I Turned My Condo into a $10K+/Month Rental Portfolio (in 4 Years!)

Summary

BiggerPockets Real Estate Podcast Episode: I Turned My Condo into a $10K+/Month Rental Portfolio (in 4 Years!)
Release Date: April 21, 2025
Host: Dave Meyer
Guest: Andrew Fried

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Introduction

In this compelling episode of the BiggerPockets Real Estate Podcast, host Dave Meyer engages in an in-depth conversation with Andrew Fried, a seasoned real estate investor from Massachusetts and Rhode Island. Andrew shares his inspiring journey of transforming a single condo into a lucrative rental portfolio generating over $10,000 monthly within four years. The discussion delves into his investment strategies, financing methods, scaling techniques, and future aspirations, providing invaluable insights for both novice and experienced investors.

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Andrew Fried's Background

Andrew Fried begins by recounting his early career and the realization that his typical "American Dream" lifestyle kept him paycheck to paycheck despite earning a six-figure income and owning a condo. The pandemic became a turning point, prompting him to seek financial independence through real estate after being inspired by Robert Kiyosaki's "Rich Dad, Poor Dad."

Andrew Fried [01:40]: "I had to come face to face with, is this the life I really wanted to live? And the answer to that was absolutely no."

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Initial Investment Strategy

With a net worth of approximately $250,000—$200,000 of which was tied up in his one-bedroom condo—Andrew decided to leverage his existing equity to enter the multifamily market. He took out a Home Equity Line of Credit (HELOC) of $200,000 against his condo and combined it with an FHA loan to purchase his first three-unit property in Worcester, Massachusetts.

Andrew Fried [05:10]: "I had $200,000 locked up in this one bedroom condo, which was providing a 0% return on an annual basis. My hypothesis was, why do I take this $200,000 and actually put into assets that can provide me an 8, 9, 10% return?"

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Growth to 24 Units

Within a year and a half to two years, Andrew expanded his portfolio to 24 units across eight properties. He emphasizes the importance of utilizing HELOCs to recycle capital, allowing for continuous investment without depleting personal funds.

Andrew Fried [06:55]: "These are the sort of calculations I utilize when I decide how am I going to recycle this equity to buy more property."

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Scaling to 300 Units

Transitioning from 24 to 300 units, Andrew outlines the catalysts that fueled this rapid growth:

1. Becoming an Investor-Focused Agent: This role enabled him to find a mentor with over 300 doors and provided value through bringing in commissions, fostering a beneficial relationship.

2. Starting a Real Estate Meetup: Hosting the largest real estate meetup in Worcester connected him with capital partners and potential deals, including his current partnership overseeing hundreds of units.

3. Active Presence on Podcasts and Social Media: Sharing both successes and challenges publicly built credibility and expanded his network.

Andrew Fried [13:54]: "Being on podcasts, providing value on social media and just putting yourself out there and operating in the light... it's extremely important to put out your wins, but also your losses."

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Financing and Capital Recycling

Andrew discusses his strategic use of HELOCs and cash-out refinances to access and recycle equity. He highlights the importance of maintaining favorable blended interest rates to ensure profitability, especially in higher interest rate environments.

Dave Meyer [09:05]: "HELOC stands for Home Equity Line of Credit... it's a really good strategy that people can use."

Andrew Fried [09:05]: "You really have to look at the loan holistically... is the blended interest rate better than what you can get from a refinance?"

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Market Focus: Multifamily in Tertiary Markets

Andrew strategically targets multifamily properties in tertiary markets like Providence and Worcester, which offer higher cap rates compared to saturated markets like Boston or Phoenix. This approach mitigates risks associated with high-interest rates and ensures positive cash flow.

Andrew Fried [19:14]: "I'm investing in high cap rate markets... I would get more worried if I was in a low cap rate market."

Dave Meyer [19:25]: "Cap rate measures how much you're paying for a property based on the cash flow it can generate. If your cap rate is lower than your interest rate, that's negative leverage."

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Operational Excellence and Property Management

Effective operations are crucial for sustaining and growing a real estate portfolio. Andrew shares experiences where operational decisions, such as reconfiguring a duplex to a single-family home, significantly improved his project's profitability by reducing renovation costs and increasing the property's value.

Andrew Fried [28:10]: "Operations is so important. We looked at the property and decided to reconfigure it to a single family, which reduced renovation costs and increased the ARV from $320K to $450K."

To manage his expanding portfolio, Andrew and his partner established a property management company, growing their team from a single employee to 16, ensuring efficient management of over 250 units.

Andrew Fried [27:20]: "We have a really strong staff that allows us to stabilize these assets ourselves."

