11 Rentals in 4 Years with SMALL, Affordable Multifamily Properties

Summary

BiggerPockets Real Estate Podcast Summary Episode: 11 Rentals in 4 Years with SMALL, Affordable Multifamily Properties
Release Date: April 28, 2025
Host: Henry Washington (Guest Host)
Guest: Jesse Walters

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1. Introduction

In this engaging episode of the BiggerPockets Real Estate Podcast, guest host Henry Washington sits down with Jesse Walters, a dedicated real estate investor from Columbia, Missouri. Jesse shares his inspiring journey from owning a coffee wholesale business to amassing an impressive portfolio of 11 rental units within four years. This conversation delves into practical strategies for navigating the current real estate market, leveraging relationships with local banks, and the transition into house flipping.

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2. Jesse’s Background: From Coffee to Real Estate

Jesse Walters began his professional journey as a coffee roaster, running a wholesale business that supplied cafes, restaurants, and grocery stores. During his seven-year tenure, Jesse witnessed the volatile nature of the commodity market firsthand.

Jesse Walters [02:03]: "We ran through Covid through all that too, and, like, coffee prices, like, doubled during that time. And it was just... a lot of sleepless nights in that business, for sure."

The turning point came when Jesse's wife, Megan, became a licensed real estate agent. Observing Megan's success and commissions sparked Jesse's interest in real estate investing.

Jesse Walters [03:07]: "I started seeing her commission checks and like, what I was bringing in, you know, I'm selling a three dollar cup of coffee. I'm like, you know, what am I doing with my life? I need to figure this out."

In 2021, Jesse and Megan seized an opportunity to purchase their first rental property, marking the beginning of their real estate investment journey.

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3. First Investments: Single-Family Homes

Jesse's initial foray into real estate involved buying single-family homes listed on the MLS (Multiple Listing Service). With a straightforward strategy—putting 20% down on a property that cash flows positively—they successfully managed to generate monthly income despite prevailing interest rates.

Jesse Walters [03:26]: "We bought our first rental property. It was on MLS. We put 20% down. There was nothing crazy about it. And the thing, cash flowed."

His first property featured a mortgage, taxes, and insurance totaling approximately $850 per month, while rental income was around $1,600, ensuring a positive cash flow.

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4. Scaling Up: Multifamily Properties and Cross Collateralization

Building on their initial success, Jesse expanded their portfolio by acquiring small multifamily properties. A pivotal moment came with the purchase of a fourplex in 2023, utilizing a strategy known as cross collateralization. By leveraging equity from existing properties, Jesse was able to secure additional financing without significant out-of-pocket expenses.

Henry Washington [08:09]: "You said you were able to do something that a strategy I like to use. Essentially it's called cross collateralization... Was this a local bank that you used or what kind of, what kind of lender was this?"

Jesse Walters [08:41]: "Yeah, correct. It's a small local bank here in my area. They offered it to me like, hey, you should do this... explain this one more time how this works."

This approach not only facilitated the acquisition of multifamily units but also set the stage for sustainable business growth by maintaining positive cash flows across the portfolio.

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5. Relationship Banking and Leveraging Equity

Jesse emphasizes the importance of building strong relationships with local community banks. Unlike larger banks that often sell off loans, community banks retain them, fostering trust and collaboration with local investors.

Henry Washington [09:02]: "That's the power of relationship banking... If you have a relationship... these banks just bring you these ideas and really help you grow."

This relationship banking strategy enabled Jesse to access lines of credit and other financial tools that significantly aided in scaling his real estate investments.

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6. Transition to House Flipping

In addition to rental properties, Jesse ventured into house flipping—a move that was initially unintended but proved financially rewarding. His first flip involved purchasing a condo below market value, making strategic renovations, and selling it for a substantial profit.

Jesse Walters [21:23]: "I kind of flipped my first house on accident... It turned out she needed to go to a nursing home... we can rent this thing out... but it's not really going to cash flow much."

By renovating the property with minimal investment, Jesse successfully increased its market value, showcasing the versatility of his investment strategies.

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7. Flipping Strategy and Execution

Jesse's flipping strategy centers on purchasing properties below market value, conducting essential cosmetic updates, and selling them at a premium. His honest and empathetic approach during transactions, especially with tenants, sets him apart in the competitive flipping market.

