$12,000/Month Cash Flow by Cracking the Rental “Formula”

This investor is producing $12,000 per month inThis investor found a real estate formula that worked so well. He bought five nearly identical properties all on the same block. Now he’s cashflowing $12,000 per month and plans to retire before age 50. On today’s episode, he’ll explain exactly how he did it. Hey everyone. I’m Dave Meyer, head of real estate investing at BiggerPockets, where we teach you how to achieve financial freedom through rental properties. Today on the show, we’re bringing you the story of investor Andre Taylor. Andre made his first investment in St. Louis back in 2007, and then took nearly a full decade off from acquiring new properties because sometimes life just gets in the way. But eventually he got back in the game. He moved to Chicago where he developed a new investing formula that perfectly aligned with the goals he’d set. Many years earlier, Andre was so committed to this strategy that he now owns five very similar buildings all on the same block. And this is a really cool story because it’s a story of an investor who set a goal at the start of his career for exactly how many units he needed to achieve financial freedom. And he stayed determined to achieve that goal even as he worked a day job and saved his money one property at a time. Now he’s reached it and is financially set for life. We can all learn a lot from this super fun and valuable lesson from Andre. So let’s bring ’em on. Andre, welcome to the BiggerPockets podcast. Thanks for joining us.Oh, it’s a pleasure. So honor to be here with you, Dave, and the whole BP community.Yeah, this is going to be a fun episode for you. You have a really interesting story and I’m excited to get into it, but let’s just get the background. How did you first start investing in real estate?My mom actually put real estate in me at a young age, and so she always would tell me, buy real estate when you grow up, buy real estate. And fast forward, when I undergraduate in 2005, I was moving to St. Louis, so she was like, go to St. Louis, make your money, travel the world, buy real estate. I was a college student, so I had to pay off debt. So from 2005 to 2007, I was paying off my debt. Went to carpentry school as well too, and leading up to me purchasing my first property, which is a duplex in July of 2007.And were you working full time at this time or were you just doing real estate?So I had my degrees in electrical engineering. I got a job right out of school with an aerospace company in St. Louis. So I moved to St. Louis two weeks after I graduated in May, 2005, still with the company 20 years later.Oh, very cool. Nice. So tell me about your deal. You bought a duplex, how’d that go?It was actually in foreclosure. It was purchased a year prior for hundred 15,000. It was in foreclosure for $89,000. I used at that time, it was like a first time home buyer where 3% down. And so the day before we closed on it, my real estate agent called me up and said, Hey, wasn’t there water running when we did the inspection? I said, yeah. She said, I think the copper pipes are stolen. And so, oh no. Yeah, somebody came in, took the copper pipes. So I went back to the bank and we got the price down to 75,000. So I bought the duplex for pretty much $75,000. Different time. Yeah, very different time. Yes, it was. Yes, it was. I had to bring $2,800 to the closing table, and I only had 3000 in the bank. So yeah, it was crazy.So what do you have to do to this property? I mean, obviously reinstall some pipes, but how much other work was it?It was a lot of cosmetic. From July of 2007 until January 1st, 2008 when I got my first rent check, first tenant moving in, it was back and forth sweat equity that we were painting, installing a cabinets towel, those different things.And then was it just one deal that you bought in St. Louis?So I bought a second deal in December, 2008. I bought another duplex, maybe three blocks away from the first one, and I bought it for 80,000.And at that point, did you have a goal for real estate or was it just something you did on the side?So my real estate agent, her husband who actually owned property as such, and they said, Andre, you need to figure out your freedom number. And I said, freedom number. And they said, yes, you need to figure out your freedom number because then you can work your way back and understand how many doors you need to get to to that number. And I said, okay. And so at the time you read Rich Dad poured dad, and knowing that, and Robert Kiyosaki, him and his wife when they walked away was 10,000 a month residual income they had. So I said, 10,000 a month, I want 10,000 a month. Say, okay, we’ll figure it out. And so I think I was averaging about 300, 320 $5 cashflow from each one of my units of both my duplexes. And so I just took 10,000 divided by 3 25, and it was like, okay, you need about 32 doors to get to your freedom numbers. So the goal set forth was like 32 doors, got to get to 32 doors.That idea of coming up with a goal and working backwards to what you have to do is probably the single best thing any new investor can do, and so few people do it. I