Before becoming a real estate investor, Jordan Malara started his career in a very traditional job. He read “Rich Dad, Poor Dad,” by Robert T. Kiyosaki and Sharon Lechter and thought maybe investing was something he could do. Well, he was right, and he crushed his investing goals in a short amount of time. I sat down with Jordan and got to the bottom of how he grew his portfolio from zero to 12 units in 4 years.
- Listen to the podcast “#117: House Hacking to ADUs: How This RE Investor Grew 12 Units in 4 Years” on the Colorado Springs Real Estate Investing Podcast
- Watch the YouTube video (at the bottom.)
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
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First Properties Purchased
Jordan bought his first home thinking he would change it to a rental. The key to his success was simply keeping costs as low as possible. “I didn’t really know how to analyze a deal, but I did try to spend less than what the average buyer was spending. There wasn’t really much beyond that,” Jordan said. He still owns his first home, and it’s been a great long-term rental for him. One great lesson he learned was that holding a property is key to building wealth. As Jordan says, it’s not about when you buy a property; it’s that you buy something and let the power of time do its thing. The power of time in real estate is a real thing.
Growing the Portfolio
Going into the second property, Jordan and his wife approached it much more like an investment. Jordan went to a local meetup and met someone who introduced them to house hacking and walked him through the numbers, which was immensely helpful. This helped Jordan really get into investing and they still work together today.
Jordan was looking for a duplex to house hack. They bought a duplex in Ivywild, a subdivision of Colorado Springs south of downtown, west of Cascade Avenue and along Cheyenne Creek. It is one of the city’s oldest working-class neighborhoods and has recently seen a revival. Jordan knew this area was going to be developed, although it wasn’t quite there when they purchased it. The future opportunity informed their decision to move to this area.
The property at a glance:
- 1800 sq ft above
- 600 sq feet below
Which level did they live in? The smaller one! Jordan and his wife made the tough decision to downsize in order to maximize their returns. Although they had to sell furniture and live differently than they had before, they remained motivated by keeping their long-term goal in mind. The upper unit was rented above market price, so it completely covered the mortgage on their lower unit. That was the moment Jordan said a lightbulb went off and he realized that real estate investing works! They were living for free.
Sacrifices for Financial Freedom
Financial freedom is great, but it’s not without sacrifice. Everyone’s goal is autonomy of time, or some kind of freedom. Jordan shares that to achieve financial freedom or a “soft retirement” you have to make sacrifices. For him, these were the sacrifices he was willing to make:
- House hacking – The sacrifice is you always have someone living close to you.
- A higher level of sacrifice for a higher return – There are different levels of sacrifice. The higher level, the better the return. For example, we could have lived in the 1800 sq ft unit but we wouldn’t have gained as much.
- Working hard now to gain time in the future – Jordan was willing to sacrifice his time now to work hard while investing in properties to gain time back in the future.
It’s hard when you’re just starting out as a real estate investor, but I tell everyone it’s a good idea to self-manage your investments at first. You learn faster. Then when you grow and can afford a property manager, you can more effectively leverage them because you’ve lived it. The sacrifice up front pays off later.
The next property Jordan was looking for was a duplex or triplex. It was a competitive time, so they wanted to get creative about how they got into their next project. They found a mediocre single-family home in old Colorado City. It was a 2/1 and they took the basement, which had a separate entrance, and added a bedroom/bathroom. Then after 9 months, they converted the garage to an ADU. Now they use those as three medium-term rental units.
Then they purchased another investment property Jordan and his wife chose not to live in. It qualified for a short-term rental permit. There was a detached garage that they converted into a two-bedroom, two-bathroom cottage. It took them about a year to do that and renovate the main house. They purchased the home for $465k with a hard money loan, so 90% was funded. They spent $175k on renovations and then refinanced – it appraised for $775k. Another successful investment that resulted in two additional units.
Current Investing Strategy
Jordan bought a new house in September 2022 that already had a detached cottage. He actually found it on Facebook. There was a wholesaler trying to offload it. After some investigation, it turned out the person who listed it didn’t have the right to exclusively list the property, so they asked the seller if we could work out a deal. The property had three entrances to the house on different levels. So, Jordan separated the house into two short-term rentals. They live on the main level. Jordan hasn’t quite finished renovating all the units, but the basement is up and running. He now has a blend of short-, medium- and long-term rentals. Their long-term rentals are with property management. Jordan says an important aspect of real estate investing is to do what you enjoy most. He enjoys working with STRs more than LTRs. Maybe that’s because you hear more positive things from STR guests than from LTR tenants. Whatever it is, Jordan is happy to manage the STRs and have property managers work with his LTR properties. Now he can be more selective about what he wants to spend his time on.
Jordan’s investing goal was 10 units in 10 years. He crushed that goal and is already at 10 units, and they accomplished that in 4 years! In fact, as of today, Jordan now has 12 units total. Because of that, Jordan’s not looking to purchase anything else right now. He’s in a holding pattern so that they can identify where they can add value to their existing properties. Jordan says, “I want to preserve and protect.”
Best Advice to New Investors
Jordan’s best advice to a new real estate investor is just to get started. “You don’t have all the knowledge right away when you start out. The truth is you will never know exactly the outcome on investing, but you just have to do it.” Jordan was willing to take on the risk that he didn’t know everything, but he knew that he would figure it out. They bet on themselves and were surrounded by people who wanted to help. There’s always some unknown with every real estate deal. Even after you’ve done some deals, it doesn’t mean it removes that discomfort. Jordan says to embrace the discomfort, move forward methodically, and continue to invest. “It will be hard, but if it wasn’t everyone would be doing it.”
Connect with Jordan
Jordan is a real estate investor and agent that, in partnership with his wife, has built a portfolio of rental properties through house hacking and furnished rentals. Jordan’s primary investment strategy has been to purchase one house a year to house hack and overtime have worked up to large scale value add renovations, such as full house renovations and ADU garage conversions. You can connect with Jordan on Bigger Pockets.