Henry Washington [22:00]: "I often tell people that real estate is not a real estate business. It's a people business that transacts in real estate... Being of service to people is the best way for me to grow my business."

This people-centric approach not only facilitates smoother transactions but also builds a positive reputation, leading to more opportunities through referrals and repeat business.

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8. Current Investment Strategy and Future Plans

Presently, Jesse manages a balanced portfolio of single-family homes, multifamily units, and flipped properties. Looking ahead, he plans to continue leveraging his relationship with local banks and expand into new construction projects, such as building a triplex on a newly acquired vacant lot.

Jesse Walters [27:43]: "A big change we're making this year... All those proceeds, we're 1031-ing it into a vacant lot a block over. We are going to build a brand new triplex on that."

By adhering to the 1% rule—where monthly rent equals or exceeds 1% of the property's purchase price—Jesse ensures that his investments remain profitable even with minimal initial expenditures.

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9. Advice for New Investors

Jesse offers invaluable advice for aspiring real estate investors:

1. Join a Like-Minded Community: Being part of a supportive group provides confidence and collective problem-solving.

   Jesse Walters [31:18]: "Get in with a group of like-minded people. It gave me so much more confidence."

2. Leverage Professional Relationships: Having an experienced real estate agent or broker, like his wife Megan, can provide critical insights and data-driven decisions.

3. Understand Local Markets: Real estate is highly local. Jesse advises investors to identify and exploit niche opportunities within their specific markets.

4. Be Service-Oriented: Prioritizing the needs of clients and tenants fosters trust and long-term business success.

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10. Conclusion

Jesse Walters' journey from a coffee wholesaler to a successful real estate investor encapsulates the essence of strategic investment and relationship-building. His multifaceted approach—balancing rental properties, multifamily units, and house flipping—demonstrates adaptability and keen market insight. For those contemplating entering the real estate market or looking to expand their investment portfolios, Jesse's story serves as an inspiring blueprint for achieving financial freedom through thoughtful and principled investing.

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Notable Quotes:

• Henry Washington [00:00]: "Guess what, folks? You can still buy real estate today and build an investment portfolio that cash flows monthly and build wealth long term."

• Jesse Walters [03:07]: "I started seeing her commission checks and like, what I was bringing in, you know, I'm selling a three dollar cup of coffee. I'm like, you know, what am I doing with my life? I need to figure this out."

• Jesse Walters [08:41]: "It's a small local bank here in my area. They offered it to me like, hey, you should do this... explain this one more time how this works."

• Henry Washington [22:00]: "I often tell people that real estate is not a real estate business. It's a people business that transacts in real estate... Being of service to people is the best way for me to grow my business."

• Jesse Walters [31:18]: "Get in with a group of like-minded people. It gave me so much more confidence."

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This comprehensive summary captures the essence of Jesse Walters' real estate investment strategies, his transition from a different industry, and the valuable insights he shares for both novice and seasoned investors.

Transcript

[Henry Washington]

Guess what, folks? You can still buy real estate today and build an investment portfolio that cash flows monthly and build wealth long term. Yes, Even with the current interest rates and home prices. Today, we're speaking with an investor who bought one single family home in 2021, then bought one more in 2022, and then he added a few more small multifamily properties over the last two years. It's not a complicated strategy, but it can have a huge effect on your financial future. Today, he's left his job to focus full time on what's going on, everybody. I'm Henry Washington, and I'm guest hosting the Bigger Pockets podcast today in place of Dave Meyer. On this episode, we have an investor story for you with Jesse Walters. Jesse started investing in Columbia, Missouri in 2021 and has accumulated 11 doors in the last five years. If anyone thinks they can't find cash flow in this market, Jesse is doing just that, even with some interest rates at 8%, because he knows how to identify strong opportunities. He knows how to buy undervalued properties and how to grow within his means. It's a tried and true playbook that almost anyone can follow. If you're on the fence about whether real estate investing is right for you or about whether or not now is the time to grow your real estate business, this conversation might just convince you. Let's go ahead and bring on Jesse. Jesse, man, thanks for being on the show today.

[Jesse Walters]

Yeah, thanks for having me. I really appreciate this opportunity.

[Henry Washington]

Oh, man. Amazing for you to be here. Why don't you give us a. Give us a little background, Tell us where you were or what you were doing when you first got into real estate.

