The Repeatable “Stack” Method to Buy Rentals Faster (and with Less Money)
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You could still hustle your way into a cash-flowing real estate portfolio with upside despite today's market challenges. You hear me say it over and over. I am long on the Midwest, and I think house hacking is the best way to start investing. And if you haven't heard of the stack method, it still works to exponentially scale within just a few years.

And today we're speaking with an investor who is living proof that all of these strategies can be huge winners in today's investing climate. Connor Anderson used to work here at BiggerPockets and has since left to build an impressive portfolio in Michigan using the stack method. He's progressed from a condo to a single family home, and he's now onto multi-unit properties and is finding both cash flow and future upside despite today's market conditions.

If you're not familiar with the stack method or you're still not convinced about the Great Lakes region, I think this conversation will give you a lot to think about and to consider for your own portfolio. Let's bring on Connor.

Connor Anderson, welcome to the BiggerPockets podcast. Thanks for having me, Dave. I'm excited to be here. I'm excited too. You are joining a growing tradition of former BiggerPockets employees who have become successful real estate investors and come back to join the show and update us on your life. It's great. I know there's a couple of other people that have done the same thing. I want to share my story with everyone here. Great. Well, we'll get to what you're up to today, but let's just start with sort of the reasons that you got into investing in the first place.

When was that? I remember thinking specifically, I was sitting in my six bedroom house that I was renting with my friends in college and the landlord, they were just, you know, kind of a mom and pop. They'd show up, you know, once a month, collect checks from us. And they didn't seem like they were all that...

you know, special. And I'm like, well, I can do this. And I'm like thinking like, all right, you know, they're collecting 500 bucks per person here. I want to be doing that someday. And, you know, just padding my wealth that way. Yeah, it's a very good thought. I really cringe thinking about

how poorly I treated the rental properties I lived in in college. Now as a landlord, I'm like, oh my God, how irresponsible was I? It's funny. I've seen those properties that I lived in pop up for sale. And my brother's like, you should buy one of these. And I just think back to how poorly we treated them. And I'm like, absolutely not. I do not want to be on the other side of that.

I know the problems in that property because I created them. Correct. We're avoiding those. Okay. So you're in college. And then how did you go from listening to podcasts, interested in real estate to actually investing? Yeah. So graduated college, moved out to Denver. And that's when I ended up with a job at BiggerPockets because I was a big fan of them prior, just kind of connected with Scott Trench and Craig Curlop and landed a job there doing advertising sales. But

Truth be told, I did everything that is advised for new investors to get started. And I cut my expenses to as low as I possibly could to save as much money. So I was renting out my car on Turo and then biking 10 miles to work every single day. I was keeping my grocery expenses super duper low. Maybe spend like 50 bucks a week on groceries.

I even used PTO to take a day off of work at BiggerPockets, still kind of collect my salary, and then work for my friend's tent rental company to save up extra cash. Double dipping on BiggerPockets. I was, yes. But I mean, you're allowed to. Yeah. So I was doing anything and everything I could to scrape together enough money to buy that first –

property and house hack with an FHA mortgage. So that's what I did from probably six to eight months of just absolutely grinding it out, saving to buy that first house hack. I feel like I need to ask you to share the story about living in Craig's house, because I know you were saving up a lot of money. Can you tell us about your living arrangement with Craig Kirilop, who, if you don't know him, he's been on the show many times. He wrote a book on house hacking for BiggerPockets. Yeah. So it's a funny story, but Craig and I were good friends. And

We came up with an arrangement that incentivized me to buy property as quickly as possible, but also saved me money. So I moved in with Craig into a second house hack and was paying him $400 a month in rent, but my rent went up $50 a month until I bought a house.

So basically he was trying to get me out of there, you know, out of there and into investing as quickly as possible. So it was a fun arrangement that we, we put together and I think I was there for like maybe six or so months. It's hilarious. A tough love situation. So you started at 400 and, but you're paying 700 a month. That must be very motivating. I would like, that's,

Pretty high pace of inflation. It's like 10% a month. Yeah, I have never heard of anyone's rate going up $50 a month. It's maybe $50 a year. So yeah, I was motivated to get out of there. But it worked. Yeah.

