BiggerPockets Real Estate Podcast - Rentals Replaced My Income in 11 Years (Even After Making Every Mistake)

Episode Date: August 10, 2026

In just 11 years, Aaron Murphy has replaced his and his wife’s income with repeatable, long-term rental properties. No complicated strategy. No huge windfall of cash. He made serious mistakes on his first true investment property, but quickly developed a “foolproof” system that allowed him to scale to an impressive real estate portfolio and gave him a sustainable exit path out of his W-2 job. After getting tired of the “do this or don’t get paid” mentality at his job, Aaron realized he needed another source of income. Stocks required too much upfront cash, homes in his city were too expensive, but what if he looked outside the city? He bought his first property with around $12,000 down, saved up more money, repeated it, made mistakes, succeeded, failed, and did it again, until he had a process that built wealth on repeat. Now, Aaron has an entire rental portfolio to rely on for income as he takes this interview from Portugal as part of a one-year trip around the world. It’s only possible because he took the first step—buying just one property. In This Episode We Cover Aaron’s repeatable BRRRR method that helped him scale to 75 rental units  The biggest mistakes you can avoid on your first rental property (Aaron learned the hard way) One thing you always account for when analyzing a rental property (or it’ll cost you thousands) Want a mentor? The “foolproof” system to finding the best ones in your area  The secret to getting low offers accepted that’s so simple, most investors skip over it  And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1315. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

We always say this. Anyone can replace their income with real estate in 8 to 12 years. Today's guest, Aaron Murphy, is proof that that is possible. Aaron was stuck at a work meeting one day. His boss looked over at him and said, we don't want to do this work, but we have to do it. Or we're not getting paid. And nothing made Aaron want to find an exit route quicker than that.

Investing in stocks was too slow and took too much money, but buying in a real estate market just outside of his pricey city could work. and he only needed about $12,000 to start. So he bought a rental, made a ton of mistakes, learned how to fix them, and then repeated it. Then the real growth came when he found the burr strategy. This foolproof system allowed him to replace his and his wife's income in just 11 years. He's now off traveling the world.

Like literally, right now, he's taking this call live from Portugal, thanks to simple, repeatable rentals he kept by. Your exit route is available too. Are you going to take it? What's going on, everybody? I'm Henry Washington. Co-host of the Bigger Pockets podcast. And today I have an investor story with Mr. Aaron Murphy from Baltimore, Maryland. So let's bring him on.

Mr. Aaron Murphy, welcome to the Bigger Pockets podcast. Thanks for having me here. It's a really dream come true. I used to listen to this show riding around in my car with no air conditioning out in rural Maryland. It was in the summertime. I'd be listening to Bigger Pockets playing. I listen almost every episode back in those days.

So it all comes full circle now. Awesome. We're glad to have you. Why don't you start with your background? What were you doing before you got into real estate and what gave you the bug to get you to start doing it? Sure. So my story is a little bit unique. I actually got exposed to real estate when I was a kid.

So my family was sort of into real estate trying to do flips and that sort of thing. We did a lot of work on flips and different projects, but it never really turned into successful deals. I don't know if it was bad market timing or what the situation was. But there was a lot of carrying shingles and trying to let. learn to paint and being used as sort of like free labor, but not a lot of having that convert into anything successful that we could feel like we really won at the end of. I like how you were there, kid, and you called it being used as free labor. I learned that later.

I learned that later. You know, sometimes if I'm talking to my parents, I call it character building. So it all depends on who I'm talking to. That's right. That's right. So I concluded in that time that real estate was basically a scam. I was like, look, it's pretty likely that you're not going to make money in real estate, and I didn't want anything to do with it.

So flash forward, I get out of school, and I end up having a sales job. So when I get the sales job, I was selling software to commercial real estate, brokers, and banks and groups like that. Two things started happening when I had the job. One is that I started getting exposed to a different type of real estate. So rather than sort of doing a whole project and then wondering if some lady was going to like the color of the kitchen, this was more focused on income, income coming in, expenses going out, and really running an operational business.

And then the second thing that I sort of started learning was more accidental, which was that the W-2 life wasn't for me. So basically what I started having was these moments where I would be in meetings. And I felt like whatever that moment is in movies when they turn to you and they speak to the audience directly and say the thing they're not supposed to say, I started feeling like I was having those experiences sitting in work meetings. So one time, like a VP turns to us and says, I know we don't want to be doing this right now, but we have to do it or they won't pay us.

We won't be able to take care of our families unless we do this. And, you know, he saw it as very motivational and he was supposed to be inspiring everybody. But to me, it felt like, okay, so that's a problem, right? We need to find a different, some kind of different avenue other than being trapped in this. And I started thinking from there, what do I do to get out of this situation? So it was basically math from there. I looked at what are my avenues to make enough money. I thought I needed about $70,000 a year.

I looked at first dividend stocks because that sounded really, like really simple. At that time, AT&T was paying a 7% dividend. So I thought, all right, I just need AT&T stock. But then I thought I needed a million dollars of AT&T stock. And my first job was only paying me 30K base salary. So I didn't see how to put that together. It takes you a little bit. It takes a little bit.

Right, right. It takes some time. And what makes it worse, Henry, I didn't even know about compound interest at the time. So I thought I really needed to save a million straight out. So that didn't seem like it was going to work. So then I looked at stocks and just in general. And I, you know, now I know there's the 4% rule in all of this. In those days, I had some general sense of that. But it seemed like I needed like $2 million worth of stocks to be able to live on as well. Same problem. If I couldn't save a million for dividend stocks, I couldn't save $2 million for regular stocks.