[Jesse Walters]

I'm an entrepreneur at heart. I was actually a coffee roaster for about seven years. During that time, my wife, she became a licensed agent, and that started growing in the background while I was doing this. And I just started getting the bug. And in 2021, we found an opportunity. We just bought our first rental property. It was on MLS. We put 20% down. There was nothing crazy about it. And the thing, cash flowed.

[Henry Washington]

And so you said you were a coffee roaster. I assume that means you, like, owned the coffee business. You weren't like the barista at Starbucks.

[Jesse Walters]

We were a wholesaler, so we got a cafe, but it was like, years later. Yeah. So we. We own the business. I sold coffee to cafes, restaurants, grocery stores, things like that. So I was on the back end.

[Henry Washington]

I'm sure buying an appreciating asset. It's got to feel more comfortable than Buying coffee and hoping you can sell it to somebody.

[Jesse Walters]

We ran through Covid through all that too, and, like, coffee prices, like, doubled during that time. And it was just. But at the same time, this price on the shelf, it didn't really go up much. So, like, we were eating a lot of that cost and it just. Yeah, it was a lot of sleepless nights in that business, for sure. Yeah.

[Henry Washington]

Okay. Well, that is definitely a great transition into real estate entrepreneurship. I don't know that the sleepless nights get any less, but it sounds like real estate might be a little less stressed than coffee. So 2017, your wife Megan, got her real estate license. I think oftentimes what happens is people either are working in the real estate industry or they're exposed to the real estate industry. And typically it's on a side that isn't an investor seeing the. Getting the payouts. And so was that what made you realize, hey, I want to be on that side of the closing table?

[Jesse Walters]

Yeah, it was. I started seeing her commission checks and like, what I was bringing in, you know, I'm selling a three dollar cup of coffee. I'm like, you know, what am I doing with my life? I need to figure this out.

[Henry Washington]

So 2017, she was an agent, was it four years? 2021 you bought your first one?

[Jesse Walters]

Yeah, 2021. So four years later, we finally dove.

[Henry Washington]

In, bought your first deal on the MLS. Traditional 20% down financing. But you said it cash flowed, so that's pretty positive. Must be a low interest rate at that time frame.

[Jesse Walters]

Yeah, that time that was like the glory days. I think we're like a 3.6, 30 year fixed loan. Like, we're just gonna let that ride till the end for sure. But yeah, it's. I think the mortgage, tax, insurance, like around 850 and like, we're renting out right now for 1600amonth.

[Henry Washington]

Oh, wow.

[Jesse Walters]

Yeah.

[Henry Washington]

So how'd you move on from that deal? Because it's. It's tough to find deals like that just sitting on the market now.

[Jesse Walters]

Actually, the next two deals we found on the MLS too. So the first three investment properties, we bought all MLS. The second one, single family home, like a 3:2. It needed some work. We were able to get that one locked in. We put 15% down on a commercial loan, and they covered all the renovation costs, everything like that. Still relatively low interest rate. We're able to cash for that one. And then it really started to snowball after that. In 2023, we bought our first 4 Plex. It needed work. We were able to use the equity we had in those first two properties. We put some money down in them and then they were also appreciating and we added value to that second one. So the bank, what they did was they used the equity from those other properties as collateral for a down payment. And so we were able to do $0 into that fourplex and it needed some work but not a lot. And we put like maybe 25, 30 grand and between all four units which was pretty minimal. That's what really set the cash flow going and it, it just sustained the whole business after that.

[Henry Washington]

That's when you're really playing the game. I have several questions about that deal, but before we get to that, we're going to take a quick break.

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[Henry Washington]

Right, we're back with Jesse and we're just getting into the meat and potatoes about how he started to scale his real estate business. It sounds like you said you bought a four plex this fourplex that you bought on the market or wasn't an off market deal.

[Jesse Walters]

It was on the mls.

[Henry Washington]

On the mls. But you said you were able to do something that a strategy I like to use. Essentially it's called cross collateralization. So you bought this duplex, but since you had owned a few other single family rental properties and those rental properties had appreciated, it sounds like the bank allowed you to pledge equity from other properties and use that as your down payment. Was this a local bank that you used or what kind of, what kind of lender was this?

[Jesse Walters]

Yeah, correct. It's a small local bank here in my area. I didn't even know about it. They offered it to me like, hey, you should do this. And I'm like, what is that? And it actually took two different meetings, explained the whole thing to me. I took notes, I went back home. I'm like, I still don't understand this. And I went back to him again. I'm like, explain this one more time how this works.