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Transitioning to Full-Time Investing

Andrew recounts the pivotal moment when peer pressure from a mastermind session compelled him to leave his corporate job at the Broad Institute of MIT and Harvard. By June 2024, he transitioned to full-time real estate investing, significantly increasing his annual income through diversified revenue streams:

1. Rental Income: Approximately $9,000 to $10,000 monthly from personal rentals and investor-partnered deals.
2. Agent Commissions: Earnings from acting as an investor-focused real estate agent.
3. Property Management: Revenue from managing his growing portfolio.

Andrew Fried [31:36]: "I bring in $5,500 in revenue on that three-unit property... I get $9 to $10K in monthly cash flow combined from my own personal rentals and some investments with my investors."

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Future Goals and Vision

Looking ahead, Andrew outlines ambitious goals for 2025 and beyond:

• Expand Portfolio: Aim to close on an additional 200 units, already nearing 150 in progress.
• Personal Aspirations: Travel to 12 different places and work only two hours a day within six months a year.
• Financial Independence: Assist 10,000 people in achieving financial independence over the next decade by building a self-sufficient business with robust systems.

Andrew Fried [34:33]: "I want to close on 200 more units... I want to help 10,000 people reach financial independence."

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Conclusion

Andrew Fried's journey from a single condo owner to managing a vast rental portfolio exemplifies strategic investment, disciplined financing, and operational excellence. His focus on high cap rate multifamily properties in tertiary markets, combined with efficient capital recycling and team-building, offers a blueprint for sustainable wealth creation in real estate. As he continues to scale his operations and pursue financial independence, his story serves as a testament to the power of perseverance and smart investment strategies.

Dave Meyer [35:18]: "Having a clear vision makes your decisions easier and aligns your daily actions with your long-term goals."

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Key Takeaways:

• Strategic Financing: Utilize HELOCs and cash-out refinances to access equity without forfeiting favorable mortgage rates.
• Market Selection: Focus on multifamily properties in tertiary markets with high cap rates to ensure positive cash flow.
• Operational Efficiency: Effective property management and adaptive strategies can significantly enhance property value and profitability.
• Networking and Mentorship: Building relationships through roles like investor-focused agents and hosting meetups can provide valuable mentorship and deal opportunities.
• Vision and Goals: Clearly defined long-term goals streamline decision-making and drive focused growth.

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Notable Quotes:

• Andrew Fried [01:40]: "I had to come face to face with, is this the life I really wanted to live? And the answer to that was absolutely no."
• Andrew Fried [05:10]: "Why do I take this $200,000 and actually put into assets that can provide me an 8, 9, 10% return."
• Andrew Fried [13:54]: "Being on podcasts, providing value on social media and just putting yourself out there and operating in the light... it's extremely important to put out your wins, but also your losses."
• Andrew Fried [19:14]: "I'm investing in high cap rate markets... I would get more worried if I was in a low cap rate market."
• Andrew Fried [34:33]: "I want to help 10,000 people reach financial independence."

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This episode highlights the importance of strategic planning, disciplined financing, and operational excellence in real estate investing. Andrew Fried's success story provides actionable insights for investors aiming to build substantial and sustainable rental portfolios.

Transcript

[Dave Meyer]

This investor grew his portfolio to 25 properties and was able to quit his job in less than four years by repeating the same real estate strategy over and over. You do need to identify the right type of real estate investing for your goals and your market. And it's totally okay if that takes some time and some trial and error, but once you do that, once you have it, you can basically execute that one deal type to perfection. Rinse and repeat, all the way to game changing wealth. Today's guest proved that this is possible in the Boston area, and he did it in the current market, not during that crazy pandemic era. So let's find out how. Hey, everyone. I'm Dave Meyer, head of real estate investing here at BiggerPockets. Today on the show, we're bringing you an investor story with Andrew Fried, who invests in Massachusetts and Rhode Island. Andrew was previously on the Real Estate Rookie Podcast back in March of 2023, but I wanted to bring him on this show because he's progressed a lot in the last two years, but he's done it by doing pretty much the same thing. So we're going to talk to Andrew about why he primarily buys rental properties in the 6 to 12 unit range, why almost all of his deals are with two to four partners, and how he achieved his goal of quitting his day job to invest full time. Andrew is a total open book with all of his deals and numbers, so there's a lot to learn in this conversation. Let's get into it. Andrew, welcome to the BiggerPockets podcast. Thanks for being here.

[Andrew Fried]

I'm excited to be here. Thank you so much.

[Dave Meyer]

Yeah, absolutely. And I know you've been on our rookie podcast or sister podcast here, but for those who didn't listen to that episode, maybe just give us a little bit of background. Tell us about yourself.

