“How I did it” features real stories about achieving goals through financial planning and preparedness.
Kenton Doyle has been in the real estate industry since his early 20s. When he started thinking about not only selling properties, but building his own investment portfolio nearly two decades later, it felt natural.
As an agent, Doyle needs to take continuing education courses to keep his license current. He’s used this requirement to his advantage to learn more about financing and purchasing investment properties.
“It was really hard to get over the hump to take the plunge and just buy it,” he says of the first property he acquired in 2007, a single-family home in Stillwater, Minnesota. “I thought about it long enough, I just knew we could make it work. We analyzed the numbers and looked at it 10 different ways. There’s always going to be a bunch of what-if scenarios that will deter you from wanting to purchase the property.”
Doyle used a home equity loan for the down payment, closing costs, and $30,000 in improvements. While he eventually sold that first property, Doyle and his wife Debbie now own half a dozen single-family homes in Duluth and the Minneapolis-St. Paul metro area. “Once you take the leap, it’s just like anything else,” he says. “You get a little experience, and all of a sudden you realize it wasn’t that big of a deal.”
In his real estate job, Doyle focuses on the sale of new construction homes. But that’s not always the case when seeking out potential investment properties. While some of his rentals are turnkey and immediately available after closing, others are fixer-uppers – but that doesn’t deter him.
“If the price is low enough but it needs a lot of repair and work, I’m perfectly fine with that. I like the challenge of it,” says Doyle, who does many of the repairs and upgrades himself. “I feel like I could walk into any house and remodel it instantly in my head.”
Finding homes is one of the easier parts of the business, according to Doyle. In fact, it’s his goal to add two or three properties to his portfolio every year. This involves viewing potentially hundreds of properties and often losing out on offers to cash investors.
In the end, however, it all comes down to financing. “The numbers just have to work,” he says. “Just like if you’re buying a house for yourself to live in, you have to pay what you feel comfortable with. Another property will come along,” if it doesn’t work out.
Wanting to avoid dipping into retirement funds, Doyle often saves up for the down payments. The down payments are usually 20 percent since mortgage insurance won’t cover investment properties. He then finances the balance by leveraging the equity from his other homes, borrowing against them or refinancing.
Monthly mortgage payments are taken care of by tenants, many of whom are college students. “Unless everybody decides tomorrow they’re all going to stop going to college, I feel like there’s a really good supply of tenants as long as I keep my plan and my business model succinct as to what I’m trying to buy and where,” he explains.
This niche market Doyle has carved for himself also comes with another perk. His two college-age kids attend school in Duluth, where many of his properties are located. Doyle is often a couple hours away in the Twin Cities. So his kids – who live in two of the properties with their friends – are able to keep an eye on the homes. They can drop by to meet an inspector, give a home tour or alert their dad of any potential problems.
While the occasional home repair and late rent payment are unavoidable parts of being a landlord, the challenges are outweighed by positives. These include tenants who are paying down the loans, investments that appreciate in value due to upgrades and a monthly income. “I look at this as a way to fund your life without having to worry about your retirement accounts,” Doyle says.
Doyle admits that his job as a real estate agent makes it easier to run an investment property side hustle. His schedule is flexible and he can work from anywhere. But he eventually hopes to take the business full-time.
“Anybody can do it,” he says. Technology has made it simpler to fulfill tasks like advertise properties and collect rent, “but properties are still properties. You still have to look at the home, understand what needs to be repaired, and evaluate the cost of those things. You still need to do your homework.”
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