encourage everyone who is listening to that do exactly this, figure out what you actually need and work backwards. It will help every single decision that you make as a real estate investor going forward. It will get easier if you just go do this because you’ll be figure out what price point to buy out, what markets to use, what strategies to use, how much leverage to use. All those decisions will get easier if you could just figure it out. So what brought you back? You took what, an eight, 10 year break? What brought you back to the game?It was kind of like I had to recalibrate my mind and real estate came back around because I wasn’t finished with what I set out years ago to do, which was Andre, you want that financial and time freedom, 32 doors and such. So at that time in 2017, I was living in Vegas and my manager was saying, Hey, we want you to stay out here permanent versus move back to St. Louis. And if you do, there’s this per diem stipend that you’ll get extra $2,000 a month for gamblingTo take to the tables.Yeah, exactly. Exactly. And I was really considering it. I had coworkers saying, Hey, the 2000 I take that and pay my house and my car note and my salary. I do whatever. So I was close to selling my two duplexes and I was going to reinvest the money and go into purchasing a laundromat. And I sat at the pool, I remember I sat at the pool, I said, didn’t finish what you started, go back. And so I went in, I said, Hey, I’m going back to St. Louis. No. And then I had bought, actually came out the gate buying in 2018, a four unit and a duplex on the same day I closed on.Oh, nice. That’s awesome. Well, I want to hear about those deals, but I just want to mention that I think your story is very relatable. A lot of people who get into real estate I think are just entrepreneurial by nature and by spirit,And I have this myself. There’s so many shiny objects. You are talking about a laundromat or an app or all these things. If you have that entrepreneurial spirit, it can be very, very tempting to go out and try and do things. And sometimes you do have to go try out a bunch of things to see what you’re good at and see what you like. But I do agree over time, you do have to sort of come back to what you’re actually good at and settle down and not just be dabbling in all of these different things and just focus on one good thing. So I want to hear how you started pursuing this freedom number again, but we do have to take a quick break, so we’ll be right back. Welcome back to the BiggerPockets podcast. I’m here with investor Andre Taylor. We just heard about how he took nearly 10 years off of his investing career, but Andre, now I want to hear how you got started. You teased us a little bit. You had owned four units in St. Louis. You got back into the game, you closed on six units in one day. How’d that come about?So I got on Redfin and Realtor because still during that time you could find deals on Redfin and realtor and I found a four unit building. It was selling for 85,000. It was in really bad shape, bad tenants or whatever. I did go and look at it. And then also I saw a duplex, and mind you, this four unit and this other duplex that I saw was a half a block walking distance from my first duplex. I love that. So I was trying to buy closest. And so what I did with the four unit, I said I put down a contract to get conventional financing for that 20%. And then with the duplex, I did FHA, and so that’s how I closed. So the four unit, it was pretty interesting because the day of the closing we’re sitting at the closing table, and then they said, we can’t fund this deal because the seller is on the terrorist watch list.What?Yeah, yeah, yeah. Oh, thatDoesn’t do one on me.Okay. So I was sitting there at the closet table saying what? Or, okay, what do we do? And I’m not going to lie, I got, I said, so if they’re on the Terra’s watch list, can I get the property for free? They’re going to get arrested or something like that. And it was like, so I don’t know what happened in the background, but the next day I got keys and the deal closed. ButYou paid forIt? Yes, I paid for it.Paid for it. Okay. And so now you’re up to, I’m trying to keep track. You’re at 10 now, right on your way to 32.AndOnce you did those six, how aggressively did you try and build from there?Oh, it was very aggressive. After I did the four unit and I had to put the a hundred thousand into getting that up to park. Now we’re into the summer of 2019. I moved back and it was like this duplex building across the alley was boarded up, and I always would see it. So my neighbor, he was like, Hey, Andre, you might as well buy this one across the alley. And I was like, we’ll see. And I kid you not. Two days later I’m at work and I get the pings from Zillow, Redfin and different things. That property popped up on my phone for $60,000 foreclosure as such. And I called my agent, I said, Hey, can you meet there? Later on when I get off round two? She said, yeah, we walked into the building. We both was like, okay, you just need to paint, change some fixtures. I was thinking it was condemned inside. It was boarded up and such. Not knowing until two weeks