Can you tell us a little bit more the numbers about what target price you were looking at for your first deal and how much you needed to save up? Yeah. So I was pre-approved for around like $250,000 to $280,000. And this was back in late 2018. So with an FHA mortgage, I think I ended up all in total spending about $15,000 out of pocket for the down payment and closing costs on that purchase. And I remember...

Closing on the property, I showed up to the closing table with my mattress strapped to the top of my car. I got made fun of by my real estate agent and my lender, who –

And I was so excited. I want to move into the house. But I had like maybe $1,500, two grand to my name after that closing. But I was excited to move in. That's unbelievable. I have never heard or seen someone showing up ready to move to a closing table. But I love the enthusiasm. Yeah. So you also mentioned something that I want to call out, which is that it sounds like you got pre-approved for your mortgage pretty early on.

which is a step I think a lot of people skip when they first get started and spend this time

wondering what they'll qualify for or how much money that they need to save up. But just wanted to recommend to everyone to do what Connor has done if you're trying to get your first deal, because he knew exactly what he was pre-qualified for. You can build a buy box around that and you can set a savings target and sort of back into how long it's going to take you to buy a goal. So great, great work there. When you were trying to look for this first deal,

Did you have a long-term strategy or were you just trying to buy anything that you could afford and sort of make work? Yeah. So I was really just trying to buy anything that I could afford because Denver is expensive. My income wasn't crazy high yet. So that $260,000 range is basically all I could afford. And in Denver, that basically meant I could buy a townhouse. So I found...

a townhouse that was two bedrooms, two and a half bathrooms with an unfinished basement, knowing that I could finish out that basement. I lived in the basement bedroom and then I rented out the upstairs bedrooms for about $800 a month and I accomplished the goal. I was living for free. Awesome. So yeah, took that pre-approval.

Worked with what I had and found a property that made sense. Were the roommates that you had random people you just met? You found tenants? Were they people you knew? No, they were friends. One of them was a friend from college who also moved to Denver, and the other was a friend from the gym. Oh, awesome. Yeah, I think that's the best way to get started is finding some friends that are looking to rent. Yeah, it's such a good way to do it.

It makes a lot of sense. So you wound up doing a little bit of value add to that deal, though, too. You finished out the basement. Did you do it yourself or pay someone to do it? A little bit of each. I handled some of the paint and the trim, but I hired out the drywall and the electrical and the carpet. Okay. So that was your condo. You house hacked it. How long did you live there?

I was there for about a year. And then I moved back to Michigan from Denver to be closer to family and friends. And that's when I bought my next property. But I still own that property today. I've had some long-term tenants in there. And it's still cash flows a couple hundred dollars a month to this day. And it's gone up quite a bit in value. So that's been a great first deal for me. All right. So you left Denver. You moved to Michigan, where you're from. What did you do when you got there?

I lived with family and then bought my property in Grand Rapids. And I'd never actually lived in Grand Rapids, but I just knew that it's the second biggest market in Michigan. It's quickly growing. It attracts a lot of young people. So I just knew that's where I wanted to be. So this was the midst of COVID when I was buying this property. I couldn't actually tour it until I got under contract. So I just one day looked at Zillow.

drove by six houses that I thought were interesting to me and ended up writing an offer on one of them. And it's been a fantastic property. You just drove by it and wrote an offer? Yeah, drove by it, wrote an offer. Yeah. That's awesome. In a city that you barely knew? Yeah, I had spent some time there, maybe for a day or an afternoon, stuff like that. But I never actually lived there. But I knew it was just where I wanted to be. Yeah. And great fundamentals in the market. So that totally makes sense. Yeah.

And how did you afford that? Because it sounds like you sort of did the hustle thing for the first deal. How did you finance the second one? So I financed the second one with a 5% down conventional mortgage. But since I was house hacking for a year, it was very easy to save up that cash. I didn't have to rent out my car and never eat out for an entire year. I was able to

Kind of enjoy some luxury. You drove to work. Yeah, it was a lot easier to save up for that second property because my living expenses were so low from house hacking the first time around. So that's why you get into this. That's why you house hack, because it allows you to slowly build up and save money pretty easily. Awesome. So you found that, you moved into it, and then just, I assume for a little while, focused on building out your agent business.

