixty thousand dollars overlist,
you know, no inspection, with an appraisal gap that if
it didn't appraise then people would still buy it. So
you know, twenty twenty was an amazing time for real estate.
But unfortunately I wasn't in transactions anymore.
Speaker 1 (13:02):
Let's talk about what you've done so how many properties
do you have, Like, what does your portfolio look like?
Speaker 2 (13:10):
So it's forty eight income producing doors. So there are
a couple of multi units sprinkled in there. There's some
commercials sprinkled in there. But for the most part, my
bread and butter is single family. I really enjoy single family.
Speaker 1 (13:21):
And how many years did that take you?
Speaker 2 (13:25):
The first one was purchased in twenty fourteen, so I
stopped flipping homes in twenty fourteen. Purchased that first one
for thirty eight thousand, and I created like a buybox
where I wasn't going to purchase in certain towns. I
wanted to stay within a couple boundaries. I wanted to
purchase homes only on a slab. I wanted no basements.
I wanted, you know, three bedroom or higher. So I
(13:48):
was really picky. Unfortunately, being that picky, my second and
third rental didn't fall into my lap until about a
year and a half later. But they fell into my
lap on the same week, So I actually purchased rental
two and three on the same week.
Speaker 1 (14:05):
So it's basically been since twenty fourteen. You've been consistently
buying here.
Speaker 2 (14:10):
Yeah, at twelve years eleven, eleven years, eleven years.
Speaker 1 (14:13):
And what made you want to stick with that with
that buybox? What were those neighborhoods just good neighborhoods.
Speaker 2 (14:19):
And it didn't make much sense now that I look
back at it. I could have bought anywhere because the
entire area that we're in, every rental is great. I
just in my mind, I just thought, hey, I need
to if I need to get to somewhere, I don't
want to have to be going all the way across
you know, the state to go fix something, which I'm
(14:41):
not very handy at all, so I wouldn't be fixing
it anyways. But it was just a limiting belief that
I had that I just needed to buy in this box.
Now fast forward to twenty twenty five, I do. I
do have a few that are outside that box, if
that makes sense. But at the time I was nervous.
I was I didn't have a lot of savings, you know,
(15:01):
as far as you know, to handle something if something
crazy were to happen. I was just taking money from
real estate and buying properties with it.
Speaker 1 (15:12):
And then as the cash flow started coming in, did
you reinvest that or what were you using that for
other things? Well?
Speaker 2 (15:22):
You know, at the same time, my real estate brokers
was growing faster than I've ever seen or faster I
could even imagine. And I was purchasing commercial buildings in
every single town that were fixer uppers to house real
estate agents. We grew from three agents to six hundred
and fifty agents. It felt like in a in a
(15:44):
blink of an eye. So if we had agents that
lived in a town next to me, I went and
bought a commercial building, I rehabbed it, I made it nice,
and recruited agents to work into that building. So at
the time I was reinvesting, but I was purchasing commercial
along with single family.
Speaker 1 (15:59):
Okay, and with the properties you're buying, like say, for
the single families, were they all fixer uppers too?
Speaker 2 (16:08):
For the most part, I mean I just most I
had a lot of relationships with investors as an agent.
They all trusted me to list their stuff after they
fixed it, so it being in that network, they would
just say, hey, look, you know I got something that
I As you know, investors either have a lot of
(16:29):
money or no money depending on the month, right and
depending on closings go. So these guys always have extra
stuff and I would just gobble it up. So you
know my second rental, that's that two and three I
had on rental two I found I was getting ready
to purchase, and I actually went to Hooters for lunch
with some investors that I worked for as an agent,
(16:50):
and they said, you couldn't believe this, Like this guy
turned down this home in Villa Shores for twenty nine thousand,
and we purchased it for sixteen. But he was mad
because we purchased it for sixteen and one and twenty nine.
And my ears perked up. I said, look, I can't
find anything on the MLS for twenty nine. I'll take it.
Speaker 1 (17:06):
I don't even have to see it.
Speaker 2 (17:07):
So I actually purchased my third rental at lunch without
seeing Wow.
