My friend Spencer bought his first rental, proving that it’s super easy

I’ve helped lots of people buy their first rental, but this deal was really fun to follow along with. I have this friend Spencer who I just closed his first deal and I’m eager to reflect on his process from an outside perspective. If i can do well in real estate while being a lazy idiot than anyone can, and thankfully for Spencer, he’s not lazy.

This deal was a long time in the making, about a year. From him it required patience, tenacity, and a considerable amount of headache medicine. The guy is ~28 years old and this is his first dedicated rental purchase. I wanted to showcase this deal specifically because it was a difficult and annoying which is a more accurate representation of what many people can expect doing their first deals (contrary to all my deals which are EASY).  Additionally it has some interesting aspects that aren’t in many deals: it was seller financed, he found it through wholesaling, it took a long time (long enough that most people would have given up), and he learned some lessons first hand that aren’t talked about enough.

If you want to know the final numbers he wrote a great and thorough write-up Spencer did on this property  I will post the links below. The following entry will not be about the deal itself, but what it takes to put one of these deals together

Part one 

Part Two

Part Three

Our backstory

I had just moved to Las Vegas and I was out making friends like I always do: diligently. One morning I was at a casual coffee meet and I started chatting up this young new investor. He didn’t have any deals under his belt, and he seemed a bit far away from closing anything but he had some qualities I instantly recognized as useful:

ConfidenceIf you don’t believe you can do something, you can’t. No one one has perfect confidence but most people have terrible confidence. He seemed undeterred by negative events and was mostly immune to my shit talking, this is definitely a advantage.

Not distracted – I refrain to use the word focused, because I don’t think that’s his strength. He definitely has a bad case of “shiny bouncy ball” syndrome. However what he did do well is not get caught up in unproductive habits nor does he succumb to social pitfalls like lifestyle inflation or trying to impress other people. He drives an old beater car, dresses plainly, and shaves his head to save on haircuts (not worth imo). This allows him to spend time on things like self improvement and financial success. I love to bust his chops about being ‘lame’ but the results speak for themselves and are concrete. He doesn’t waste time on things that are a waste of time. This is is a strong quality to have, albeit boring.

Big ego – look, if you aren’t cocky enough to think you’re entitled to TAKE what you want from the world, then you’ll be forever waiting for permission from someone else. I could tell this guy had a lot to prove to the world and himself which is good, because he just might prove it! Plus, I have a soft spot for a bit of well deserved arrogance. 

So we started meeting once every few weeks casually to discuss real estate, economics, and various topics regarding our inevitable future success. We became friends pretty quickly and he wavered back and forth about real estate for a few months but eventually started to get quite committed.

Putting the deal together

Every new investor wants to wholesale because they think they can do it without money. Spencer found that he was able to do it without a LOT of money, but he still had to come out of pocket $20,000. I’m willing to bet this is his last wholesaling deal for a while and that he would not much recommend wholesaling either. To be fair, if he had turned this deal over to another investor and just taken a cut then this deal would be proof that you can wholesale without any money.

Wholesaling is basically finding off-market properties and negotiating with the sellers directly to find out what problems you can solve for them and how to get creative on deals. The basic approach is to get lists of potential properties (absentee owners, tax delinquent, etc) and mail them letters with offers to buy their house. So that’s what he did.

He’s so cheap though he didn’t’ want to pay for mailers, so each week he was writing thousands of handwritten letters to absentee owners. This is a seriously dumb and inefficient use of time. I was damn near verbally abusing him for going down this path, I told him repeatedly to just spend the money to get mailers printed and create some efficiency. Luckily the stubborn kid didn’t listen to me because a few months in he got a response from an owner of a 4-plex here in Las Vegas with the owner in New York.

So negotiations went back and forth for a while. He built great rapport with the seller, but it didn’t seem like the guy was highly motivated to sell. I think they went back and forth for 2-3 months in negotiations alone. 99% of people, myself included, would have quit in that amount of time. Things seemed to be going well, and he didn’t have any other prospects at the time so it certainly made the most sense to sink into this deal.

They agreed on a price that was nearly retail price (over actually, and I’ll get to that in a moment), but it’s a Las Vegas 4-plex in the summer of 2017 so demand was HIGH to say the least. To make up for this though, the seller agreed to carry 90% of the note. This means Spencer would pay the owner and not need to get a mortgage. This saves on time, headache(supposedly), and allows for flexibility in terms. Banks are rigid and want their borrowers to conform to their standard lending approaches. This isn’t a bad thing, but the seller finance allowed Spencer to buy this deal without a lot of cash and the rate much lower than market rate (plus no points, fees, realtor costs, etc).

Vendors make me hostile, im proud to say it wore off


So the deal was found, negotiated, agreed on price and terms, and set to close right? RIGHT?!?! Unfortunately Spencer learned what I found out long ago, that people will always take the path of least resistance.


