- Father-and-son partners Austin and Shannon Page have built a real-estate portfolio of 80+ units.
- They started in 2015 by fully renovating and flipping a distressed house.
- Austin laid out a step-by-step plan for investors looking to get started with limited capital.
From watching financial shows on TV and working with his hands at an early age, Austin Page has long known that he had an entrepreneurial spirit and an interest in money.
So while he was working toward his degree in finance at Austin Peay State University in Tennessee in 2015, Page decided that it was time to start building a business. With the goal of growing generational wealth, he decided that real estate would be his primary focus.
Page, now 26, found his first opportunity in an old, run-down house that needed major renovations. He purchased the house for $15,000 in a partnership with his father, Shannon, with the two taking out a personal loan for the payment from a local bank and putting the renovation costs, about $30,000, on credit cards.
“We don’t come from any type of wealth,” Page said. “My dad was working a full-time job, and I was a college student.”
Page said that he and his father did extensive renovations on the house and the project took them about two years. They were then able to sell the rehabbed home for over $164,000, according to the Hickman County Recorder of Deeds listing of the property.
After generating a ten-fold return on the initial investment within the short timeframe, Page saw an opportunity to build further wealth in flipping. He reinvested the proceeds from the first deal into other properties, and was able scale up quickly. These properties then allowed him buy even more units by tapping into the equity built over time to use as cash down on other buildings.
Page now has a portfolio of over 80 units, according to title documents show to Insider.
He said self-discipline has helped him to scale up, and stressed it for other investors looking to build their portfolios.
“You have to be willing to push forward and make this happen,” he said. “I could have bought a $70,000 truck.”
A step-by-step guide for building a real-estate portfolio from scratch
Starting in a position with very little money on hand, Page shared with Insider his step-by-step advice — broken down below — for getting started in real-estate investing and building a portfolio with limited capital.
1. First, Page recommends keeping your focus on inexpensive properties in your area that you can renovate. Since this will be your first rental property, the low cost will lessen the financial risk you take on, and maximize return potential.
A great inexpensive option, Page said, is a mobile home. Page said you can find them for around $60,000, and the down payment for them will be a fraction of that. (Like any type of property, mobile homes also come with their own set of issues. It should also be noted that they typically don’t appreciate like other properties.)
2. To finance the purchase — if you don’t have cash on hand or a partner who does — Page recommended using a hard money lender for the down payment. A hard money loan allows you to access to capital more quickly and with looser requirements than is possible with a bank, but has significantly higher interest rates than a traditional bank loan. Hard money lenders are willing to take on this type of risk because they typically will have a stake in the property until the loan is paid off.
Page says that once a hard money loan is settled it’s time to refinance the property with a local bank for a lower interest rate. Depending on the situation, the a buyer could then seek a larger cash-out in the financing of the property to help cover costs of further repairs. He recommended doing this within six months to limit the interest paid to the hard money lender.
“They will run an appraisal for you in a minute. They’ll probably give you construction loan against it,” he said.
Page also stressed the risks of borrowing from a hard money lender and not refinancing, since their interest rates are so high.
“Hard money loans are a great tool, but time is a huge part of your equation as well,” Page says of this financing tool. “If you use hard money and you don’t know what you’re doing and you don’t have time, it will eat you alive.”
However, starting with a relatively inexpensive property keeps the potential risk at a minimum, he said. This is because there is more potential to build equity and if things do go sideways, you’re able to walkaway without losing too much.
3. Third, Page said to renovate the property as much as time and costs allow. This could cost upwards of $30,000, or more, which Page said could buy new vinyl siding, interior wall paint, windows, trim, an updated HVAC system, and a metal roof in his market. However mileage may vary in other markets where the strained supply chain and high demand have caused materials costs and labor to become much more expensive.
4. The fourth item, Page says, is to list, market and sell the property. After renovations, the improved property is worth much more than the price you would have originally paid for it. It’s important to explore and study comparable sales in the local market to get a better idea of what asking price to start at. And flippers who have their own brokers license stand to save even more money by avoiding costly commission fees.
5. With the cash from the property’s sale, Page said to do start looking for other properties to purchase. If you manage to turn the kind of profit the Page and his father did, he recommended sinking the money into down payments of three or four properties at once that you can then rent out. Finance the purchase of the homes under one mortgage in order to diversify your money and allow for the opportunity to build more equity, he said.
“Now you are a conventional buyer. You’ve got cash down into the properties from the flip that you didn’t have to begin with,” he said. “Now you’ve got net worth.”
Spreading money and equity across multiple properties reduces risk, Page said, because if one tenant stops paying or unit can’t be filled, payments from the others can likely cover most or all of its mortgage payment.
Doing this also allows you to reduce your taxable income via a 1031 exchange by rolling
into other investments, he said.