[Andrew Fried]

So, like many people here, I would have the American dream. You know, I get a good education, get a good job, get a nice swanky condo in a city, make six figures. Like, I essentially did that. I did it all through my 20s. And after I did that, you know, I came home and at the end of the day, I realized I was paycheck to paycheck. Yeah, maybe I had six months, maybe I have 12 months of reserves. But at the end of the day, I had to go crawling back to that job, and that ultimately scared the living hell out of me. So come around, Covid. When I ran out of vices to do, video games to play, movies to watch, like, I really had to come face to Face with is this the life I really wanted to live? And the answer to that was absolutely no. So thankfully I found rich dad, poor dad at that time. And that opened my eyes to the power of real estate. And at that point I looked at my net worth, which is about $250,000 at that point.

[Dave Meyer]

Nice.

[Andrew Fried]

$200,000 of which came from that one bedroom condo. I completely forgot about. It literally took me 10 years to save up $50,000. And at that point I realized maybe there's something to this real estate thing. So I literally just fomoed. Right. I took a HELOC on my one bed condo for $200,000 and I utilized that to start buying multifamily, specifically in Worcester, Massachusetts. So I completely uprooted my life in Boston. I knew absolutely nobody in Worcester, Massachusetts, which is about 45 minutes from Boston. And I just decided to start buying Maltese in that market where I started with house hacks. And I kind of moved on to joint ventures and kind of moved on to syndications and larger projects from there.

[Dave Meyer]

Awesome. I want, I want to hear the fairytale story. So it started in Worcester. I'm sort of familiar with the area. Why Worcester? Just Boston. Too expensive or.

[Andrew Fried]

So when you're planning on investing and creating a real estate portfolio, you really have to come up with a thesis. Right. And my thesis was I wanted to buy multifamily. And it's way easier to buy multifamily when there's a lot of that asset class in the market. Right. So the way I really decided on Worcester was I looked at all the markets in Massachusetts that had a large a lot of Maltese. Brockton, Massachusetts. New Bedford, Massachusetts. Worcester, Providence, Rhode island had a lot of Maltese. Manchester, New Hampshire had a lot of Maltese. So I looked at all the markets and out of all those markets, I felt like Worcester had the best fundamentals. It was one of the largest growing cities in Massachusetts, in New England. But not only that, 30 to 40% of the housing stock are multifamily.

[Dave Meyer]

Yeah.

[Andrew Fried]

So it's way easier to get that asset class if there's a plethora of that asset class.

[Dave Meyer]

I'm so glad you said that because I think a lot of people overlook that element of picking and selecting markets. Yeah, you need fundamentals of the economy, the job growth, like all that stuff. But there are markets, as, as you've alluded to, where the concept of a duplex or chip flex is basically non existent. I actually invest in a market where it's almost impossible to find something bigger than A duplex. You know, I started my career investing in three unit, four unit buildings and I can't find any there and that would changes my approach and strategy. So I really appreciate you said that and, but I'm curious, so the multifamily approach sounds like you're doing small multifamily, right? Like sort of the still residential, you know, foreign units or fewer. Was that where you went first?

[Andrew Fried]

I started with house hacking. I started with house hacking, residential properties, two to four unit multifamily. Then I graduated to five to 10 Plexus Commercial Maltese, primarily residential. And then from there, then I graduated to buying portfolios, a plethora of 3, 4, 5, 6, 7 units, you know, buying 10, 12 of them all in one foul swoop.

[Dave Meyer]

Just tell me a little bit about how you financed that first deal. Because you had a solid net worth, $250,000, nothing to sne at most of it was locked up right into a condo. What you said you he locked or how did you, how did you wind up doing that first deal?

[Andrew Fried]

I wound up doing that first deal by utilizing he lock, a home line of credit on my one bed and condo. And I ended up taking out 85% of the value in the form of a HELOC and got about $200,000 out of it. And when I utilize that he lock, I want people to keep in mind the concept of return on net worth. Right? I had about $250,000 of net worth, $200,000 of which was locked up in this one bedroom condo. That's providing a 0% return on an annual basis. So my hypothesis was, why do I take this $200,000 and actually put into assets that can provide me an 8, 9, 10% return. Meanwhile, I'm borrowing at a 3 to 4. That was during COVID right? So with the simple concept of arbitrage, that's really how I kind of built my net worth from there. Right. And going back to your original question, how did I finance that house hack? I ended up financing it with a FHA loan. So I combined that with the HELOC. So I took around 30 to $40,000 for my HELOC. And I used that combined with an FHA loan, I got a three unit in Worcester, Massachusetts for around $560,000.