Yeah, so when I was living in that single-family house, I did have roommates for a period of time, but thankfully the mortgage on it is so low. It was like, you know, $1,400. So with roommates paying $500, $600, you know, that covered the vast majority of the cost. But that's when I really started hitting the ground running as a real estate agent in Grand Rapids. So this was...

May of 2020 that I bought that property for $225,000, got up quite a bit in value. And right now rents for about $2,400 and cash flows pretty well. But in those four and a half, five years since then, I've become a very successful real estate agent focusing with investors, have sold about 150 properties since then. And the main people that I work with are investors just like myself. Many of them house hackers, some of them out-of-state investors,

or instant investors along with you know helping my family and friends buy their properties as well that's great i'm curious and congratulations on building such a great business but

Now that you've been an agent there for a long time and you know the market so well, did you make a good buy on the single family? I did. I completely lucked out. I didn't know really much about the market other than like, hey, this seems like a good spot. But I absolutely love that property. I think I bought it in the perfect location. I don't think I could build a house within a different block. Like that's just where I would like to be long-term. So no, I really lucked out. It's so funny because I know like

the data person, but intuition goes a long way with these types of things. Even if you're just driving around, you just get a gut feel of where you want to live because you will get a sense for which places are growing and which places are most aligned with your strategy. So good job on that. Yeah. Thank you. All right. So you bought your condo, you bought your single family, you're building an agency business. I want to hear what comes next, but first we got to take a quick break.

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your single family home as your first property in Grand Rapids. What did you do after that one? Yeah, so I bought that property, the single family house in May of 2020 and then became a real estate agent. And during that time, quit my job at BiggerPockets and went from W-2 to 1099.

And unfortunately, I had to wait a couple of years until I was able to buy that next property because financing was no longer easy for me as a 1099 employee without any sort of track record. Yeah. You know, I'm sure you're here on the podcast too. People are always talking about...

whether they should become a real estate agent in this decision. And there's no right or wrong answer, I think, to this. But the very important component of this is that getting loans as a 1099 employee, whether you're an agent or any other type of 1099 employee,

employee is a lot harder. You could do DSCR loans, but those are more expensive. But so it's just something to take in consideration. Basically that the lender just needs to see that you have strong, steady income coming in from being a 1099 employee. In my case, I kind of had like a half a year on my first taxes. And then I had two full years, you know, after that, before I was able to buy my next property.

And what did you buy? It was 2023. So there was not a ton on the market at the time. Listings were pretty low. So I created my own inventory. I went and basically scoured every single expired listing, withdrawn listing, or canceled listing in the area that I wanted to live. That was a duplex or two to four unit property.

reached out to every single one of those sellers that had a property that I thought was attractive got one callback from a guy who had 13 or 14 properties that he was looking to offload so I picked my favorite one close

Closed on that with an FHA mortgage. Used my commission to cover the vast majority of my down payment. It's actually kind of funny. I collected a check at this closing table. Wait, how? So 3% of my commission covered 3% of the down payment. Yeah. I had $5,000 in closing costs that I had the seller pay for because there was some work that needed to be done. Yeah.

I closed strategically on like the first or second day of the month. So I got all of the rent for that month, plus their tenant security deposit, which is, it's not my money. It's the tenant's money, but it still is money that was credited to me. And then of course I had my earnest money deposit that I paid up front. But I think all in told my cash out of pocket to close on that property was like,

five grand, but I collected a check at the time. That's unbelievable. Yeah, it was a very weird experience. The lenders were confused. They didn't know what to do. Yeah. I was going to say, you've been a part of, you just said, 150 transactions since. Have you ever seen any other buyer get a check? No. No buyers ever pull that off. Anyone listening, if you've had this happen, please let me know. I'm very curious if this is a once-in-a-lifetime thing. So let's dig into this one because obviously 2020, 2023, big shift in market conditions. Yeah.

First of all, if you had looked at an on-market deal, was there anything attractive or was going off-market and sort of grinding it out the only way to find something that really made sense? Yeah, just the inventory has been a struggle for the last five, six, seven years. It just is an issue, especially here in Grand Rapids. Yeah.