after I closed that the building had black mold in it. That’s why.Okay, so how’dYou deal with the black mold? So I said, I’m going to have to rehab this myself, and this was going to be my first fully rehab project. I’ve updated rental properties that I’ve owned, but this is going to be the first rehabAnd how’d it go?So I did get a more remediation company in there. I mean, when I say we gutted it out, gutted it toWhere you have to,You got to gutted it to where just the floor joists was only in there. Literally, you could open the door and look to the basement and look all the way up to the ceiling. That’s how it was just all the thing wood in there was the floor jo. So from December of 2020 into July of 2021, I constructed it and redid that building, made it into a single family. At that time, I had got my real estate license, I I was going to sell it. That was going to be my first flip sale project.Okay. Well good for you. I mean, it sounds like a huge project, but it sounds like again, it worked out well. The timing probably worked out well because property values just started going crazy during that time.So when I had it ready in July to sell, now, this property I had was in a C-Class area such, and so I had interesting people, but they were like, again, people are buying crazy around that time. And I’m like, I can’t get this sold. It was keeping me up at night because it was like I got a lot of debt on this, and at this point I knew I was going to pretty much break even until I got the idea to furnish it and make it an Airbnb.Oh, okay. That work out.That went really good. I turned that into a Airbnb in September. September, October. I made about $11,000 with that property. And when I sold the property on Halloween of 2021, the buyer was inheriting $8,000 in future bookings from me when I sold it as an Airbnb.Oh, wow. Okay. That’s a pretty good way to sell it. I’m sure thatHelps aBit. Yep. So take me through this. We’re now in 2021 after this sale. Where are you on your path to this freedom number?We were at 13 because I did buy a building, another duplex building in January of 2021. It was from a wholesaler off of Facebook marketplace. I got ’em down from 80,000 to 35,000. It was going to be another gut rehab project. So I had another duplex that was just sitting waiting for me to get done. So you can kind of say I had 13 units, but two were not active. Okay. Just yet.All right. Well, I want to hear about the last couple years. It sounds like you’ve made some really cool progress towards your journey. We do have to take one more quick break. We’ll be right back. Welcome back to the BiggerPockets podcast. I’m here with investor Andre Taylor, where we left off, you had 13 deals. Tell us where you are today. That was still 2021 ish. So have you been up to the last couple of years?So from 2022 up to this point, it’s been crazy because now we are officially pretty much at the 32 door mark.Wait, you just as of when? Most recently. ThisLast deal. Last month. LastMonth. Oh my God, man, congratulations. That’s so cool. And wait, so I want to ask how you got there, but did 32, is the cashflow actually what you wanted it toBe? Now we’re talking cashflow wise of 12 to 14,000 a month.You did it. Congratulations. That’s so cool. I love that we talked to so many people on the show are growing and have these numbers, and usually people are on their way, but we very, very rarely get people who have actually hit their number. So congratulations. That’s super cool. So tell us what happened. You went from 13 to 32Fast. So what happened was I was just bit by the commercial bug. I literally came home and I put everything up for sale. That was the mold house went up for sale, the four unit, the duplexes, I put all those up for sale. At that time I had seven properties, and so I put six of ’em up for sale because the property I bought off of Facebook marketplace, it was gutted out. So I didn’t sell that one, and I put those six up for sale, which I got sold by November of 2021. So I had about, after paying off a lot of expenses and stuff like that, I had about a quarter million dollars in profit.Wow.Wow.Congratulations. That’s awesome. But you’re going in the wrong direction, man. I thought you were going to say you started adding to your portfolio, but okay, so you started selling. Did you know what you were going to buy or were you just kind of like, I got to liquidate, I need this capital so that I can go buy something bigger?Yeah, so what happened was when I was getting ready to liquidate my real estate agent, her husband at the time, who was my mentors, and they owned about close to a hundred doors in St. Louis. So they had a 32 unit apartment complex that they were selling. They said, Hey, why don’t you buy this from us? My finance guy, Jerome said, Hey, don’t you stay here in the St. Louis market. He got me in contact with US Bank and US Bank was like, since you’re a local investor, we’ll only want you to put down 15% to buy this 32 unit. So at this point it’s like stay in St. Louis, but then Chicago, the numbers work better with Chicago, and this is my opportunity. I did wanted to own back in my city. And so