The Stack Method

Hey everybody!

Welcome back to another newsletter discussing the topics of real estate and financial freedom.

Today, I wanted to talk about “The Stack Method” when it comes to rental properties.

I first heard of this method when listening to Brandon Turner on the BiggerPockets podcast several years ago.

He has also made several videos describing it, which you can find on Youtube.

The main idea of “The Stack Method” is to start small with your real estate business and then to double the amount of rental units you have each year.

For example:

1st Year: 1 unit

2nd Year: 2 units

3rd Year: 4 units

4th Year: 8 units

5th Year: 16 units

For clarification purposes:

Single Family House = 1 unit

Duplex = 2 units

This allows you to learn and make mistakes at the beginning on a smaller level.

As you grow your business, you will continue to learn and improve over time.

It’s better to make mistakes when just starting out than to make mistakes when larger deals and amounts of money are on the line.

Now, you may be thinking to yourself, what if I want to do 20 units in my first year?

If you are able to do that in a smart way, then go for it. I don’t want to hold you back or put a limiting belief on you.

However, for most people, using “The Stack Method” allows them to build confidence and momentum by just doubling the amount of units each year.

Obviously, it can start getting tough to double each year after Year 5 due to the numbers getting much bigger. However, you can start building at scale with apartments.

But the idea is to start small and begin growing exponentially from there.

When starting out, there are so many different things to learn.

-How do I finance a property?

-How do I structure a deal?

-How do I make a rehab budget?

-How do I know how much the property will rent for?

There are literally hundreds of things you will have questions on and it can get overwhelming very quickly.

Here, you start small, and learn on a smaller scale.

The purpose of the first few deals isn’t to get rich. However, the first few properties will help you build the skills that will eventually make you wealthy.

I’ve taken a similar approach to “The Stack Method” and that is why I am such a big fan of it.

In 2020, I bought my first property.

In 2021, I bought 2nd and 3rd.

In 2022, I bought 4th and 5th. (Fell 2 short)

This year, my goal is to get back on track with 8 total units purchased.

I have my work cut out for me for the remainder of the year, but feel like the past several years have created momentum for me to reach this goal.

That’s all I have for today’s newsletter.

I hope this gives new investors a game plan for getting started without feeling overwhelmed.

Have a good weekend everybody!

For Active Investors:

If you want to learn how to purchase your first or next investment property in the next 3-6 months, but don’t know what steps to take, please schedule a call with me using the link below to see if my coaching program can help.

The main strategy I teach is the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy.

I’ll help you avoid beginner mistakes and shorten the learning curve from years to months.

Also, if you haven’t already, be sure to follow me on Instagram: @realestatewithcaleb

Disclaimer: My newsletter should be viewed as educational content and should not be construed as actionable advice without consulting the proper professionals.