Speaker 1 (17:12):
Wow. Okay, well, let's take a look at your numbers here.
I'm really curious to see how the numbers work on
your portfolio. So on an average month where maybe you
know you have a vacancy or two, how much rent
do you bring in every month?
Speaker 2 (17:28):
Ned is about fifty Gross is about thirty five. You
do have, you know, insurance here for a single family
is about two thousand a year. Taxes are two percent
of assessed value. You know, that's that's considerable. Then I
have property management, which is ten percent of gross rents,
So if you take out fifteen of that, I'm about
(17:51):
thirty five.
Speaker 1 (17:53):
And that does that include repairs that come up to.
Speaker 2 (17:56):
Repairs we were talking earlier range. You know, I went say,
on average, if you take the whole and split it up,
I would say fifteen hundred a month. Okay, there are
months where trees fall that gets expensive. There the first
cold month you're out for air conditioning calls, the first
I'm sorry for furncet calls, and then your first hot
(18:18):
month you're going out there for air conditioning calls. So
I would say on average it's about fifteen hundred month pres.
Speaker 1 (18:24):
So all in so you're bringing about fifty thousand a
month in you have about fifteen thousand a month of
expenses on average, including everything, So your your profit is
about thirty five thousand a month. Yes, you know. And
what I think is incredible too, is so you've got
great cash flow. But the last twelve years, we've had
(18:47):
a lot of appreciation. You have your properties appreciated a ton. Yeah.
Speaker 2 (18:53):
So I mean these homes that were like the one
we just talked about that I purchased for twenty nine
thousand at lunch. That's probably two hundred thousand dollars home
on the MLS right now. The thirty eight thousand dollars
home was in the same subdivision, but it's got a
bonus room in a garage that's probably two fifty so quickly.
A lot of that stuff has really appreciated right.
Speaker 1 (19:15):
Now, so you know, obviously years so I mean, obviously
you're doing great. And you know, I can't give you
advice on how to do things better because I mean
what you did obviously worked. But with the appreciation that
we've had, if you had used loans, like like say,
(19:38):
if you put down twenty percent on each property, I
mean you would have made five times as much. Like
do you ever think about that? Oh?
Speaker 2 (19:45):
I think about it, trust me. I just stumbled upon DSCR.
I just did my first DSCR home about two months ago,
and I wish I would have knew about DSCR when
it was three percent interest now it's seven. But yeah,
I thought about that. The problem is you just you
don't know what you don't know. I mean I could
also go back and say, oh man, I wish I
(20:05):
would have purchased every home that was thirty thousand because
I would have. But at the time I didn't have
the money, and I didn't have the knowledge that I
just for me, I had a I have a I
can say that I have a great mentor and a
great mentor, but he taught me to buy a cash
so that's all I really need. I didn't really, I've
(20:26):
heard people talking about the Burn method, and I've I've
really I'm really, I'm really I guess well versed on
the Burn method now, you know, probably in the past
five years.
Speaker 1 (20:37):
I just I guess.
Speaker 2 (20:39):
I I also put a I put a value on
the time that I have to put into it and
the stress. You know this, I'm not paying mortgage payments.
I'm not worried about any of that stuff. I just
I just opened the mailbox, right, So I would have
loved to get five times more. And there are people
that work way harder than me and put way more
(21:01):
time into it and thought and processes. But for me,
I'm just a lot more simple. I'm not the most
exciting investor that you're going to find.
Speaker 1 (21:10):
Yeah, I mean it's it's exciting, though, I mean, I
think you're making thirty five thousand. I mean, everything you've
done to me is very exciting just seeing that that
this is possible. Now, what what made you want to do?
Do a D S c R loan? And you know, actually,
before you answer that, why don't we explain what a
D S c R loan is? So I.
Speaker 2 (21:34):
So this sounds crazy, but I really like TikTok. I
actually found it on TikTok. I saw TikTok and I'm like,
that can't be real. And then I called my logo.
He's like, it's absolutely real. People have been doing it
for a long time. I'm like, I had no idea.
So it's ds CR stands for uh, let's see.
Speaker 1 (21:52):
Here, Debt service covered ratio.