[Dave Meyer]

Okay.

[Andrew Fried]

I could rent two units for 3200, $1600 each, and I end up living in the third for free. And my mortgage was 30 $200. I ended up kind of breaking even on that property. But my savings rate went through the Roof, So I didn't have to pay, you know, rent or overhead in that regard.

[Dave Meyer]

With your rookie episode, you, you had gotten to a point where I think you had 24 units in eight properties. How long did it take you to get to that level of scale, to.

[Andrew Fried]

Get to 24 units? It probably took me a good year and a half to two years of investing in real estate.

[Dave Meyer]

That's fast.

[Andrew Fried]

You know, one thing I think people sleep on a lot of times is everybody knows about the house hack, right? It's the easy way to, you know, reduce your living expenses to zero. But very few people talk about the heloc, right. And I recommend so many people, prior to leaving your first house hack, get a HELOC on it. Because when it's your primary residence, you can he lock sometimes up to 100% so you can actually access that equity before you leave it. Right. And it becomes an investment property. Once it converts to an investment property, then your line of credit is limited to 75% of the value of the property, greatly reducing your ability to leverage. Right. So you asked how did I do that? I end up he locking my first house act. I got another $75,000 he lock and I use that to buy a couple more house tax as well.

[Dave Meyer]

Okay, got it. And just for everyone to understand, HELOC stands for Home Equity Line of Credit. This is a way that you can access equity in properties without actually having to sell or doing a cash out refinance where you might be getting a different mortgage rate. And so I think for that reason alone, it's a pretty attractive option right now because say you bought something during the pandemic and you have a 3 or 4% interest rate, you've built up a ton of equity in your property which you want to leverage, like Andrew's talking about, to go out and buy few future properties. But you don't want to give up that 3 or 4% mortgage. Totally understandable. Take out a HELOC or consider talk to a lender about taking out a heloc. This is a way that you can borrow against your assets. So that's a really great way to do it. And the other benefit of a HELOC that I love is you only pay interest when you're using it. It's what's called a revolving line of credit. And so let's say you use a HELOC to finance a renovation on a new rental property and then you're going to refinance that. Sure. You pay when you've drawn on that line of credit and you're paying it. But when you go refinance that brrrr, you could repay off your HELOC and pay nothing for a time and then use it again in the future. And so this is a really good strategy that people can use. And I think it's going to become increasingly popular in the next few years because of that sort of dual advantage of allowing you to recycle your equity but not giving up historical mortgage rates.

[Andrew Fried]

And you bring up a really good point. And I just want people to be clear about, yeah, interest rates do have a higher interest rate. You're talking six, seven. But you really have to look at the loan holistically. Right. And what do I mean by that is like if 70% of your loan is at a 3 and 20% of the loan is at a 7, what is your blended interest rate? And is that blended interest rate better than what you can get from a refinance?

[Dave Meyer]

Yeah.

[Andrew Fried]

Or is it not? Right.

[Dave Meyer]

That's right.

[Andrew Fried]

So you kind of want to weigh those options. Or maybe a cash flow refinance makes sense. Maybe the blended rate of your current low mortgage rate combined with the HELOC makes sense. So these are the sort of calculations I utilize when I decide how am I going to recycle this equity to buy more property.

[Dave Meyer]

Totally. And I think this is just one of the natural evolutions that has to take place because during COVID or the years leading up to that, it was kind of a no brainer to do a burr and refi. Right. Because like rates were going down. So why wouldn't you refinance and get a lower interest rate on your, on your new property? That is higher equity. That was a no brainer. Now in our new upside era that we're in, you just need to think about this stuff a little bit more critically. As Andrew said, there's options now, there's just different options and there's different ways to do it. But it's not just as like cut and dry. Like just do the burr, do the refi every single time. All right, we do need to take a quick break to hear from our sponsors, but we'll be back with Andrew Fried right after this. If you're in real estate like I am, you don't want to lose deals juggling multiple tools. That's where Resimply comes in. A true all in one CRM designed for real estate investors like us. With Resimply, you can connect with motivated sellers through calls, texts, emails, or direct mail. Plus you can enjoy free skip tracing cash buyer searches, customizable websites, and automated drip campaigns that turn cold leads into successful deals. Head over to resimply.com biggerpockets now to start your free trial and get 50% off your first month. Once again, that's resimpli.com forward/biggerpockets landlords here's.

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[Dave Meyer]

Welcome back to the BiggerPockets podcast. We are here with investor Andrew Fried talking about how he scaled his portfolio in the last couple of years in the Boston area. Let's catch up then. So, you know, you were at a properties in 24 units. Obviously investing conditions have changed pretty dramatically. What have you been up to in the last two years?