there was a lot of properties there for sale. So in Chicago you have a lot of six unit buildings, and so I look at those as the red hotels for Monopoly.So I was like, I’m going to own some six unit buildings. So I was under the gun. I was 10 31 a quarter million dollars. I had 45 days to find, and I did find two six unit buildings that were going to purchase, but they fell out of contract within two weeks as such, whatever. So it was like, yo, you got to hurry up. Yeah, that’s scary. Yeah, it was very scary. I do not want to give the government about $50,000 taxes. So I just went back to when I was studying for my real estate license in Missouri, and I remember reading something they said, realtor.com has the most listenings or whatever. So literally I went to realtor.com, I found two six unit buildings selling. One was for 450,000, one was for 425,000. And again, underwriting commercial debt that I learned going to the summit with Grant Cardone, I was like, yo, these buildings are way under value. I come in and bring the rents to market value. I called my age. I said, put four price offers in, let’s get it done and such or whatever. And that’s how. And so I had to put down 25%.That’s not bad for a six unit. Not bad atAll. Yeah,That’s pretty good.Really good. Because in Chicago there’s three unit buildings that selling for 400,000 bucks. So at the time, my finance guy in Chicago, he found me a lender up here, and I closed on both of those buildings the same day. I got a five year fix for 3.6% on both of those properties.Okay, so you sold them all. So you’re back to 12, right? Back to 12 units, because you just said two.Yep.Okay. How have those two deals? It sounds like you sort of bought them under the gun, which was everything in 22. It was so competitive, everyone was buying. How have they performed for you?We’ll talk about the one building that I bought for four 50. My cousin, we call it the Taj Mahal because it’s really huge and it’s the building that we’re doing the renovation in that you guys will see when you get here.Oh, cool. Just so everyone knows, Henry and I are going on a road show and Chicago is one of the stops. July 15th, we’re having a meetup in Chicago. It’s free for everyone. So you guys should definitely come if you’re in the Chicago area, definitely come check it out. And one of the things we’re going to do, Andre and I were talking about before the recording started, Henry and I are going to come stop by and see what Andre is up to in Chicago. So if you’re in the area, we’re going to have a lot of fun. It’s going to be great. So come check that out. Oh, definitely. But keep going. Tell me about the TajMahal. So there’s a six unit building, and so the gross rents that we’re coming in where it was about $5,400, close to $900 a month average wise, and these are all two unit apartments. Square footage on ’em is about 1200 plus square feet. It’s really huge. And so the market rate for two bedrooms in this area is 1450. And when I did the numbers and stuff, this building worth was like $750,000 where it should be. So I was like, this is a no brainer and stuff. So because of the renovation that we’re doing on the building, the units are in this building we rented for 1650. So just off pure rent, it’s going to be bringing me in 9,900 gross a month, not including the garage spaces and the laundries that the tenants would be paying for in that buildingAnd then fill us into the gaps. How’d you get back from there to now hitting your goal? Last month.So when I came and bought this building, there were other buildings next door to it, and I was like, I’m about this block up. I said, I’m going to buy the rest of these buildings next to it as such. Because another thing that I learned early on investing is the best real estate to buy, and I say this all the time, is the real estate next door to you. So one of the buildings next door to me, which brought me to the 18 door mark, I call it the freedom tower because it hit that number for me, the 10,000 mark as such.AndSo with that, I became real friends with the owner of the building. I would see him come over. He was an older guy, would come over, do his lawn and different things of that nature. I said, Hey, if you think about selling this building, here’s my number. Just give me a call. Whenever the case, his wife called me the next day say, you want this building? We’re selling it because I’m tired of him going over to that building every day to work. And this building that I’m in right now is the Freedom Tower. We met in this basement. They had a little office set up down here, and we worked out the deal to purchase it. So I purchased this building April of 2023.That’s awesome.Yeah. So now I go to 21 doors later on that year because my duplex building in St. Louis that I bought off Facebook marketplace for 35,000, I started renovating that property. We put a basement apartment in that duplex, so I had to get the zoning redone and different things of that nature. So I have the three unit building in St. Louis that took me to 21 doors. So now it’s like, okay, the other two buildings that’s next door on the other side of the Taj Mahal, one is a six