Speaker 2 (21:54):
There you go, that's what it stands for. It's basically
alone based on market rent. If the market rent exceeds
your mortgage, your taxes, and in your insurance, that's part
of the qualification. So there's three basic qualifications for me,
at least in this area. You need twenty percent down,
(22:16):
you need a credit score above six hundred, and it
needs to have a higher market rent than those three
expenses combined. If those three things happen, you're approved it
can close in about ten days. There's no underwriting, there's
no tax returns, there's no this or that. There's not
(22:37):
a lot of hoops to jump through. It was really easy,
and I was very skeptical every single time a step
would come to do I'd be like, any minute, this
is going to prove to me why I've never done this.
But it was great and I can't wait to do another.
I actually just called some investors this morning and said, hey,
I'll be ready for my next DSCR number two in
about a week because the first one was almost finished.
Speaker 1 (22:59):
It's really interesting that you're saying this because like this
really kind of contradicts everything you just told us in
the last few minutes. Right.
Speaker 2 (23:08):
Yeah, So for me, I would say that, you know,
this portfolio with appreciation has really gotten to about nine
point three million and paid for property. The DSCR thing
for me is a little easier at the moment because
I just built a new home and new construction has
(23:30):
gotten insane, so every single month I was paying the
builder a draw, you know, one hundred hundred and fifty thousand.
So for me at this time, cash flow is a
little bit lower. Not cash flow, but reserves I guess,
and I paid cash for my new home. DSCR makes
sense for me, and it also makes sense for me
(23:53):
because I pass up a lot of deals. I really
do if I if I don't have it in a
safe place to buy and the next rental. I basically
pass on great deals to friends, which is fine, it
helps them out, but I pass on probably thirty deals
a year just because of my first way of thinking of, hey,
(24:15):
buy it when I have the money, right, this can
help me scale a little bit. My thought is having
a cash portfolio and keeping it that way and not
refinancing or anything, and then I'll just do another DSR
portfolio where I can grow a little bit quicker, but
keep that as a separate portfolio. Yeah, so that's the
thought so far.
Speaker 1 (24:36):
And I think you're very safe too. I mean, it's
like you have so much cash flow that if a
property isn't making money, it's not going to take you down.
I mean, you've got such a buffer there.
Speaker 2 (24:49):
Well, I think there's a lot of people like this
that grew up just dirt poor with no money, and
you don't ever want to go back to that. So
I think I'm extremely gun shy. I'm extreme passive. I'm
not what you would call an aggressive investor. That that's
for sure.
Speaker 1 (25:06):
Yeah. All right. So to summarize what you did, you
got really good at something. In this case, it was
real estate sales. You became really good at it, and
you had two jobs. You saved all the real estate
money and then use that to buy rental properties, and
the rental properties and generated even more money, and everything
(25:27):
just kind of snowballed from there. Today, Kevin owns a
real estate brokerage in Northwest Indiana called Listing Leaders. If
you're looking to invest in that area and you want
to connect with Kevin's company, I've got a link to
his website on my website. You can find it at
Rental Income podcast dot com. Slash episode five twenty four.
(25:50):
I'd like to thank chay Lee Ridge from Ridge Lending
Group for sponsoring today's episode. Kevin mentioned that he's using
DSCR loans to fund his rental properties today. If you
want to learn more about DSCR loans, definitely reach out
to Chailey. She does them all day, every day, and
you can track her down at Ridgelendinggroup dot com. NMLS
(26:13):
four two zero five six. Thank you so much for
checking out the podcast today. Make sure you hit that
follow button. I put out a new episode every single Tuesday,
and if you're following the show, you'll get notified when
the next episode comes out. My name is Dan Lane
and this has been the Rental Income podcast
The inspiring interviews with today is Top Landlords, This is
the Rental Income Podcast and now damnly, Kevin, tell me
what you're thinking was when you first started buying rental properties.
Speaker 2 (00:15):
So initially the goal was to take real estate commission
that I that I earned from being an agent, and
using my commission of selling real estate to actually purchase
real estate. When I got enough money to saved up
commission wise, I'd go and buy, you know, a single
(00:35):
family home. And it kind of spiraled over the past.