There was just not many deals to pick from. There was maybe 10 to 12 listings for multifamily properties on the market compared to right now we're seeing like 40 to 50. So it was slim pickings. So I had to kind of go off market to even find something that I would want to live in. Yeah. How much time did that take you?

I might have gotten lucky, but it did not take terribly long. Like I mentioned, I kind of went through all these expired listings, canceled listings, and reached out to probably 20 or so people and got a response within a week. Okay, so 20 people in a week. Yeah. But I found the right guy because I bought that property and then built a relationship with him, built some trust with him.

And he decided to offload his entire portfolio with me that year. So not only did I buy one of his properties off market, I sold another 11 properties for him that year, which was...

It was about $45 million worth of real estate that I sold for him that year. Four to five, not 45, right? Yeah, four to five, yeah. Okay, I was going to say, wow. So we talked a little bit about one of the potential drawbacks of becoming an agent of 1099, but it sounds like this is one of the real benefits that you've experienced by being an agent. Do you think you could have pulled this off if you weren't an agent yourself, this type of off-market deal finding?

I think I could have found the deal, yes, but I definitely would not have been able to build the relationship with that owner and be like, hey, I want to sell your properties for you if I was not licensed. And I don't necessarily recommend everyone get licensed if they're going to be a real estate investor. I kind of don't recommend you get your real estate license if you're just going to be an investor. Agreed. But vice versa, if you are a real estate agent...

and you're not investing in real estate, you need to start considering that. My advice to people is usually that to be an investor, you just need income. You know, it's like you need a job, I believe. And if being an agent is going to get you a lot of income that you can use to invest, great. If you have another job that's going to make you more money, probably just stay there and invest the money that you have there. But

Jeez, there's obviously trade-offs. Yep, absolutely. So it's interesting about your story, Connor, is that you sort of have gone in this like slowly escalating path, right? You started with a townhouse, then you went to a single family home. Did you purposely then go to a duplex to try and like start to get some...

in terms of number of units? Yeah, I just kind of took the cards that I was dealt and, you know, when I was looking to buy opportunities that I thought would make sense. And, you know, when I first started investing, all I could really afford was a townhouse.

When I bought the second property, there wasn't really any duplexes available. This next time around, you know, I was able to find a multifamily property that made sense. And for the fourth deal, you know, I was able to buy something even bigger. So I've just kind of been taking advantage of what was out there in front of me and available at any given time. Well, I want to talk about the bigger thing too in just a minute. But I want to call out that, you know, Brandon Turner, former host of this podcast,

has this concept of the stack method where he advises people to buy, you know, in your first year, buy a single family. And then in your second year or your second deal, even if it takes you more than another year, go buy a duplex. Then the following year, do a fourplex. And you've sort of embodied that. I think it's a great strategy. I personally...

like getting to that fourplex, sixplex, apex, you don't necessarily need to get into these like huge multifamilies in my opinion. But I really think for people starting, it is a good mindset to have. And it sounds like you just did that sort of naturally. Yeah, absolutely. All right. So tell us about the duplex. You got paid to buy this duplex somehow. Yeah.

I assume you moved into it and house hacked and then was it cash flowing? Did you have to do any work to it? Yeah. So this duplex is a three bed, two bath each side. And there's not very many side by side, three bed, two bath duplexes in this portion of town. So I knew it was a very rare opportunity that I want to take advantage of.

One side was pretty nice. It has some great tenants in there. The other side was gross, had just kind of some guys that we'd worked at bars late nights. One was a drummer and there was just, you know, always empty beer cans and cigarettes being smoked on the front porch. So when I got in there, I had to do a ton of renovations.

Basically, I did everything but take it down to the stud. So I did all brand new electrical because there was an oven tube in there. Did all new plumbing because there's lots of galvanized plumbing in there. All new flooring, all new paint. The kitchen we ripped out because the cabinets were so gross and stained from their cooking or whatever. They just cannot be salvaged. And then the bathrooms had to re-glaze the showers because they were just...

moldy beyond belief and, you know, could not be cleaned up. So did everything to that property that you basically can. And the way that I paid for that was with a HELOC that I took out of my old primary residence, that single family house before I moved out of it. Oh, nice. I took a HELOC on that and use that for the renovation costs of the duplex. How much did you budget for the renovation? Did you hit the target? I was budgeting like 40 to 50%.