[Andrew Fried]

So as we alluded to earlier, I went from 24 units and now I'm at 300 people. Like, how do you make that dramatic growth? Right? And I'll give you some catalysts that really brought me to that level. Right? So the first catalyst that really brought me to that level was becoming an investor focused agent while having my W2. Like, ultimately I didn't need the, you know, the agent income, right? It was icing on the cake. It allowed me to buy more real estate. But ultimately, why did I become an investor focused agent? I became an investor focus agent to find a mentor. The broker of that agency has over 300 doors, right. And I wanted to leverage him as much as I could. So I decided I'm going to provide him value in the form of bringing him commissions, right. And if I bring commissions, that he's going to feel a need to help me along my journey. So that was number one, I found a mentor and I found ways to provide him value in the form of commissions. Number two, I started the largest real estate meetup in Worcester.

[Dave Meyer]

Nice.

[Andrew Fried]

Through that meetup, I found capital partners, I found deals, I found my current partner. We were, me and him own hundreds of units together. That really allowed me to grow to the next scale. Right. And lastly, the catalyst that really pushed me to the next level and thanks to bigger pockets for this, was being on podcasts, being, you know, providing value on social media and just putting yourself out there and operating in the light. Ultimately, people aren't going to know what you're doing if you operate in the dark. So it's extremely important to put out there your wins, but also your losses.

[Dave Meyer]

Yeah, absolutely. I'm glad you said that because wins and losses, it is important to sort of build credibility. Can you maybe give us some examples of how you did this? Like what's A property that you bought when you sort of stepped away from using your own equity and started using capital partners externally.

[Andrew Fried]

I'll talk about a deal first that I bird into three other deals, right? It was with my own capital, but I recycled the money over and over and over again. Right? So me and my partner now, Zachary, we end up buying this five unit in Worcester, Massachusetts, up Solid street about for $650,000. Like three unit, three units in the area sold for $600,000. This was a deal all day, Right. And it was right on the mls. So what did we decide to do? We decided to like put an offer out day one, right. When it was on the mls. Within two days of being on the mls, we had it under contract. That particular property. The current rent roll on it was around 30 $500 pro forma, or market rents in the property. The ability to bring the rents up was about $9,000.

[Dave Meyer]

Oh, wow.

[Andrew Fried]

Yeah. So it's not a big upside. Right. But the downside is the cost was 650 and the monthly income was 3,500. If anybody knows anything about commercial debt and debt service coverage ratio, like, you can't get a loan at that 75% loan of value. Like, it's impossible. Right.

[Dave Meyer]

That's tough.

[Andrew Fried]

But what did we do? Thankfully, I had a mentor and he guided me through this process and he advised me. Rather than do a conventional finance and go to these portfolio lenders, these small local credit unions, and ask them for construction money. And when you ask them for construction money, they do it before appraisal and they do an after appraisal. And that after appraisal takes to account pro forma, or market rents. Right. So that allowed us to get a loan based off their pro forma rents only bringing 25% down. We ended up bringing this property from 3,500 revenue to nine grand in revenue over the course of six, seven months.

[Dave Meyer]

Okay, so not bad. Yeah, it's quick.

[Andrew Fried]

We end up bringing the value from 650 to $1.1 million. So we had a ton of adequate. Right. But we wanted to access that equity. So what do we do? We end up going to the bank that gave us the first lien and we got a rental line of credit for the equity up to 75%. So that bank gave us a line of credit for $156,000, more or less. All of the money we put in the deal, we put about 160. Right. Fantastic opportunity. What do we do with that money? We took the 160 and we ended up using that combined with hard money to buy a nine unit in West Warwick, Rhode island with four gutted units and five occupied units. We bought it for $715,000 with hard money. So we only brought 10% of the purchase price. Yeah, we ended up putting around $220,000 into it. We got the units rented, we brought the market rents up to 14 grand, and we refied that at $1.52 million.

[Dave Meyer]

Wow. Oh my God. So, yeah, that's, that's. I'm, I can't keep up with your math. But you built what like half a million, three quarters of a million dollars in equity just off those two deals alone.

[Andrew Fried]

And I split that 50, 50 with my partner. So that was only 80 grand for me. Right. So I built half a million dollars in net worth off 80 grand within a year. Right.

[Dave Meyer]

Wow.

[Andrew Fried]

And then let me the next. No. What did I do with this property? Right. So we end up doing a cash or refinance for 1.52 million. We got about $230,000 out of that. Me and my partner ended up transitioning that, that $230,000 into a 21 unit in Lowell, Massachusetts that we just closed on this week.