Let's say, let's see twelve years and you fast forward,
it's grown into something a little bit more considerable. So
that's initially what the plan was is just you know,
sell homes, collect commission, save and try to purchase rental
(00:58):
properties and build some type of portfolio.
Speaker 1 (01:00):
Kevin's really got an incredible story. He got really good
at his job and he took his active income and
turned it into rental income. And what's really remarkable is
that he never had to borrow any money. He was
able to buy rental properties with cash. And on the
show today, we're going to figure out how we did it.
Joining us on the show from Hobart, Indiana is Kevin
(01:23):
Huttneck will take a quick break to anchor sponsors. We'll
come right back and we'll talk to Kevin. I've had
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at Midsouth home buyers dot com. Kevin, walk me through
your thinking. You would sell a house, a couple of houses, whatever,
get some commission checks, you would save them and then
use use that to buy a rental property with cash.
What was your thinking in using cash, Like would it
have been easier to just save a down payment?
Speaker 2 (04:21):
Sure? I think I'm a little bit more of a warrior.
I worry about risk and overhead and things like that.
And I was working for a company owner or a
managing broker that had showed me the way to just
pay cash, and he taught me that cash is king,
(04:43):
you know, just a slow grow, don't involve the banks.
He would always say, cash is king financing his queen,
and debt is the joker. So I just always kind
of stuck by that and just did a did a
slow purchase when I could, and that was it, really.
Speaker 1 (05:04):
And then did you have just a feeling of security,
knowing that no matter what happens, you can keep things going. Yeah.
Speaker 2 (05:14):
Absolutely. I mean I was flipping homes before that. So
my first rental was purchased on a home path Fanny
May site for thirty eight thousand, and it needed a roof,
so I sent the roof guys over cheap roof and
the roofer said, hey, I'll give you sixty thousand for
this right now. And I said, you know, me, being
(05:35):
a flipper, I'm like, oh my gosh, that's a quick,
quick bang. But I'm like, you know what, I'm dedicated
to this. I want to try it. I want to
get my first one under my belt. So I said no.
It hurt to say no, but that was kind of
how it started rolling. Was, you know, it gets something
under my belt, and try to keep the risk low,
try to keep overhead low. And you know, you always
(05:58):
hear people say, you know, the bubble was going to
burst some time, and I've been hearing that for gosh
twelve years now. But you know, I just was so
worried that it. You know, I wasn't gonna have income
or no commission or anything like that. So I just
told myself. Hey, I'll pay cash. I won't have to
worry about it. I don't have to involve the banks
or underwriting or any of that stuff. And when I
(06:18):
get enough money, I'll go buy a second one.
Speaker 1 (06:20):
And so you mentioned about that property that was thirty
eight thousand hour most of your properties, like, did you
get them like in that price range? No?
Speaker 2 (06:30):
I mean that lasted for a little bit.
Speaker 1 (06:32):
You know.
Speaker 2 (06:32):
I got my real estate license in twenty twelve, so
it wasn't the crash, but we were slowly kind of
creeping up. And I look back at that, and I
mean that home I still own it. I still have
the same tenants in it. But that home now, even
like a foreclosed version of or a hut or a
home path is probably one fifty to buy and probably
(06:57):
two fifty retail. So those thirty eight dollar houses aren't
around anymore. And I do have five that I had
purchased in that subdivision, ranging from twenty nine at the lowest,
and I believe, let's let's see here, I think seventy
five at the highest, and that doesn't even exist anymore.
(07:18):
I mean it's hard to find that. So now I'm
purchasing rentals. My most recent rental was a great deal,
and it was one forty five in my hometown here,
So the mindset has definitely changed. It's crazy that one
forty five is a good deal now when just twelve
years ago, thirty eight was a good.
Speaker 1 (07:38):
Deal, right, right, So basically, you got really good at something.
In this case, it was selling real estate. You became
a really good agent, started making money, and then you
were living below your means to save that money to
buy more properties. Correct.
