Real Estate Rookie Podcast Summary
Episode Title: $5,000/Month Cash Flow from 3 Small Multifamily Properties in JUST 5 Years
Hosts: Ashley Kehr and Tony J Robinson
Guests: Daniel and Becca Hawthorne
Release Date: April 14, 2025
1. Introduction
In this episode of the Real Estate Rookie podcast, hosts Ashley Kehr and Tony J Robinson welcome Daniel and Becca Hawthorne, a dynamic couple who have successfully built a 32-unit multifamily property portfolio in just five years. Their journey serves as an inspiring blueprint for beginner investors aiming to create substantial wealth through strategic real estate investing.
2. Guest Background
Daniel Hawthorne shares his personal story, highlighting the challenges he faced growing up with housing instability in South Central Los Angeles. These early experiences fueled his determination to achieve financial freedom and build generational wealth through real estate.
Notable Quote:
Daniel Hawthorne [08:00]: "This was impossible to be a black boy in South Central in the 80s, to make it out to be where I am today at that point in time, that was also impossible."
3. Initial Investment Journey
Daniel recounts how he felt real estate investing was unattainable until he discovered the BiggerPockets podcast and forum. Leveraging the community's resources and tailored advice, he and Becca took the leap to purchase their first property—a turnkey eight-family unit in St. Louis.
Notable Quote:
Daniel Hawthorne [00:40]: "It was literally a blueprint for how ordinary everyday people can create extraordinary wealth through strategic real estate investing."
4. Choosing the Multifamily Strategy
Becca explains their decision to focus on multifamily properties over other strategies like short-term rentals or flipping. Managing multiple units under one roof proved more efficient and scalable for their growing portfolio.
Notable Quote:
Becca Hawthorne [04:21]: "Seemed easier than just like, you know, adore, adore all in different places."
5. Scaling the Portfolio
The Hawthornes detail their rapid expansion from three properties to 32 units within five years. Central to their success was hiring a property manager from the outset, allowing them to focus on acquiring additional properties without becoming overwhelmed by day-to-day management tasks.
Notable Quote:
Daniel Hawthorne [13:19]: "We have currently do some self management as well as leveraging PM for some of the others."
6. Financing Strategies
To fund their acquisitions beyond the first property, Daniel and Becca utilized Home Equity Lines of Credit (HELOCs) on their primary residence. This approach provided the necessary capital while managing debt effectively through rental cash flow and their corporate incomes.
Notable Quote:
Daniel Hawthorne [16:44]: "We leveraged HELOCs throughout the entire process."
7. Leveraging 1031 Exchange
The couple employed a 1031 exchange to defer capital gains taxes, allowing them to reinvest profits from sold properties into new acquisitions seamlessly. This strategy was instrumental in fueling their portfolio growth.
Notable Quote:
Daniel Hawthorne [20:07]: "It's 'hey, I don't want to pay taxes on this. I'd rather reinvest this somewhere else.'"
8. Enhancing Cash Flow
Initially, long-term rentals provided modest cash flow, averaging $100 to $125 per door. However, recognizing the potential for higher returns, they shifted towards furnished midterm rentals, significantly boosting their monthly cash flow.
Notable Quote:
Daniel Hawthorne [21:23]: "We've shifted recently to furnished midterm units. That's allowed us to really magnify our cash flow."
9. Becca's Role and Midterm Rentals
Becca transitioned from her corporate healthcare role to obtaining a real estate license, enhancing their operational efficiency. She spearheaded the move to furnished midterm rentals, catering primarily to traveling healthcare professionals. This strategy not only increased cash flow but also maintained high occupancy rates with minimal vacancies.
Notable Quote:
Becca Hawthorne [23:15]: "I became a little bit more involved and I...started using apartments.com to manage and collect rent and all that."
10. Overcoming Challenges: Tenant Incident
A significant hurdle arose when the Hawthornes encountered a fraudulent caretaker who caused extensive damage and distress to tenants. This incident cost them approximately $30,000 and tested their property management strategies. Through diligent effort and collaboration with law enforcement, they successfully resolved the situation, reinforcing the importance of thorough due diligence and effective property management.
Notable Quote:
Daniel Hawthorne [36:40]: "It was a big...tenant hostage deal there. They were not fully disabled, but this person actually put...nailed the windows so that way no one could get in."
11. Lessons Learned and Advice
Daniel and Becca emphasize the importance of surrounding oneself with like-minded, successful individuals and leveraging community resources such as BiggerPockets. They advocate for early investment in professional management to scale effectively and advise rookies to remain patient and adaptable in their investment strategies.
Notable Quote:
Ashley Kehr [11:33]: "Being around other people who are like-minded can just change what you're capable of."
12. Conclusion
Daniel and Becca Hawthorne's journey from their first multifamily property to a thriving 32-unit portfolio underscores the potential of strategic multifamily investing for building substantial cash flow and wealth. Their experiences offer valuable insights and actionable strategies for beginner investors seeking to embark on their real estate investment journey.
Contact Information:
- Daniel Hawthorne: hawthorne.d12@gmail.com, Facebook: Daniel Hawthorne, LinkedIn
- Becca Hawthorne: Primarily connects through Daniel
This episode of Real Estate Rookie provides an in-depth look at the practical steps and personal experiences of building a multifamily property portfolio. Daniel and Becca's story is a testament to resilience, strategic planning, and the power of community in achieving real estate investment success.