When Brady Hanna turned 30, he decided it was time to start building passive income.
That was six years ago. Today, he has 12 doors, which gross him around $7,700/month.
Granted, that’s not all profit. His net profit in a given year? Around $40,000.
That’s higher than the median personal income in the United States!
Here’s exactly what he’s done over the last few years, to build that portfolio.
In the Beginning
“I had stumbled across BiggerPockets and started absorbing as much information as possible. I asked questions on the forums and started listening to the podcasts every chance I could,” Brady explained to me.
How seriously did he take his real estate investing education?
“I installed a Bluetooth speaker in my shower and bathroom, so I could listen to the podcast when I was taking a shower and getting around in the morning. Over the years, I have listened to every podcast multiple times and get fired up every time I hear a new episode.”
“For my first property, I wanted to follow all of the things I had learned and was looking for properties that hit the 2% Rule.”
Brady located a move-in-ready duplex for sale in Grandview, MO (which is south of Kansas City). Estimating gross rents at $1,100/month, he paid $55,000 for it.
To finance it, Brady secured a loan from a local community bank, using money saved from his 9-5 job for the down payment. “I put down a 20% down payment and was off and running.”
Early Lessons in Property Management
“I thought I was smarter than the system and figured I would self-manage to save the property manager’s fees.”
Any time you catch a case of the smug and think you’re beating the system, that’s a good time to pause for some good ol’ fashioned self-reflection. Not that I would ever discourage anyone from managing their own rentals—if they’re prepared to put in the time and learn the skills necessary to do it.
Brady advertised the units for rent, then promptly left town for two days for a trade show through his day job. Over those two busy workdays, he received no fewer than 60 phone calls from prospective renters.
“After the first week of driving out to the property multiple times for showings, I saw a property management company off the side of the highway and quickly pulled over, walked in, and hired them on the spot.”
Does it strike you that he skipped an important step there? It should.
“I didn’t vet this property management company. I just assumed that since they were close to my rental property, they would do a good job.”
If you’ve ever wondered about the first sign that a property management company needs replacing, pay attention here.
“Communication was a struggle. It was like pulling teeth just getting information out of them and trying to stay in the loop about what was going on with the property.”
That’s the sound of foreshadowing, for all you non-English majors.
Related: Sorry, But Passive Income is a Myth for Most Investors. Here’s Why.
Property #2, Property #3
After a few months of collecting rents, Brady decided that being a landlord was everything he thought it would be.
“I took out a $50,000 home equity line of credit (HELOC) against my personal residence, using my local bank. I used $36,000 to buy a single-family property through a short sale in South Kansas City. The property needed $7,000 in repairs.”
If you’ve ever bought a property with cash, you know how much…