[Dave Meyer]

Wow. Congrats. And so all of this has been done in this higher interest rate environment.

[Andrew Fried]

Yes.

[Dave Meyer]

And did you have any qualms, like did you worry that the market was going to crash or this was bad timing?

[Andrew Fried]

I did. Not whatsoever. Right. Because ultimately I'm investing in high cap rate markets. Right. I'm investing in assets that pro forma, once I'm done stabilizing the asset, have an 8, 9, 10% cap rate. Right. So 10% cash on cash return. Right. So if I'm borrowing at a six or a seven, like that asset far exceeds the debt. I would get more worried if I was in a low cap rate market. You're talking, you know, a Boston or you know, a Phoenix where the cap rates of 4 or 5 and borrowing at a 6 or 7, then the assets literally operating in the negative. Right?

[Dave Meyer]

Yeah.

[Andrew Fried]

So the way I really got around the high interest rates was I operated in high cap rate markets in tertiary markets, outside high growth cities. Think Providence, think Boston.

[Dave Meyer]

Yeah, that makes a lot of sense to me and I think hopefully everyone's following this. But in certain markets, especially when you're, you're evaluating deals on cap rate and this is just a way of measuring how much you're paying for a property based on how much cash flow that potential it has to generate. And some of these markets. Phoenix, the fastest growing markets, because they are generally considered low risk, have lower cap rates, which means they're more expensive. And generally speaking, when you have a cap rate that is lower than your interest rate on your loan, that is negative leverage. You don't want to have that. But Andrew basically said if you go into these tertiary or smaller markets where the cap rates are higher than the interest rate, it reduces your risk and it allows you to sort of operate and grow in a way that is frankly just much more challenging in these lower cap rate markets right now. Andrew, I want to talk to you a little bit more about this sweet spot you seem to have found with Multifamily right after this break. So everyone stick with us. We'll be right back. If you want to attend bpcon, but you were worried that you missed out on the best rates. I've got great news because we just opened up a surprise Early Bird extension through the end of April. BPCON 2025 is in Vegas this year at Caesar's palace from October 5th through 7th, and the early bird savings will get you $100 off the regular registration price. And if you haven't been to BPCON before, there's so much value to it. People are doing deals there. The networking is top notch, plus you'll learn from some of the best investors in the industry. This year's Agenda features over 60 focus sessions across four specialized tracks so you can completely customize your learning experience. For example, our Advanced and Passive Investor track includes sessions on portfolio management, scaling your business, and transitioning to larger deals. I'll this year actually be giving one of the keynotes. So if you love this podcast, which I hope you do, you won't want to miss that. Head to biggerpockets.com conference now to learn more and get your early bird discount before May 1st.

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[Dave Meyer]

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[Dave Meyer]

Welcome back to the Biggerpockets podcast. I'm here with investor Andrew Fried talking about how he scaled very rapidly from just owning a single condo a couple of years ago to hundreds of doors that he manages and owns now. Andrew, before the break, you're talking about how you've really effectively recycled capital, which is awesome. But you've also seemed to have honed in on sort of a sweet spot of commercial multifamily more than four units. But it's not huge. At least right now. It doesn't sound like you're buying these 200 unit deals. Like do you do that intentionally? And if so, why?

[Andrew Fried]

So the sweet spot that we're, we're really playing in is the multi space between 2 and 50 units, right? So the reason why we like these smaller assets is because first of all, there's not as much competition, right? These deals are way too small for the big players. Additionally, these deals are really easy to stabilize. It's way easier to stabilize a 6, 8 temple than it is a 5,000 unit. Right? Like you can get that stabilized in 6 months versus 100, 200. That's going to take you a couple years, right? So that, what does that mean? That it means that you can have a velocity of capital. You can keep utilizing that money quicker and quicker and quicker. And the last sweet spot that we really have been playing in that's been very effective is buying scattered site portfolios, right? Buying 1012 properties all at once. And because we're buying in bulk, just like you go to BJ's and you buy toilet paper, you get in bulk. It's the same with property. Like if I'm buying 10 properties, I'm expecting a 20 to 30% discount for buying all those.

[Dave Meyer]

Yes.

[Andrew Fried]

All at once. Right? So that's kind of the sweet spot we're playing in. And we also have started to flip, but we are only flipping multifamily and the reason for that is because it allows multiple exit strategies. Right. So if we can't sell it for the price we want, we could toss a renter and then it still works as a buy and hold rental and we could simply refinance most of the cash out.

[Dave Meyer]

I'm curious, Andrew, this is a lot of work. So are you doing this all yourself?

