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How to Build a $1 Million Real Estate Portfolio on the Side | Black Kite Express

Austin Miller built a $1.2 million real estate portfolio at 31 years old — for free.

He’s a side hustling real estate investor specializing in “creative” financing deals — houses he can buy without using his own money.

Austin is the author of Free Houses: How To Build Your Real Estate Investment Portfolio With No Money.

His basic strategy is this:

  • Find a killer deal on a house that needs some work.
  • Buy it with the creative financing methods Austin talks about in this episode.
  • Either do the work yourself or hire contractors.
  • Put a paying tenant in the newly rehabbed home.
  • Refinance the home with a traditional bank loan and pay back the original funding source.

The end game is positive monthly cash flow from rental income, plus building a long-term wealth through tenants paying off the mortgage.

Austin has developed some unique and interesting ways to hard money and private money to fund his property purchases.

The best part – it’s truly a real estate side hustle that can be done in a few hours a week the end result is passive income from rental revenue.

Tune in to hear how Austin finds killer deals, buys the houses without risking his own capital, and then rehabs them to get ready to rent.

Related: Want to get into real estate without the work? Check out the popular Arrived platform for fraction ownership of cash-flowing rental properties nationwide.

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How to Find “Discount” Houses

“Like in any industry, you’ve got to nose around a little bit,” Austin said.

Austin said when he started out he would talk to bankers to see if he can find out about any foreclosures. He talked to real estate investors in his area, joined groups for real estate investors, talked to real estate investment realtors, kept an eye out for “For Sale” signs when he’s driving around, and looked online.

He submerged himself into the industry as deep as he could and has even found a
couple of deals in the classified section of his local newspaper before.

When dealing with banks Austin likes to approach smaller local banks. This way it’s easier to talk to a person who’s making decisions, and they are more likely to know about deals in your area.

Hard Money Loans

Once you’ve seen a property you want to buy you need to raise the funds for the down payment and Austin has some strategies for this.

When Austin graduated college, he knew he wanted to get into real estate. His realtor at the time introduced him to some hard money lenders.

Hard money lenders are small companies looking to lend money in the short-term at a high-interest rate. Austin ended up paying 14-18% at the time, but he knew it would only be for 4-5 months while he bought, renovated, and secured a bank loan on the property he was interested in.

The lenders mitigate the risk by transferring the money through a title company on the deal closing. They will also take control of the property if you disappear or fail to make your payments to them.

Austin said it’s as simple today as doing a Google search for hard money lenders in your area. He recommends working with someone local you can talk to on a one-to-one rather than larger companies.

Then you need to make an estimate on the rehab costs. You can do some research
ahead of time, and Austin recommends using the 10-day investigation period after the deal is closed to get some quotes from contractors.

Once the house is fixed up you can go to the bank and tell them you have a house with a less than 80% loan-to-value and secure a traditional mortgage to pay back the hard money lenders.

Private Money

The saying within the real estate investing circle is, “Hard money is good, private money is better,” Austin said.

Austin said that everyone knows somebody with money, whether they’re aware of it or not. He’s even had an offer from a friend’s dad before when he was talking about his business.

Networking groups are also a great way to meet people who might be interested in
private money lending. Austin went to a meetup, stood up and said, “I’m looking for somebody with a lot of money.”

A woman passed him a note saying she was interested and they ended up making a
deal.

Another reason to find private lenders instead of hard money lenders is because you can secure lower rates. You have a lot more say in what the interest rate is going to be, Austin said you can typically expect to pay 7-10%.

Limiting Your Liability

It’s always possible for a deal to go bad, so it’s good practice to sign properties over to an LLC to limit your liability and protect your personal assets.

Austin has all of his properties under the same LLC, although he knows of some people who used a different LLC per property. Once you get to a certain point you can use the umbrella policy, but Austin recommended talking to your attorney to figure out what’s best for you.

Buying a House with a Credit Card

Austin was researching ways to get funding when he came across balance transfer
checks. These are checks you can have written out for whatever your credit limit is on your credit card.

After calling the number on a couple of his credit cards he found a lender willing to write a balance check. The balance had an annual interest rate of 6%, which goes up to 12% after a year.

It wasn’t the best rate; he could do better with a private loan. Then he rang another company and found out they were writing balance checks at 0% for the first year, with just a $75 one-off fee.

Austin increased his credit limit to $16k and had them send him a check for the whole amount.

He found a property for $12k that needed about $50k of rehab and knew he could
appraise the property for $80k when the work was finished.

He got the additional funds for the rehab work from a bank loan and this is how he
brought a house with his credit card.

Related: Check out my free course Credit Card Rewards 101!

Deals Gone Wrong?

Austin has had projects go over budget and needed to dig into his pocket, but he said that overall the deals have balanced out.

With no real horror stories to speak of, Austin said, “Minimize your risk, protect your downside, and usually you’re ok.”

Austin’s #1 Tip for Side Hustle Nation

“Be a doer; someone who’s not afraid to take action.”

Links and Resources

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