[Henry Washington]

That's. I mean, that's the power of relationship banking, right? So relationship banking is typically going to be a bank, like a small local community bank. And the reason they are called relationship banks are because local community banks must lend to local community businesses in order to generate income. They're not like bigger banks who originate loans and then sell those loans off. They originate loans and they keep them in their portfolio. And so what they're really looking for are good investments to put their money into that. They. And then they're looking to. Into good operators that to. To entrust with these loans. And so essentially, when you build that relationship, what you're doing is you're showing them that, hey, I can buy good deals. I'm buying deals that are going to have equity in them. And that makes the bank feel comfortable. Banks typically, like real estate investors who are good operators, can buy good deals, and typically they will go out of their way to figure out how to help you to continue to grow. The same thing happened to me when, with one of my first deals, the bank basically was like, hey, man, I want to give you a line of credit on this property, so you can keep bringing us deals like this. For people that are listening, like, if you have a relationship with a local community bank already, if you've done some deals already, go talk to them about cross collateralization. Go talk to them about, if you've got existing properties, go talk to them about pledging equity in your properties to use as your down payment. This is something that a lot of banks do. But if you have a good relationship, sometimes these banks just bring you these ideas and really help you grow. That's super cool to hear. So you bought this quadplex. You used this cross collateralization strategy. What'd you pay for it and what were. What were. What is it rent for?

[Jesse Walters]

Yeah, so we bought it for 190,000. We paid full price asking on the MLS 40. We just. We knew there was an opportunity there. And this is in a smaller town outside of where we do a lot of our investing. It's actually my hometown, so I knew the market pretty well, so bought it for 190. We put 23, $24,000 in it between all four units. At the time, rents were very, very low, and it was actually lower than I thought it was. Three of the four units went up for rent when we purchased it. So one was vacant when we bought it. And then when we took ownership Two voluntarily left, and we only just had one of the original tenants left. So we had. We had to turn all three of those very quickly. So the first unit we rented for 700amonth. Turns out that was way too low. We should not have done that.

[Henry Washington]

Is that tenant still there now?

[Jesse Walters]

Actually, no. She ended up leaving. But, yeah, we had. But my phone was ringing off the hook. I was like, okay, so the next one, we put it at 800amonth, and then it started leveling out a little more. But that all being said, so we left the original tenant in place. We raised his rent a little bit, but we didn't want to put him up to market. He'd been there a long time. We got rents up to about 2,400amonth, and we had been. We had, like 215,000 in it, 220 in it. So, like, we were over the 1% rule on the MLS buying this deal.

[Henry Washington]

Yeah, no, that's great. That's great.

[Jesse Walters]

Kind of a bonus, too. There was a vacant lot with it next to it, and it was all part of the package. I got a vacant lot just sitting there free and clear, too, on the deal.

[Henry Washington]

Oh, man, I love doing that. That's another strategy I really enjoy is finding properties that have either lots big enough that you can split off a vacant lot. So, like, legally go to the city and split it off, and then you'll get a vacant lot free and clear. Or specifically marketing to properties that have additional lots. Because typically when you buy the property at a discount, you essentially get the land for free, which you can use to develop later. I've either. I've done all scenarios. I've bought land with a free lot and then sold the free lot to cover my down payment on the. On the property. I've also bought land with a lot, and then we're looking at developing some of that land right now. So it really gives you options for later on down the road. And it's free land. Right. Like, why. Why wouldn't you do that and have those options? So I also want to talk to you about. So you. You dabbled in this multifamily now, so did that become your main strategy going forward, or are you still focused on singles?

[Jesse Walters]

It definitely put a light bulb in my head for multifamily. We. I really look for them. I. I want to buy more of them, but it's not my only strategy. I still do a lot of single families. We actually purchased a condo last year because the numbers worked. Yeah, and we did that, too.

[Henry Washington]

You're you're like me, man. I'm gonna, I'm gonna buy it. If it's a good deal, I'll figure it out after I buy it. Sometimes I'll keep it, sometimes I'll sell it. So one of the things that's unique about you, Jesse, is your wife is an agent and a broker. And there's a lot of new investors who always ask the question, should I get my license to get started in real estate? And I'm not going to, I'm not going to throw that question at you, but I am going to say, do you feel like it's been a benefit to you to have somebody around you that has a license or do you feel like it's been a hindrance?