Speaker 2 (07:54):
Correct, Me and my brother and my mom have a
children's clothing store that we bought into in two thousand
and eight, and I was working there probably sixty hours
a week to just kind of keep that thing running.
So I told myself, Hey, any commission I get is
just icing on the cake. I can live off of
selling baby clothes, and you know, we'll see where this
(08:17):
real estate stuff turns into. And you know, it grew,
It grew quickly, and it grew fast. But the goal
was to save every penny I had from selling real
estate to purchase really lif Wow.
Speaker 1 (08:31):
Okay, so you weren't spending any of those commission checks
like that was all going towards buying rentals.
Speaker 2 (08:37):
You know, I rewind to one of my final years
at that brokerage. It was year five on that brokerage
and two conversations. The first conversation was my managing broker
and they used to have these little cubby holes that
they put your checks in. He's like, Hey, are you
going to come and pick up these checks. I'm like, yeah, yeah,
I've just been really busy. He's like, you have sixty
thousand dollars in here, and I'm like, oh, I'm coming,
(09:00):
you know, I'm coming to get it.
Speaker 1 (09:01):
Yeah.
Speaker 2 (09:01):
And the second conversation that same year was his wife,
and I'm really close friends with them still to this day.
She said, do you have any idea what you made
in real estate this year? And I said, I have
no idea. I've just been running my tail off right
just to sell houses. She's like, you made seven hundred
and fifty one thousand this year.
Speaker 1 (09:20):
Wow? What Like I'm doing this crazy wow as.
Speaker 2 (09:24):
A side hustle. So that those are two conversations that
I'll never forget.
Speaker 1 (09:29):
Yeah, so how many properties was that? Like the year
you made seven fifty how many houses did you?
Speaker 2 (09:35):
I was there, I'm selling everything anything I could. I mean,
people in my area They're like, it's northwest Indiana. They're like, oh,
I don't mess with Gary, or I don't mess with
Lake Station or East Chicago, which are typically you know,
a lower, lower price point. I said, I told all
my competitors, Hey, I'll take any of it. I'll if
I can make a commission, I will sell it. So
that year, my final year at the brokerage, we sold
(09:58):
two hundred and forty two homes.
Speaker 1 (10:00):
Wow, two hundred and forty two homes and you're working
full time at the at the clothing shop, Like, how
did you have time to do that? Like that just
seems like a ridiculous amount of work.
Speaker 2 (10:14):
Me and Holly looked at each other. Actually, the year
before I had sold one hundred and nineteen homes, and
I basically told Bart I said, I don't think I
can do that anymore, Like I need some type of
system because one hundred and nineteen was brutal. I don't
remember anything. It was like every day I looked up
(10:36):
it was Friday.
Speaker 1 (10:37):
Yeah.
Speaker 2 (10:38):
So Holly's like, look you, I think you aged like
ten years this year. And it was true, Like my
mind was so at capacity and it's hard to explain,
but like things that you remember as a kid that
you would never forget. I was forgetting things, Like when
I was in third grade, Kirk Gibson hit that walk
off home run in the World Series. I couldn't remember
(11:01):
the team or the name. Like I was just so
honed in down work that I just had no more
room for anything. Another story from that exact same year,
I was in a cruise to Alaska with my wife.
I had forty two pending deals at the time, and
we lost Wi Fi on the boat and I had
to go seven days without WiFi with reactions and it
(11:24):
was just my phone lit up like a cherry where
we got off the got off the ship. But it
was a crazy year and I look back and I'm like, man,
that was a that was a crazy, crazy time.
Speaker 1 (11:36):
You know. I got to hand it to you that
you're you're selling all those houses, you're working at the
clothing shop, and you're you're living way below your means.
I mean, if you're making seven hundred thousand dollars selling properties,
like you could have just been living like a king.
Like it's like, but it sounds like you were really
(11:57):
focused that that you really wanted to build this for.