$45,000. I think it came in at about $50,000. Had one hiccup with the city. The city made me basically reinstall the electrical service because it was too close to a set of stairs. That was annoying. That cost me about $3,000. Then I added air conditioning as well in the summer months. That boosted up the

budget a little bit, but made it a heck of a lot nicer to live in. Okay, great. And then when you leased it up, were you able to get the rents that you were expecting? Yeah, I got a little bit higher rents the first go around. So I've had a couple of different tenants now on that property and been getting between $1,900 and $2,100 a month in rent for each side. So it is renting for at or just above the 1% rule because I bought for 410. Okay.

Oh, that's amazing. Okay. So 410, but you had a total of like 460 in it by the end. Yep. All right, great. And now is it cash flowing? It does cash flow. The mortgage payment, including the HELOC is about $3,200 a month. And then getting rents of, you know, two grand each side is, you know, four grand a month. So

Toss in about $300, $400 aside for vacancy and repairs. The cash flow is $200 to $300 a month. That's awesome. That's great. And sounds like a really...

good deal. I assume it's in a good part of town and that you think it's like got some long-term potential. Yeah. It's in a neighborhood called Heritage Hill in Grand Rapids, and it's super close to the wealthy street district, which has all the coffee shops, the restaurants, the cocktail bars, just the places that, you know, young professionals oftentimes want to be. And so what was the experience like doing your first sort of, it sounds like a big renovation project.

It was somewhat stressful because I was doing this, I mean, while living in the property. Sometimes during the renovations, I was actually living there. So, you know, living in a construction zone is not fun.

I hired out a good portion of the work. So all the electrical, all the plumbing, refinishing the floors and the carpet I hired out. But I was doing all the painting. My dad and I did, you know, installed the kitchen. So I was there basically, you know, every single day with some help from my family putting together this property while also selling a number of properties and getting constant phone calls from my buyers, my sellers, you

It was a lot of work. Took about three months to do the renovation, and I'm very happy that I did it. Cool. Well, that sounds great. You alluded earlier to buying an even bigger property, which I want to hear about. But first, we got to take a quick break. Stick with us.

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We're back with Conor Anderson on the BiggerPockets podcast, talking about how he has built a successful portfolio starting before the pandemic, but has continued to grow even in the higher interest rate era. He bought a duplex, renovated it,

Connor, what'd you do after that? Yeah. So was in that duplex for about a year and a half, and then just recently bought a four unit property that I'm also house hacking. So four house hacks in a row, right? Yeah. Over five or six years? Started in December, 2018. And then this last one was purchased December of 2024. So yeah, six years to buy four properties. Awesome. Great. So tell us a little bit about the deal. What did it look like? How'd you finance it? Yep.

So this deal was, it was listed on the market. It was a four unit, about a mile to the hospitals here in Grand Rapids. And it was originally listed at $630,000, which I just thought was a very high price. You know, I'm paying attention to the market all day, every day for myself and for my clients. And I'm like, that's just too high. So waited for probably 30 to 40 days on market before I kind of finally wrote an offer on it. And

and use 5% down conventional financing to buy this with the owner occupant for $580,000. Wow. Okay. That's great. Are you doing another big renovation or how's the condition of the property right now?

Yep. So they're all two bedroom, one bath units. And thankfully the previous owner did a fantastic job of renovating the property to the point where it's completely turnkey. The only thing I plan on doing to the property is, you know, when tenants turn over, just getting going from green paint to some other nice color. But yeah, it's really just going to be paint and maybe carpet whenever tenants move out. But it's as

turnkey as it can get. Oh, that's awesome. So you're up to eight units now? Correct. That's great. And do you have a strategy for where you want to take your portfolio from here? I think I just want to continue to slowly grow. And thankfully, since I have been able to build up a sizable portfolio and make an income as a real estate agent, I think can kind of have that more exponential type growth. But my next property I'm

I want to start trying the short-term rental space. Oh, nice. Mainly because I just want to have second homes in different parts of the country that I can take advantage of. Of course you do. It's awesome. That sounds fantastic. Yeah. But no, I closed on this property less than two months ago. I haven't had my first mortgage payment. So I don't have a dialed in plan of exactly what's going to be next to when, but I think I might dabble in the short-term rental space next.