[Jesse Walters]

I'm biased with it. Being my wife, I'm going to say she's a really good agent, but she actually is like, she is one of the top producers in our area. And I go to her when we flip a house or if we have a rental or anything like that. I'm going to her like asking all these data points and like, what do you think we should do? Xyz, even on the design, you know, hey, what are you seeing in houses that are selling? Like, should we, what color should the walls be or the, what kind of floor she put in? Like, she's like, yeah, the xyz, you know, these, these homes with this floorington that sell better. And it has been a huge help and I, you know, I can get a pretty good idea of like what the value of a house will be, you know, after we do repairs, things like that. But like, she is way more accurate than I am. And I think that goes for most agents.

[Henry Washington]

Probably the most important person on a real estate investor's team is that investor friendly real estate agent. And luckily for you, you're married to yours. I always tell people that if you're getting your real estate license just because you want to be a real estate investor, that's probably not the best first move because they don't really teach you about real estate investing at agent school. That's not really helpful for you. I think there are other things that you can do that are more beneficial. But having an agent, a good investor friendly agent on your team is great. Like, I would love for someone that was directly tied to my business to have their license. Luckily for me, I have a phenomenal agent. And instead of since you married yours, I just moved into my investor friendly agent's office. Like I, I, I rent a space in his office. So that I can be that much closer to them.

[Jesse Walters]

I like that strategy also.

[Henry Washington]

Like just the ability to have someone that can help you accurately comp. Because you mean the best way to comp a property is with MLS data. And so I mean that alone will save you a ton of money. So I don't know that you need your license to be a real estate investor, but having somebody with a license close to you is absolutely a cheat code.

[Jesse Walters]

If my wife was not licensed, I probably wouldn't be either. But really the sole reason I have my license is to help her out with her listings, things like that. If, if I was just full time investor, I probably wouldn't have my license either.

[Henry Washington]

For those people who are considering getting their license, what are some of the benefits being licensed as an investor? So you specifically having your license, what benefit does it have for you and your investing business?

[Jesse Walters]

One I do have access to analyze data. That's probably the biggest one, especially where we're located. So we're in Missouri and it's a non disclosure state. So sales price for homes and multifamily in the state are not public data. You can only get it through the mls. So there is Zillow, things like that, but they're not accurate. And so having that data is crucial to an investor. And then also the other big one is commissions. Like, you know, you can kind of leverage your commissions when you're buying and selling properties too.

[Henry Washington]

Talk about kind of how you do that.

[Jesse Walters]

Like that fourplex we were talking about. We, when we went to put in an offer, this thing was on the market like one day and there were other people getting ready to come in and place other offers. So what we did, we placed a full price offer on this thing and waived our commissions. So they got kind of an over asking offer without us having to over pay.

[Henry Washington]

Okay. In other words, they were able to actually pocket more money because they didn't have to worry about agent commissions because the seller typically pays the commission. So you waive your commission. So instead of them selling for 190 and then paying 6% or 3% in this case to an agent, they get to put that 3% in their pocket.

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[Jesse Walters]

I kind of flipped my first house on accident. Yeah, it was, it was actually a condo here in town. We bought it for my grandmother in law to live in. At one point it was just gonna work out there and then all of a sudden it didn't work out. Like it turned out she needed to go to a nursing home and it was one of those things of like, well, I could rent this thing out. I was like, like, but it's not really going to cash flow much. I wasn't buying it for the cash flow. So, so to say I'm like, well, I can just turn this around and flip it. So that's what we did. We could put a good chunk of change in our pocket. I was like, huh, maybe I should keep doing this.

[Henry Washington]

Tell us about the numbers on that.

[Jesse Walters]

It was kind of an interesting story how we got it. It was listed for $150,000 which was already under market value. No photos or anything. I went, looked this thing, it was tenant occupied. I spoke to the tenants for like half an hour. An older woman and her daughter was living there, things like that. And they kept asking me, you know, like, if you buy this, what are you gonna do with it? Can we stay here? All these things. And like I just, I, I mean I was very blunt and honest with, I was like, I mean my intention is, you know, for my grandmother in law to live here. However, like, I'm not just gonna kick you out. Like, we're. We're gonna come with a plan to find you another place. I'm not gonna make you homeless, Things like that. Like, I will definitely help you in those ways. Well, it turned out those tenants were very in the ear of the owner, so the tenant was really driving this whole transaction. I guess I was the only one that came in there and told the tenants I would not kick them out. Everyone else said they would. I was the lowest offer on the table, and they took my offer.