Speaker 2 (12:00):
I mean, I bought a car that year. My tax
said he's like, look, you know, go and buy some
you need some business expenses here. And I was driving
around a Honda Ridgeline with over three hundred thousand miles
on it. And but you have to think I had
no admin or no process or I was entering listings
at night. I was doing price adjustments and century lack
(12:21):
of stuff. And you don't have time to shop for
a car. You don't have time to look at a car, right,
I mean it was It was so crazy at that time,
and the market only got crazier. I got out of
that because I, you know, started my own company. But
transaction wise, I mean, I couldn't even imagine how it
would have been during COVID Because COVID, I don't know
(12:44):
about the rest of the country, but here it was nuts.
We were selling houses forty fifty sixty thousand dollars overlist,
you know, no inspection, with an appraisal gap that if
it didn't appraise then people would still buy it. So
you know, twenty twenty was an amazing time for real estate.
But unfortunately I wasn't in transactions anymore.
Speaker 1 (13:02):
Let's talk about what you've done so how many properties
do you have, Like, what does your portfolio look like?
Speaker 2 (13:10):
So it's forty eight income producing doors. So there are
a couple of multi units sprinkled in there. There's some
commercials sprinkled in there. But for the most part, my
bread and butter is single family. I really enjoy single family.
Speaker 1 (13:21):
And how many years did that take you?
Speaker 2 (13:25):
The first one was purchased in twenty fourteen, so I
stopped flipping homes in twenty fourteen. Purchased that first one
for thirty eight thousand, and I created like a buybox
where I wasn't going to purchase in certain towns. I
wanted to stay within a couple boundaries. I wanted to
purchase homes only on a slab. I wanted no basements.
I wanted, you know, three bedroom or higher. So I
(13:48):
was really picky. Unfortunately, being that picky, my second and
third rental didn't fall into my lap until about a
year and a half later. But they fell into my
lap on the same week, So I actually purchased rental
two and three on the same week.
Speaker 1 (14:05):
So it's basically been since twenty fourteen. You've been consistently
buying here.
Speaker 2 (14:10):
Yeah, at twelve years eleven, eleven years, eleven years.
Speaker 1 (14:13):
And what made you want to stick with that with
that buybox? What were those neighborhoods just good neighborhoods.
Speaker 2 (14:19):
And it didn't make much sense now that I look
back at it. I could have bought anywhere because the
entire area that we're in, every rental is great. I
just in my mind, I just thought, hey, I need
to if I need to get to somewhere, I don't
want to have to be going all the way across
you know, the state to go fix something, which I'm
(14:41):
not very handy at all, so I wouldn't be fixing
it anyways. But it was just a limiting belief that
I had that I just needed to buy in this box.
Now fast forward to twenty twenty five, I do. I
do have a few that are outside that box, if
that makes sense. But at the time I was nervous.
I was I didn't have a lot of savings, you know,
(15:01):
as far as you know, to handle something if something
crazy were to happen. I was just taking money from
real estate and buying properties with it.
Speaker 1 (15:12):
And then as the cash flow started coming in, did
you reinvest that or what were you using that for
other things? Well?
Speaker 2 (15:22):
You know, at the same time, my real estate brokers
was growing faster than I've ever seen or faster I
could even imagine. And I was purchasing commercial buildings in
every single town that were fixer uppers to house real
estate agents. We grew from three agents to six hundred
and fifty agents. It felt like in a in a
(15:44):
blink of an eye. So if we had agents that
lived in a town next to me, I went and
bought a commercial building, I rehabbed it, I made it nice,
and recruited agents to work into that building. So at
the time I was reinvesting, but I was purchasing commercial
along with single family.
Speaker 1 (15:59):
Okay, and with the properties you're buying, like say, for
the single families, were they all fixer uppers too?
Speaker 2 (16:08):
For the most part, I mean I just most I
had a lot of relationships with investors as an agent.
They all trusted me to list their stuff after they
fixed it, so it being in that network, they would
just say, hey, look, you know I got something that
I As you know, investors either have a lot of
(16:29):
money or no money depending on the month, right and
depending on closings go. So these guys always have extra
stuff and I would just gobble it up. So you
know my second rental, that's that two and three I
had on rental two I found I was getting ready
to purchase, and I actually went to Hooters for lunch
with some investors that I worked for as an agent,
(16:50):
and they said, you couldn't believe this, Like this guy
turned down this home in Villa Shores for twenty nine thousand,
and we purchased it for sixteen. But he was mad
because we purchased it for sixteen and one and twenty nine.