[Andrew Fried]

So currently me, my partner, we own a property management company. We, we self manage around 250 doors, right? So it was a crap done or come around the start of 2022, I think we had about 150 doors that me and my partner self managed and we had one employee and I was doing this on top of being an investor focused agent, on top of having my W2 because I didn't leave my W until June of 2024. Like it was a lot of work. But since then we've increased our staff from one to around 16 employees.

[Dave Meyer]

Oh wow. Okay.

[Andrew Fried]

So we have a really, really strong staff that allow us to kind of stabilize these assets ourselves. You know, real estate is made in three ways, right? The debt on the property, the operations and the price. Right. And operations is really important. You can turn a really good deal bad or you can turn a bad deal okay. With solid and good operations, right?

[Dave Meyer]

Totally. Everyone always says you make money real estate on the buy, right? I think you need to caveat that you get the potential to make money in real estate on the buy, but you actually make the money by operating that program successfully. Because I'm sure you've seen this too. But I've seen a lot of people buy good deals and run them into the ground or you see someone buy a thin deal, run it effectively and manage to turn it into a pretty solid return. It's not just as simple as getting a good deal. It's an important component for sure. But as you said, there's a lot more to it.

[Andrew Fried]

A perfect example of that. I bought this duplex in Killingly, Connecticut for $160,000. We were playing on renovating it completely. We budget around $80,000. We come to realize the foundation is straight messed up, right? And our renovation budget went from 80k to 120. And we were planning on selling these duplexes of $320,000. Like we were going to make no money on this deal. Right? So this is, this is an exact reason why operations is so important. So what do we decide to do? We actually looked at the property. We're like, hey, if we actually reconsfigure this to a single family, we'll get a better price per unit. And by the way, our renovation costs will go down because now we're not doing two bathrooms, now we're not doing two kitchens. Right. So we ended up doing that. We ended up bringing our renovation costs down to like 110 and we got the ARV from 320 to 450. And that's just a prime example of how operations can turn a bad deal good.

[Dave Meyer]

Yeah, it works both ways for sure. Like, if you're good at this, you'll find a way to make it work. If you're bad, you could find a way to destroy what should be a really good deal.

[Andrew Fried]

Totally.

[Dave Meyer]

At what point did you quit your job? Because you said at the beginning of the show that you had been working in corporate America, then you took on being an investor friendly agent. Can you give us just like a timeline here of like when you stopped working a sort of more traditional corporate job?

[Andrew Fried]

So I'll be honest with you, it was really, really challenging leaving my job. Like, I. I worked at the Broad Institute of MIT in Harvard as a project manager, so there was a certain level of identity associated with that that I had to escape. Right. Additionally, my job paid me 130 a year and I was probably working 10 to 15 hours a week. Right. It was so freaking easy. But at a certain point, you know, it came to the point where, you know, my activities in real estate from a dollar per hour perspective completely outweighed the money I was making at my W2. So, you know, I put it off as long as possible to leave my W2. But what really pushed me over the edge was going to a mastermind. I think I went there in March 2024. Right. And the host asked the question to the table. He's like, what's one thing you can do that's holding you back that would bring your business to the next level. You know, I ended up getting on stage and I'm taking the mic and I said, quitting my job. And the host is like, you know, so as of now, like, we're going to set a deadline for you that you have to quit your job by this date. Oh, and if you don't quit your job by this date, we're going to shave that beard of yours. And then after that, the crowd of 500 people proceeded to yell, quit your job. Quit your job. Quit your job.

[Dave Meyer]

No one can say no to that level of chanting. You just have to give it.

[Andrew Fried]

It was such peer pressure. I literally felt like I was like naked in a dream. I have everybody staring at me. It was so awkward. But that ended up pushing me to take the leap to leave my job in June. And since leaving my job, I probably forex my annual income.

[Dave Meyer]

Tell me a little bit about that because, you know, there's a big debate about how long you should work in a corporate job, when you should quit and go full time into real estate. So can you just tell me a little bit about where your income comes from now? Because it sounds like you do a couple of different things. You have a property, property management company, you do your own deals, you're an agent. Like, what does your income look like?

[Andrew Fried]

So ultimately I was very strong on the defensive side, but is also very strong on the offensive side. Right. So I actually moved into a house hack at the three unit. I rent two units for two grand and I live in the third unit. It's a three bedroom, one bath. I rent two bedrooms and I live in the third.

[Dave Meyer]

Oh, wow.

[Andrew Fried]

Yeah. So I literally bring in 5,500 in revenue on that three unit property. And my mortgage is 3,200 bucks.

[Dave Meyer]

That's pretty good. Yeah.