You know, we've interviewed a lot of people on this show who started before the pandemic, and things have definitely changed. I'm curious...

What gives you the confidence and the ability to find deals and keep wanting to invest even in a different era of real estate investing? Yeah, I think, I mean, there's just two things that I pay attention to when analyzing a deal and that's how much will I rent for and what's my mortgage payment. And as long as I can have a healthy enough spread between those two numbers, I'm

I think it's going to be a good long-term deal. So for this four unit that I bought, I know that, hey, market rents are going to be about $1,500 per unit. So that's $6,000 of rent coming in. And the mortgage payment on it is right around 4,800 to five grand. So I have like $1,000 of spread there that I can kind of make sure that I am afloat on that property for a very, very long period of time.

You know, there might be some years where $800 of that difference is going towards vacancy and repairs and only $200 of it is cashflow on a monthly basis. But there'll be other years where, you know, maybe it's the opposite and only $200 of expenses I average on a monthly basis and $800 is cashflow. So that's really all I look for is just build a nice spread between rent and the monthly payment.

And you've done this by entirely house hacking. And people who listen to the show know that I am I'm long on the Midwest. I think affordability is a really good, important metric. Is it possible to generate cash flow in Grand Rapids or in other markets in Michigan where you where you operate?

if you're not house hacking right now. There definitely is the ability to create cash flow. Is it as good as the cash flow that we saw in years where the interest rates were 3%, 4%, 5%? No.

But I think with getting creative and also, especially if you're managing your own property, yes, it is definitely possible to cash flow rental properties. One way that I have gotten creative is I did a 2-1 interest rate buy down on this property, which I'm not sure if you've talked about in this show, but basically I got the seller to

up front concessions to where my interest rate on my property for the first year is 2% lower than the current interest rate. The next year is 1% lower. And then after that, it's, you know, the seven half percent interest rate that I got on the mortgage. But the,

That allows me to kind of do two things, and it's increase rents over that period of time and also maybe pull off a refinance if rates do come down. So I think that is another potential option for people out there that are looking to create their own cash flow in this market. Could I ask you what it costs to do that 2-1? It's about 2.5%.

Seller paid concessions. And what was the purchase price? $580,000. So it was like 11 grand or something? Yeah, something like that. Well, Connor, congrats on building this successful portfolio. It sounds like you've done well, both as an investor and as an agent, which is great to see for our former employees at BiggerPockets. We appreciate it.

Is there anything else you think, either as an investor or an agent, you think our audience should know maybe about investing in the Midwest right now? Because we do get a lot of questions about that. Yeah.

Yeah.

The average price point in the city of Grand Rapids is about $380,000, which is below the average sales price in the country. So it's an affordable place to live. And because it's an affordable place to live, there's lots of demand. On the inverse, there's not a ton of supply. In my county here in West Michigan, they do a study and the study showed that we need 35,000 more units of housing in Kent County to meet the demand that there is.

over the next five years. And last year they built like two or 3000 units of housing in Kent County. So like, there's still going to be a continuation of shortage of housing in, in,

Grand Rapids and Kent County specifically. So I feel pretty confident that with those two metrics, prices will go up, rents will go up, and it'll be a great place to invest. Yeah, that's a great analysis. And I just want everyone to think about that because I obviously, I say the Midwest is a very big area. Not everywhere in the Midwest is a good place to invest. In fact, most places probably aren't.

But I just think there are cities like what Connor is mentioning here that have really strong fundamentals and are relatively affordable. Doing that type of analysis, whether it's in the Midwest or anywhere else, is exactly what you should be thinking about. Figuring out if there's going to be sufficient demand to fill your rental properties, if there is going to be –

good balance between supply and demand so that prices and rent keep moving up modestly. They don't have to be amazing, but moving up near the pace of inflation, doing something a little bit better than that, that's what we need to be looking for as investors. So, Conor, again, congrats, man. It's great to see you. And thanks so much for joining us today. Thank you, Dave. And thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you soon.

Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kay. Copywriting is by Calico Content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

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