And my ears perked up. I said, look, I can't
find anything on the MLS for twenty nine. I'll take it.
Speaker 1 (17:06):
I don't even have to see it.
Speaker 2 (17:07):
So I actually purchased my third rental at lunch without
seeing Wow.
Speaker 1 (17:12):
Wow. Okay, well, let's take a look at your numbers here.
I'm really curious to see how the numbers work on
your portfolio. So on an average month where maybe you
know you have a vacancy or two, how much rent
do you bring in every month?
Speaker 2 (17:28):
Ned is about fifty Gross is about thirty five. You
do have, you know, insurance here for a single family
is about two thousand a year. Taxes are two percent
of assessed value. You know, that's that's considerable. Then I
have property management, which is ten percent of gross rents,
So if you take out fifteen of that, I'm about
(17:51):
thirty five.
Speaker 1 (17:53):
And that does that include repairs that come up to.
Speaker 2 (17:56):
Repairs we were talking earlier range. You know, I went say,
on average, if you take the whole and split it up,
I would say fifteen hundred a month. Okay, there are
months where trees fall that gets expensive. There the first
cold month you're out for air conditioning calls, the first
I'm sorry for furncet calls, and then your first hot
(18:18):
month you're going out there for air conditioning calls. So
I would say on average it's about fifteen hundred month pres.
Speaker 1 (18:24):
So all in so you're bringing about fifty thousand a
month in you have about fifteen thousand a month of
expenses on average, including everything, So your your profit is
about thirty five thousand a month. Yes, you know. And
what I think is incredible too, is so you've got
great cash flow. But the last twelve years, we've had
(18:47):
a lot of appreciation. You have your properties appreciated a ton. Yeah.
Speaker 2 (18:53):
So I mean these homes that were like the one
we just talked about that I purchased for twenty nine
thousand at lunch. That's probably two hundred thousand dollars home
on the MLS right now. The thirty eight thousand dollars
home was in the same subdivision, but it's got a
bonus room in a garage that's probably two fifty so quickly.
A lot of that stuff has really appreciated right.
Speaker 1 (19:15):
Now, so you know, obviously years so I mean, obviously
you're doing great. And you know, I can't give you
advice on how to do things better because I mean
what you did obviously worked. But with the appreciation that
we've had, if you had used loans, like like say,
(19:38):
if you put down twenty percent on each property, I
mean you would have made five times as much. Like
do you ever think about that? Oh?
Speaker 2 (19:45):
I think about it, trust me. I just stumbled upon DSCR.
I just did my first DSCR home about two months ago,
and I wish I would have knew about DSCR when
it was three percent interest now it's seven. But yeah,
I thought about that. The problem is you just you
don't know what you don't know. I mean I could
also go back and say, oh man, I wish I
(20:05):
would have purchased every home that was thirty thousand because
I would have. But at the time I didn't have
the money, and I didn't have the knowledge that I
just for me, I had a I have a I
can say that I have a great mentor and a
great mentor, but he taught me to buy a cash
so that's all I really need. I didn't really, I've
(20:26):
heard people talking about the Burn method, and I've I've
really I'm really, I'm really I guess well versed on
the Burn method now, you know, probably in the past
five years.
Speaker 1 (20:37):
I just I guess.
Speaker 2 (20:39):
I I also put a I put a value on
the time that I have to put into it and
the stress. You know this, I'm not paying mortgage payments.
I'm not worried about any of that stuff. I just
I just opened the mailbox, right, So I would have
loved to get five times more. And there are people
that work way harder than me and put way more
(21:01):
time into it and thought and processes. But for me,
I'm just a lot more simple. I'm not the most
exciting investor that you're going to find.
Speaker 1 (21:10):
Yeah, I mean it's it's exciting, though, I mean, I
think you're making thirty five thousand. I mean, everything you've
done to me is very exciting just seeing that that
this is possible. Now, what what made you want to do?
Do a D S c R loan? And you know, actually,
before you answer that, why don't we explain what a
D S c R loan is? So I.