So without realtors in the picture he needed to hire private lawyers and title companies to handle the transaction. This is normal and no big deal but they delayed his transaction to the tune of ~5 months. 5 months he spent chasing these people while they went on vacation, missed appointments, pushed their obligations to the side, and generally gave him the runaround. Spencer isn’t a pushover, but he’s not one to throw temper tantrums, at least, he didn’t used to be.


If you’ve met me, or read much of my content, you know that I live in hostility. This is not a complaint, I actually quite like it, and I find it very efficient. When Spencer and I first met he was a bit caught off guard with how quick I am to throw obscenities around or my absolute intolerance for behaviours I deem incorrect. Lots of people think I’m just maybe unstable, but I watched Spencer transform in a similar manner. Having to deal with the ineptitude of others will change a person. When you rely on people to do their jobs properly at the cost of your success is frustrating to say the least. Imagine a lawyer that you paid in full up front, he has ZERO downside if your deal falls apart, and he has all the money from the transaction already. His incentive to work hard is no longer economic, it’s just reputation at this point and the guy lives in New York so I’m pretty sure he wasn’t too worried about that. So I was delighted to watch my friend come to the gym in the evenings with a red face of anger and throwing profanity around cavalierly. Not that I hope for anyone’s misfortune but it does feel validating to know that my constant anger is at least understood by someone else now.


In the end, he closed without having a heart attack and all the struggles he endured to make it happen were rewarded. Not rewarded with cash, but achievement, and that’s what makes this business so amazing. The money is ok, but persevering through something so complex, so difficult, and in the face of mountains of morons slowing you down is quite a confidence boost.


Don’t chase money, chase challenge

Mistakes were made


Buying at retail – The number two rule of real estate is “You make money when you buy”. So buying a house at the market rate rarely makes sense. In this instance Spencer paid a bit OVER retail and I won’t say it was an ideal move, but there seems to be enough risk mitigation built in that he will still make money on it. The Vegas market has been rising steadily for the last 2 years, and if it continues to do so the minor cost of overpayment will pale in comparison to long term gains. In fact at the time of this writing, since the deal did take so long, if you compare the retail price of the building compared to what he paid it was actually under retail. Damn near cheating! Also, it’s incredibly important to remember that this was seller financed. So is it better to pay a bit over asking price and save a TON of transactional costs and time on bank underwriting, not to mention scrutiny? Maybe it is.


Too damn nice – I’m a nice enough fella, but certainly no one would describe me as ‘nice’. That said even I’m way too nice most times. Spencer made this common mistake and that’s ok. He dealt with a lot of vendors and he did what anyone would do: he trusted them, he treated them with respect, and he assumed they would do a good job. Well he learned that lesson. Never again bro. What he found was a gang of inept, selfish, mouthbreathers that only made him mad and barely did what they were paid to do. This is the mistake everyone makes in the beginning, it’s imperative to run a tight ship going forward.

This was the easy part!

The deal closed earlier this week, and while his stress may be over and he may be feeling good about himself, the hard part has just begun. See real estate is like any good drug addiction, the fun is getting the score, not having the drug problem. Buying assets is fun, challenging, and generally profitable, but it’s also a constant responsibility and it’s never “set it and forget it”. While I may have drowned the previous vendors in insults as if he never has to deal with them again, the reality is he will have a property manager forever now. The building has 4 tenants with personalities, individual needs, and drama. Some won’t pay, some will trash his units, sometimes the building will just have a problem that’s hard to fix.

Unexpected occurrences are to be expected

It’s not the 2am overflowing toilet problem that he will worry about. It’s the unexpected city ordinance costs, rising insurance prices, social drama (the building is not in an A class part of town), higher than expected vacancy, early roof replacements, etc. It’s the nonstop economic and emotional cost of bearing the responsibility that can really drain people. I’m sure he will be 100% fine dealing with this, but it’s certainly most stressful than the acquisition itself.

What to learn

If you got all the way to the end of this block of text, I hope it was more than just entertaining. I wanted to highlight the pitfalls and stress that new investors have to deal with. This was a fun deal to watch Spencer go through and I loved watching him melt down in anxiety from it. It’s also both a cautionary tale to new investors that the deal may seem easy on paper, but the real world is tough and will chew you up if you’re not prepared. However, I also wanted to show how possible real estate is if you persevere. I’ve never done a seller financed deal, I’ve never done letters to absentee owners, and I’ve never done a deal that takes more than 2-3 weeks. So I commend him on all of those, and it should be massively encouraging to anyone new and interested that this is POSSIBLE if you just try.

Alex Felice

Alex Felice

My name is Alex, I’m a real estate entrepreneur who became camera obsessed This website shares my journey, from creating financial freedom through real estate, to exploring the wisdom of philosophy, and finding my love of art through cameras. Everything I learn about life goes here so I can hopefully make yours easier

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