[Henry Washington]

You know, I often tell people that real estate is not a real estate business. It's a people business that transacts in real estate. The more we can find ways to take care of people, the more your business will thrive. Because there are people's lives at the other end of our real estate transactions. At the other ends of this wealth. We're trying to build a lot of investors. I don't want to say most, but a lot of investors are very transaction focused. It's all about the numbers. If the numbers work, it's great. If the numbers don't work, then it's not great. And if I need to get rid of a tenant to make the numbers work, work, then I'm going to do that. I've often just found that being of service to people is the best way for me to, a, grow my business, but B, sleep at night. Like, if I lose a deal because I can't take care of the. Because I wouldn't have been able to take care of the people, then I'm fine with that. I'll go find another deal where I can. Where I can help somebody. So I appreciate you taking that approach because I think that's what people need to learn how to do. They need to learn how to take care of people first. The money makes itself.

[Jesse Walters]

It took a little longer in this process, but it. We really didn't lose any money ever, and. Or any sleep. But we found these people actually a better place to live in the future. And it was. It just worked out for everybody.

[Henry Washington]

Okay, so you bought it for 130. You put how much into it?

[Jesse Walters]

We put 18,000 into it. It was a pretty easy cosmetic.

[Henry Washington]

That's a great deal.

[Jesse Walters]

Yeah, yeah. Paint, carpet, some light fixtures, a couple new appliances. And that was really it. It.

[Henry Washington]

And you sold it for.

[Jesse Walters]

We sold it for 175.

[Henry Washington]

Nice.

[Jesse Walters]

After commissions, closing costs, it was a little over $21,000 profit.

[Henry Washington]

Nice. Yep. And so now you definitely got the bug, because I know I did after I did my first flip, definitely.

[Jesse Walters]

Yeah, yeah. It was another light bulb moment for me in my investing career. I was like, we need to do more of these. Yeah.

[Henry Washington]

Okay. So how did you. How did you expand that part of your business and what does it look like today?

[Jesse Walters]

I rely pretty heavily on. My outreach is mailers, but I've also bought from wholesalers. I bought a house from my. It was a referral from my junk removal guy. So my contractors send me houses now too. So it's kind of all around. And I. I still look on the MLS all the time. We bought one on the MLS last year, and then actually another agent sent me a couple duplexes last year too, before it hit the mls.

[Henry Washington]

What kind of volume are you doing in your flipping business?

[Jesse Walters]

Last year I closed out five flips, and this year I already have five. I've closed one and I've got four under construction right now. And then they're all in different phases. But, yeah, I assume we'll probably be 10 to 15 by end of this year if we keep doing what we're doing. Yeah.

[Henry Washington]

Okay. That's amazing. And so you said Columbia, Missouri is where you live and invest. Is that the only market you invest in?

[Jesse Walters]

For the most part, yeah. So Columbia, and then my hometown is Boonville, Missouri. Small, 8, 000 population, I was gonna say.

[Henry Washington]

It sounds like you made that up, to be honest.

[Jesse Walters]

Yeah, it kind of is. The thing Boomville's known for is to have a casino. It's probably one of the smallest towns in the nation that has a full blown casino in this thing.

[Henry Washington]

Yeah.

[Jesse Walters]

But it, it really helps the economy there. And it's a commuter town for Columbia, which is the University of Missouri, is a lot of hospitals, a really economy driven town, like, with a lot of jobs, a lot of people moving in and out of here, things like that. So Boonville has naturally kind of grown with Columbia. As Columbia keeps growing, like, as Columbia gets more expensive, Boonville becomes more and more attractive to renters, for sure. And we've definitely learned that in our experience. So I have more luck within the rental market in Boonville than I do Columbia now. It's. It's a lot easier to get into it. It's easy to find renters, good renters too. And yeah, they're appreciative and want to be there.

[Henry Washington]

Yeah, man. I would encourage everyone who is investing in a specific town, especially if that town is a larger town, to look for a smaller town within 30 minutes to two hours away that share. That share Some of the same market dynamics and have a good strong economy. In Jesse's case, this is fueled by a casino. Typically, there's always a small town in and around your, your larger town that has similar market dynamics where it may be easier for you to find and cheaper for you to find a deal, but still get that consistent cash flow. All right, before we get out of here, Jesse, it sounds like each year you've kind of improved and progressed as a real estate investor and become more mature. What are you doing now or in 2025 that's different than what you've done in the past?