[Andrew Fried]

So my living expenses are really, really, really low. I probably spe spend four to five grand a month on probably food is my largest expense. Right. So I didn't allow life creep to creep up. I mean, like, ultimately I'm a multimillionaire, right. Like, I don't have to be living in a house, act with roommates, but I do it because I see the long term vision. Right. And, and, and to answer your question, my other income comes from cash flow. Right. I probably get 9 to $10,000 in monthly cash flow combined from my own personal rentals that I built over the years and combined with some of the investments in part with my investors. Right. I also get, you know, buyer agent commissions or acquisition fees for deals that we close. Right. That's another form of income. I'm an investor focused agent, even though I've kind of taken a step back from that. So those are primarily the sources of my income.

[Dave Meyer]

Thank you for sharing that. Because I think a lot of times what happens is people quit their corporate job. You know, they tell everyone they're quitting, they're going full time into real estate, and that means some combination of cash flow and maybe working as an agent or a loan officer, and that's totally fine. There's nothing wrong with that. But sometimes when you're doing that, you might be working 40 hours as an agent. Sounds like you're not in that bucket, Andrew. But the reason I'm asking the question is because I think it's really important. When people say, I quit my job, I'm working in real estate full time, what does that look like? How many hours a week do you spend in each of these different buckets? But it sounds like it's really cool for you. You can spend the majority of your time on your own investments and then syndicating other deals to some LPs that you have other investors.

[Andrew Fried]

So let me be clear. Syndications are not great at building wealth. They are great at building network capital. When it comes to a syndication, the way it's usually set up is the investor has to get paid first before you get paid, right? That's right. And that more or less means that you're not getting paid until year three or five of the business plan. So you're essentially working for free a lot of times. Right. So syndications are fantastic for deals that you simply don't have the cash to take down. But they're also fantastic for building network capital to build credibility and also allow you to raise capital in some of these more profitable deals. Maybe a 6 or 10 plex. You're talking about a fix and flip, right? So I think people should be clear, like syndications are not a get rich quick scheme, they're a get rich slow scheme.

[Dave Meyer]

Yeah, it's a business. It's really, it's really like a business that you're operating similar to other, you know, operations intensive businesses. You need investor relations, you need to do property management. It's just, it's a different thing. It's a great thing if you want to do it. But as Andrew said, there are trade offs to this and you need to like, consider pretty carefully if it's right for you at this point in your investing career and it sort of fits into your overall portfolio strategy. Andrew, this has been a lot of fun. Great lessons for everyone here. Before we get out of here though, just tell me a little bit, what's your, what are your goals for 2025? What are you looking to do next?

[Andrew Fried]

So My goal for 2025 is I want to close on 200 more units. I think we've already closed it on 120. We have another 30 or 40 in the pipeline. So we are way ahead of schedule. I'm also planning, I want to travel to 12 different places. I want to help 10,000 people reach financial independence is probably 10 year goal. And I want to travel six months out of the year. And I only want to Work two hours a day. Like, that's my ultimate vision of like 10 years from now. And that's really why I'm working on growing, building my team and kind of building a self sufficient business so I could really live the dream life that I want to. Because ultimately, you know, my life sounds great and I did reach financial independence, but it does come with a lot of responsibility and a lot of time commitment. I'm trying to build, build systems to kind of get out of that down the road.

[Dave Meyer]

I love that. I mean, I wrote about this in my book, Start with Strategy, but I feel like having that clear of a vision that you have is sort of the most important part of building, of building a real estate portfolio. What you do to actually achieve that goal becomes so much easier if you know exactly what you're trying to accomplish. Because you could say, all right, yeah, I should syndicate for the next couple of years. I should own a property management company for the next couple years. And that will. Even though, you know, property management is a loss leader for me right now, that means in a couple years I'll be working two hours a day and I'll be able to travel six months a year. And it makes those decisions so much easier rather than sort of implement obsessing about the fact like, oh, I'm losing $500 a month. Well, it's like, yeah, that's fine because it's getting me to this longer term goal. So it's easier said than done too, like having that clear of a vision. I don't know about you, it took me a while to really sort of like nail down what I wanted to achieve with real estate, not just try and like grow at all costs and scale in every which way. Well, thank you so much, Andrew, for being here. We really appreciate it.

[Andrew Fried]

Thank you.

[Dave Meyer]

And thank you all so much for listening to this episode of the Biggerpockets Podcast. We appreciate each and every one of you. If you enjoyed this episode, make sure to leave us a review either on Apple or Spotify. Or give us a thumbs up on YouTube. We'll see you all next time. Thank you all for listening to the Biggerpockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or tutorial. Sign up for our free newsletter. Please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.