Speaker 2 (21:34):
So this sounds crazy, but I really like TikTok. I
actually found it on TikTok. I saw TikTok and I'm like,
that can't be real. And then I called my logo.
He's like, it's absolutely real. People have been doing it
for a long time. I'm like, I had no idea.
So it's ds CR stands for uh, let's see.
Speaker 1 (21:52):
Here, Debt service covered ratio.
Speaker 2 (21:54):
There you go, that's what it stands for. It's basically
alone based on market rent. If the market rent exceeds
your mortgage, your taxes, and in your insurance, that's part
of the qualification. So there's three basic qualifications for me,
at least in this area. You need twenty percent down,
(22:16):
you need a credit score above six hundred, and it
needs to have a higher market rent than those three
expenses combined. If those three things happen, you're approved it
can close in about ten days. There's no underwriting, there's
no tax returns, there's no this or that. There's not
(22:37):
a lot of hoops to jump through. It was really easy,
and I was very skeptical every single time a step
would come to do I'd be like, any minute, this
is going to prove to me why I've never done this.
But it was great and I can't wait to do another.
I actually just called some investors this morning and said, hey,
I'll be ready for my next DSCR number two in
about a week because the first one was almost finished.
Speaker 1 (22:59):
It's really interesting that you're saying this because like this
really kind of contradicts everything you just told us in
the last few minutes. Right.
Speaker 2 (23:08):
Yeah, So for me, I would say that, you know,
this portfolio with appreciation has really gotten to about nine
point three million and paid for property. The DSCR thing
for me is a little easier at the moment because
I just built a new home and new construction has
(23:30):
gotten insane, so every single month I was paying the
builder a draw, you know, one hundred hundred and fifty thousand.
So for me at this time, cash flow is a
little bit lower. Not cash flow, but reserves I guess,
and I paid cash for my new home. DSCR makes
sense for me, and it also makes sense for me
(23:53):
because I pass up a lot of deals. I really
do if I if I don't have it in a
safe place to buy and the next rental. I basically
pass on great deals to friends, which is fine, it
helps them out, but I pass on probably thirty deals
a year just because of my first way of thinking of, hey,
(24:15):
buy it when I have the money, right, this can
help me scale a little bit. My thought is having
a cash portfolio and keeping it that way and not
refinancing or anything, and then I'll just do another DSR
portfolio where I can grow a little bit quicker, but
keep that as a separate portfolio. Yeah, so that's the
thought so far.
Speaker 1 (24:36):
And I think you're very safe too. I mean, it's
like you have so much cash flow that if a
property isn't making money, it's not going to take you down.
I mean, you've got such a buffer there.
Speaker 2 (24:49):
Well, I think there's a lot of people like this
that grew up just dirt poor with no money, and
you don't ever want to go back to that. So
I think I'm extremely gun shy. I'm extreme passive. I'm
not what you would call an aggressive investor. That that's
for sure.
Speaker 1 (25:06):
Yeah. All right. So to summarize what you did, you
got really good at something. In this case, it was
real estate sales. You became really good at it, and
you had two jobs. You saved all the real estate
money and then use that to buy rental properties, and
the rental properties and generated even more money, and everything
(25:27):
just kind of snowballed from there. Today, Kevin owns a
real estate brokerage in Northwest Indiana called Listing Leaders. If
you're looking to invest in that area and you want
to connect with Kevin's company, I've got a link to
his website on my website. You can find it at
Rental Income podcast dot com. Slash episode five twenty four.
(25:50):
I'd like to thank chay Lee Ridge from Ridge Lending
Group for sponsoring today's episode. Kevin mentioned that he's using
DSCR loans to fund his rental properties today. If you
want to learn more about DSCR loans, definitely reach out
to Chailey. She does them all day, every day, and
you can track her down at Ridgelendinggroup dot com. NMLS
(26:13):
four two zero five six. Thank you so much for
checking out the podcast today. Make sure you hit that
follow button. I put out a new episode every single Tuesday,
and if you're following the show, you'll get notified when
the next episode comes out. My name is Dan Lane
and this has been the Rental Income podcast
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