[Jesse Walters]

A big change we're, we're making this year in our investments. So that fourplex we mentioned, we actually sold it. So yeah, going back, we bought it for 190. We put 2025 in it, I think, and we sold it for 3, 11.

[Henry Washington]

Oh wow.

[Jesse Walters]

Two weeks ago. But anyway, all those proceeds, we're 1031 ing it into a vacant lot a block over. We are going to build a brand new triplex on that.

[Henry Washington]

Do you mind sharing the numbers for this, this new construction?

[Jesse Walters]

Yeah. So this triplex we're estimating to cost around $400,000 to build. And with it being in the smaller town, the land that we're buying is hardly anything. I think we paid $17,000 for this lot. Yeah. So there really isn't much going into. It's really just the, the build itself is what we're investing in. Based on my experience with rentals there, there's a huge need for it. And especially three bedrooms. There's a lot of twos and ones in, in these smaller markets there are no three. So we're building all three bedroom units and it'll have off street parking. It has laundry like things that like these small just don't have, especially where we are. It's a lot of older homes, 100 plus years and there, there isn't laundry hookups or anything like that. So it's kind of become known that you just don't get laundry in this area. Well, we're going to have that, so we're going to offer something else. And I think our rents I'm projecting to be between 13 and 1500amonth per unit.

[Henry Washington]

Wow.

[Jesse Walters]

So I'm building at the 1% rule, just about.

[Henry Washington]

Yep. So it sounds like on the low end you're at, at 3, 900amonth in rents. On the high end you're like at 42, $4,300 a month in rent. You bought the land for 17, you're building for 4. So you're all in at 417 and you're hitting the 1% rule on new construction. And we all know like the 1% rule is a great rule of thumb, but I think, I think the cool part about it is you're at the 1% rule in New construction. A lot of your expenses with rental properties are maintenance and capital expenses. But when you do new construction, your maintenance and your capital expenses are typically going to be far lower because the property is so brand new. So you kind of put that off for five to 10 years, which allows you to actually make more cash flow. So I think that that's great. And I also love that you, you, you didn't just say, I'm going to go build something. You said, I'm going to go build something, but I'm going to build something that's going to have demand. And that's why we always tell people like real estate is such a local game. You have to understand your local market. And your understanding of your local market told you that there's a shortage of three bedrooms and that there's a shortage of rental properties with laundry. And so essentially by building something that doesn't exist, you get all the demand for that product because there isn't that product anywhere, which essentially is going to allow you to probably get the top rents in the market because you have a brand new product and you have amenities that don't exist in your market. So it sounds like if you want to invest in Columbia, Missouri or Boonville, you need to build three bedrooms or you need to go buy laundromats.

[Jesse Walters]

Give me a couple years head start. But yeah, you guys.

[Henry Washington]

That'S okay. Go, go, go find all the laundromat owners in the area. Let's start marketing to them and I'll go on a laundry mat business with you down there.

[Jesse Walters]

I love it. Let's do it.

[Henry Washington]

All right, Jesse, thank you so much for sharing your journey in real estate investing with us here. Do you have any last minute advice for somebody who's brand new and looking to get started?

[Jesse Walters]

If I could say one thing that really propelled me forward in the success of all this. Get in with a group of like minded people. It gave me so much more confidence. Like my problems are not unique. Everyone's dealing with the same stuff.

[Henry Washington]

Yes.

[Jesse Walters]

And if, if you can hear other people talk about it, either you gu guys can, you know, kind of drink a beer together and just talk about it, or the other person will have a solution for you.

[Henry Washington]

One of the two.

[Jesse Walters]

You know, it's, it has helped me tremendously.

[Henry Washington]

100 man who, who you choose to be around will show you what's possible. I've, I've always said that. And it's, it's hugely important. So change your circle, change your circumstances, man. Thank you again, Jesse for joining us. We appreciate it having you. We hopefully you all learned a whole lot. And if you think the Bigger Pockets audience could learn from your own investing journey, you can apply to share your story on the show just like Jesse did. Biggerpockets.com guest I am Henry Washington and we'll be back with another episode of the BiggerPockets podcast in just a few days. Thanks for listening.

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