unit and one is a five unit. What I did was I looked up and coincidence, one owner who owns both the buildings, the six unit and the five unit he lives, he lives out your way. He lives in Seattle. Oh, really?Oh, cool.Yeah, he lives in Seattle. So I wrote him a letter. I just wrote him a letter saying, Hey, my name’s Andre Taylor. I’m an engineer. I work for this aerospace company. I’m sure you would know because it’s out there in Seattle. Really big.I think I know which one you’re talking about. Yeah,Exactly. Exactly. And so I said, listen, I own the building. I own these two buildings. I said, I’m not looking to force you, but I said, I do like the integrity of the block. If you ever decide to sell, please give me the first opportunity to purchase. Here’s my information.Did they ever respond to you?Yeah, yeah, yeah. He actually called me rightAway.This was December of 2023. He called me in January of 2024. After the holiday, he said, Hey, I’m actually thinking about retiring in about a year or two as such, whatever. He said, yeah, I have no problem selling it to you. You going to own the block after this. YouWere like, yeah, that’s what I’m trying to do.Yeah, exactly. And so he said, Hey, I would love to meet you. I’ll be in Chicago when it’s warm and we’ll meet. And so it went cold, Dave, he was supposed to reach out to me in May. I emailed him. I said, Hey, how’s it going? Nothing. So he reached out to me back in this past January, said, Hey, I’m ready to sell now. I’m like,That’s just how it works though, right? It’s just like you got to put the iron in the fire and wait, and you can’t rush that because especially if someone’s retiring, that’s going to be on their own timeline.I use my credit business credit line, which I had no PG guarantee. I used that to help me close on the new properties and stuff. I also pulled some equity out the Taj Mahal, because the Taj Mahal was valued at $700,000 on the appraisal. Now the five unit, we actually we closing on that soon. So we were supposed to buy both the buildings. And so he was like, I’m waiting on to see what’s going to happen with the big beautiful bill. He liked capital gains, the a hundred votes depreciation. So we went back to the table. We wrote up the contract where it’s the two parts. So this one is executing and we execute the second one after the big beautiful bill comes out. So right now, 27 with that five, that’s going to get added on later on, which will make it 32 doors.Wow, amazing. Well, we do have to get out of here, Andre. We’re running long, but I love this story so much. I’m happy to do it. But I just had one last question for you. So you’ve had this sort of interesting career. You started, you took 10 years off, then you came back to it. You never have quit your job, right? You’ve stayed with your career. Is that intentional, and do you think you’ll keep doing that?So here’s the deal. I know people always talk about this with the job. Literally, me being able to get these deals is because I still work. Don’t get me wrong. I have a great job and pays very, very good and stuff. And because of that, that strategically is going to allow me to walk away. I’m 43, I’ll be, trust me, I will be done before 50, but at the same time, I don’t have to rush. I’m in a stabilization mode right now. I’m not looking for no more properties. I’m stabilizing the properties to maximize everything so I can reinvest my profits, my cashflow into the buildings to even bring them up even more and all this other stuff, and I can live off my W2 money. So yeah, so it’s no rush of stuff. I can prepare strategically on my exitOut and you’ll be done by 50. That’s amazing. I think that’s super cool. And just a lesson to people. There’s no right answer. But I do think in this industry, a lot of people over sell the idea of quitting when quitting has trade-offs. And I just wanted to point out to people that, Andre, you’ve had this super cool career and a lot of it seems to be in part because one, you’re doing this, you’re good at it and you’re diligent about it, but also you’ve sort of gone with the slowest steady approach of trying to keeping your job, being lendable, getting conventional mortgages, that kind of stuff really seems like it’s helped your career.It definitely has. There was no special hack that I did or anything of that nature with the finance. It was just, I leveraged money off credit cards. I had a pool for 401k, have money saved up, just that norm. And then of course, appreciation. Real estate is long term appreciation game, so it’s definitely been a ride.Awesome. Well, congratulations on your success, Andre. Super cool story. Really appreciate you being here today.Yeah, yeah, yeah. Can’t wait to have, have you guys over at the Taj MA Hall.Looking forward to it. Yes, it’s going to be great. And Everett, again, if you want to hang out with me, Henry Andre, we’re going to be in Chicago the night of July 15th. We have a free meetup for BiggerPockets listeners. It’s going to be a great time. We’re doing the cash flow road show stopping in Chicago. Make sure to check that out. Thanks again, Andre, and thank you all for listening. We’ll see you next time.