30 Rentals in 5 Years with Small, Affordable Multifamily Properties

Summary of 30 Rentals in 5 Years with Small, Affordable Multifamily Properties

by BiggerPockets

40m•April 22, 2026
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Overview of 30 Rentals in 5 Years with Small, Affordable Multifamily Properties (BiggerPockets)

This episode follows investor Jesse Walters (Columbia, MO) and how he built ~30 rental units in ~5 years using small multifamily properties, affordable housing conversions, flips, and a builder-partnership new-construction model. Jesse shares deal sourcing tactics, underwriting rules, financing strategies (including cross-collateralization to achieve a no-cash-down commercial conversion), what worked, what flopped, and actionable lessons for scaling in a high-rate/competitive market.

Key takeaways

  • You can scale in a tough market by focusing on small multifamily and affordable housing, walking into equity, and leveraging relationships.
  • Conservative underwriting rule: use Henry’s formula — gross rent minus 30% (for expenses) and then cover debt, taxes, insurance. If it still cash-flows, hold; otherwise consider flipping.
  • Source deals through mailers/postcards, trusted agents (pay full commission to keep pipeline warm), lender relationships, and niche MLS/online listings.
  • Partnering with builders on new construction (builder builds at cost; profits split) is an efficient, low-labor way to earn development returns.
  • Be prepared for inspections, market shifts, and overruns — sometimes a “flop” teaches more than a win.

Jesse Walters — timeline & portfolio snapshot

  • 2017: Wife gets real estate license; they learn the market.
  • 2021: First rental — turnkey single-family (~$165k, 20% down) rented for ~$1,500/month.
  • 2022: Second single-family (value-add, ~$130k + $15k rehab) rented ~$1,500/month.
  • 2023: Bought a fourplex for $190k; stabilized to ~$3,000/month.
  • 2024: Flipped four houses and bought two rentals.
  • 2025: Several purchases including a duplex and a bigger motel-to-apartment conversion; portfolio now ~30 doors with an estimated total value just under $4M (including motel after rehab).
  • Strategy: Generally flip single-families, hold small multifamily; moving more into new-construction partnerships in 2026.

Deal sourcing & relationship strategy

  • Primary sources: direct mail/postcards, investor-focused online platforms, Facebook, and agent referrals.
  • Key tactic with agents: pay the agent’s full commission (don’t haggle) to encourage repeat referral flow and create mutual benefit.
  • Offer hit rate: roughly 1 in 10 offers gets accepted (persistence matters).
  • Local lender relationships: have blunt, direct lenders for quick feedback on deal viability.

Underwriting & exit strategy

  • Conservative underwriting: Gross rents – 30% (expenses) – debt/taxes/insurance; if positive, keep.
  • Walk-in equity rule: never buy at true retail; buy such that you have immediate equity and at least optional cashflow.
  • Exit options: hold for cashflow, refinance to pull equity, or sell if the asset underperforms. Jesse typically flips singles and holds multis, but adapts per deal.

Financing & partnerships

  • Banks often ask for 20–25% down on atypical deals; solutions:
    • Cross-collateralization: Jesse used a fully paid condo as collateral to effectively achieve the motel buy with no cash down.
    • Build credibility: show track record, bring on a reputable builder/GC to reassure banks.
  • DSCR refinancing example: duplex bought at $210k with $30k in rehab, appraised at $330k — refinanced to pull capital and secured a ~5.8% 30-year rate (result: recovered cash invested).
  • New-construction model with local builder:
    • Jesse buys lots (often as agent to avoid paying himself commission), builder builds at cost (no builder fee), they list/sell on MLS (no seller commission), and split net profit 50/50.
    • Example: lot $52k + build cost $220k → sale $330k → ~$30k profit split ($15k each).

Notable wins and the “flop” lessons

Wins

  • Duplex (bought $210k, $30k rehab) appraised $330k, pulled capital out via refinance, low-rate loan, and ongoing rents.
  • Motel conversion: bought for $325k, converting ~18 rooms into 10–11 units (projected gross rents ~$9k/month). Rehab expected to take total project cost to ~$600–$700k; rents aimed to stay affordable (1BR $850–900 incl utilities; 2BR $1,050–1,100).

Flop (teachable loss)

  • Ranch walkout flip: bought $265k with a $40k budget but spent ~$65k due to scope creep and higher-quality finishes (market was tightening), sat on market 4 months, inspections revealed deck & roof issues costing ~$10k+. Net profit essentially near zero.
  • Lessons: don’t fib on underwriting to hit seller's number, factor turning-market risk into renovation budgets, expect inspections to reveal cost items, and calculate whether extra spend will actually change ARV.

Actionable advice (what you can implement)

  • Build and maintain strong local agent and lender relationships; pay agents fairly to build repeat referral flow.
  • Start a targeted direct-mail/postcard campaign in your submarket(s).
  • Use conservative underwriting (gross rent minus 30% rule) and aim to “walk into equity.”
  • Consider cross-collateralization or alternative bank conversations for non-traditional deals (commercial to residential conversions).
  • Partner with reputable builders on buy-lot / build-at-cost / profit-split deals to earn development returns with less hands-on construction work.
  • Always plan for inspection surprises and hold contingency for market slowdowns — don’t rely on gut decisions under pressure.
  • Track offers and maintain persistence — success often comes after many “no”s.

Memorable lines / concepts

  • “Speak to the people in the ‘what’s in it for them’” — structure offers to create mutual benefit (agents, sellers, lenders).
  • “Walk into equity” — leave yourself an exit option and lower downside risk.
  • One-in-ten offer acceptance rate — persistence and volume in deal-making matters.

Final numbers & current focus

  • Portfolio: just under 30 doors (including the motel conversion once complete).
  • Portfolio value: right under $4 million (current estimate).
  • Current focus (2026): more new-construction lot + builder partnerships, selective duplex flips, and completing affordable multifamily conversions.

If you’re scaling in today's market: focus on local relationships, conservative underwriting, multiple exit paths (refi/sell/hold), and creative financing structures (cross-collateralization or builder partnerships) to reduce upfront cash needs and risk.