Overview of How to Turn One Condo Into a 17-Unit Rental Portfolio!
In this episode of Real Estate Rookie, Rick Albert shares how he got started investing with a $225,000 condo in Los Angeles, turned it into a successful house hack, and used the equity from that first deal to scale into a 17-door portfolio across three states. The conversation covers the exact numbers, renovation strategy, financing tools like a HELOC and FHA 203(k) loan, the risks he underestimated, and the operational lessons he learned from managing tenants, renovations, and high-cost-market investing.
Key Deal Breakdown
First House Hack: LA Condo
- Bought a 2nd-floor condo for $225,000.
- Put 10% down and invested about $18,000 in renovations.
- The unit had been occupied by a heavy smoker for over 30 years, which scared off other buyers but not Rick.
- He used a simple room-rental model:
- Rented one room for $800/month
- Total monthly expenses were about $1,600, including utilities and cleaning
- He also included biweekly house cleaning, which made the arrangement easier to manage.
Renovation Approach
- Focused on cost-effective upgrades:
- Flooring
- Kitchen updates
- Bathroom reglazing
- Countertop painting
- New paint and smoke remediation
- To remove cigarette odor, he used:
- TSP cleaning
- Kilz / nicotine-blocking primer
- Multiple coats of paint
- Air purifiers
Why the Condo Worked
- It was a low-barrier entry in an expensive market.
- The condo’s layout and location made it attractive:
- Walkable
- Near his office
- Smaller renovation scope than a house
- He avoided bigger risks like roofs, sewer lines, and major exterior maintenance.
How He Scaled the Portfolio
Using Equity to Fund the Next Deal
- When the roommate moved out and later when he transitioned to the next opportunity, Rick used a HELOC on the condo.
- He pulled roughly $80,000+ in equity to fund the down payment and closing costs for the next house hack.
Second House Hack: ADU + FHA 203(k)
- Bought a property with the plan to add value through:
- An addition
- A remodel
- A garage-to-ADU conversion
- Used an FHA 203(k) loan, which let him finance both the purchase and renovation as a primary residence.
- The project was expected to take 4 months but ended up taking 12 months.
- Major challenges included:
- Delayed inspections
- Slow draw payments from the lender
- Underbudgeted renovation costs
- Unpermitted work that had to be torn down and rebuilt
- Unexpected sewer line and code-related costs
Living in the ADU to Make the Numbers Work
- Rick and his wife moved into the studio ADU and rented out the main house.
- This allowed them to:
- Keep the property owner-occupied
- Improve cash flow
- Later refinance into better terms
Refinance and Rental Income
- After completing the project, they:
- Refi’d into a better structure once rates improved
- Later rented the main house for about $2,999/month
- The ADU design helped with rentability:
- Private layout
- Separate yard
- Separate washer/dryer
- Strong natural light
- Better privacy than many ADUs
Portfolio Expansion and Exit Strategy
Selling the Condo
- Rick kept the condo rented to a friend for four years.
- In 2022, he sold it for $453,000.
- A major reason for selling: LA’s eviction moratorium, which made the risk/reward less attractive in that moment.
Reinvesting the Equity
- After selling, he redeployed capital into:
- A 50/50 partnership on a fourplex in Nashville
- A triplex in Alabama
- The Alabama deal became a BRRRR-style investment:
- Bought for about $90,000
- Put money into hot water heaters and repairs
- Later completed a cash-out refinance
- He described that as his first real introduction to BRRRR.
Lessons and Best Practices
What Made the First Deal Work
- He leaned on:
- Networking
- Market familiarity
- A willingness to buy a property with obvious cosmetic drawbacks
- He found a tenant through his own network rather than relying only on listings.
- He treated tenant sourcing like marketing:
- Facebook groups
- Friends
- Fraternity/alumni networks
- Personal contacts
Managing Friends as Tenants
- Rick rented to people he knew, but he was intentional about setting expectations:
- Clear boundaries
- Lease terms
- Utilities caps
- Quiet hours
- He emphasized that friendship and landlord-tenant relationships need to be separated early.
What He’d Do Differently
- Pay more to speed up rehab draw inspections
- Front more money upfront to keep contractors moving
- Use better scheduling and tighter project management
- Be even more deliberate about HOA docs, utility caps, and lease addendums
Notable Investing Insights
House Hacking in High-Cost Markets
- Don’t ignore condos and townhomes if they’re the only realistic entry point.
- Look just outside the most desirable neighborhoods to get better value.
- In expensive markets, appreciation can be powerful:
- 3% on a $1M property is far more impactful than 3% on a cheaper one
FHA 203(k) Loan Takeaways
- Useful for primary residences with major renovations
- Best for:
- Additions
- Rehabs
- Converting existing structures into legal units
- Not ideal for every investor because it can be:
- Slow
- Bureaucratic
- Dependent on appraisers and city inspections
- Best use case: when it’s the only viable way to get the project done.
A Less-Known Financing Trick
- Rick shared that borrowers can sometimes raise the interest rate to receive lender credits.
- This can help cover closing costs if you plan to refinance later.
- He said this can be a smart move on fixer-upper or temporary financing situations.
Actionable Takeaways for Investors
- Start with what you can afford, even if it’s a condo.
- House hack with a plan: roommate income can dramatically reduce your living costs.
- Use equity strategically: a HELOC can fund the next step without selling.
- Be flexible on financing: FHA 203(k), lender credits, and refinancing can all be useful tools.
- Design for rentability:
- Privacy
- Laundry
- Yard space
- Separate access
- Don’t underestimate operations:
- Draw schedules
- City inspections
- Contractor cash flow
- Tenant screening
- Know when to hold and when to sell:
- Sometimes exiting a property is the better move if risk outweighs upside.
Final Thought
Rick’s story is a strong example of how a first-time investor can use a small, practical house hack to build momentum, then recycle equity into increasingly larger opportunities. The episode is especially valuable for investors in high-cost markets who want to understand how to use creativity, financing, and persistence to grow from one condo into a multi-state portfolio.