But when I looked at real estate, I thought I could save up enough to get rental properties because I thought I only needed about 14 or 15 rental properties. And in my mind, I thought that was realistic. I could buy those a little bit at a time. I could use down payments and that sort of thing. So that's how I decided on real estate just because it seemed possible. That was the advantage it had over other stuff. And then I started listening to Bigger Pockets. I started studying, learning.

I ended up doing my first deal, which was a house hack in the D.C. area at that time. And that's sort of how I got started. But as you flash forward to today, we've got about 75 rental units. We do construction in-house. We do maintenance in-house. We do our own property management in-house, and it's really been a blessing of a journey to go down. I want to go back to the beginning. You said your first deal was a house hack in the D.C. Maryland area.

Talk to me about that. Was it a multifamily house hack, or was this like a single family you rented some rooms out? No, this was as far from the having your own space house hack as you could as you could be. I know you guys talk about this being on a spectrum. This is super uncomfortable. Right, right. This is a rough one. So this was the situation where I bought a five-bedroom house in the D.C. area.

This was 2016 when I bought my first deal. So when it started out, I thought I needed to buy a house in D.C. Because that's where I was working. And the house prices, they were around $700,000 per property. Yeah, I didn't see a way to make it work. And I also only knew about 20% down purchases. So I'm thinking I'd 140 grand, better than $1 or $2 million, but still difficult to get to that. So from talking to a friend, I sort of realized that he had bought a property with a much lower down payment in this area called Hyatt'sville.

And so I learned at that time about FHA loans, which I combined the idea of the FHA loan with three and a half percent down along with going and getting a property outside the city in a more affordable area, this area of Hyattsville. So I put down $11,900 for the first deal. It was a five-bedroom house. I lived in the basement of the house and I rented out the other four rooms. So I'm living down there. I'm running out the other rooms for $700 a piece. My mortgage is about $2,000. It really was basically a break-even because of utilities and maintenance requirements. request and all of that, but it allowed me to stop paying rent so it accelerated how much I could save. And that let me start really moving faster towards my next deals. That is the key. I feel like

people start house hacking. They start covering their expenses, but then they adjust their lifestyle, right? And so they don't save anything and they don't really help themselves be prepared to go and do more deals. So you had that in the bag. You were saving. In your mind, what were you saving towards? Like, what were you seeing as the next step? So I thought I just needed like 14 properties, 500 bucks apiece, $7,000 a month, and I'll be good. So I was trying to save to get those properties. So the saving from that allowed me to buy my next deal, which was actually in a less expensive market called Hagerstown, a little bit more north of D.C.

And that was a triplex that I bought for $96,000 in 2017. Say what, now you bought a triplex for how much in 2016? For 96,000. Was it standing? It was standing. That was about all that I can say positively about it. That was an interesting situation. I started inventing ways to make mistakes on that deal, Henry.

That was a rough one. Tell us a little more about that experience. What did you expect going into it? Don't give us all the problems. We'll be here all day. But give us some of the biggest hangups that happened that maybe you didn't expect. With this deal, what I expected was just pure cash flow and profit and to be starting, you know, be writing my book the next year.

Looks good on paper, doesn't it? Right. It looks good on paper, doesn't it? So, yeah, if I just had to pick out some of the most ridiculous mistakes that I made, the first one is that in the contract to buy the property, it said that the property was going to be delivered fully occupied. And that's what I told it was told was the condition of the property. Three units occupied, all tenants paying rent. When we were about two weeks out from closing, they told me that in fact, one unit was occupied, two units were vacant. But the two vacant units were in pretty good condition.

they provided photos. So at that moment, I had to decide what to do. No, I decided I'm standing up for myself. You guys aren't going to push me around. It's in the contract that these units need to be occupied. You need to deliver the units occupied. It sounded like a great idea. Terrible idea.

Nothing in the contract said how they had to screen those tenants or the rules of requirements. So this is a post-industrial city and rural Maryland or the Pennsylvania State Line. They found people that were willing to move into the units. And hand those people off to me. So those people became my first two evictions. And to all manner of problems with this. So it was a rough situation. I could tell you got the problem immediately.

But those days, I thought, you know, I felt great about what I was doing. When we say educating yourself is hugely important, like this is an example of what we mean, because you didn't think you were doing anything wrong. You thought you were actually doing the opposite. You thought somebody else was trying to do you wrong. And no, absolutely not. I am going to stand on my business, which is do what you said you were going to do. But yeah, man, that's tough. So let's just go back to the numbers on that one. So you paid 96. How much you put in it? I put down 20%. So it's a little, I guess, a little under 20K. What did you pay for the renovation?

It was supposed to be turnkey. So there wasn't any renovation at that time because remember, I was supposed to have three occupied units. Yeah. Okay. So what did you pay for renovating it? Once I got those tenants out and actually evicted and all that, I would say I probably put in another maybe 20,000 or so turning over those units. But the good thing about that market is that the labor cost is cheaper. And the units didn't need to be fully gutted or anything. They were sort of like livable. So I got that up and running. And what did you get the rents to once you got the eviction?

You put the 20 grain into it. What were you renting each unit for? I eventually got the rents up to about $1,900. per month in total across the three different units. That's a solid deal. You're all in for about 115 to 117 and you're getting $1,900 a month. There's a lot of people that would love that deal. Yeah, you went through a lot of headaches. Is it one you still own? Yeah, I still own that. And that property ended up being sort of helped create the opportunity to create my birth portfolio later. So it turned into a big wind down the road. All right, man. That's super cool. First,

thank you so much for sharing the not the best. side of a deal sometimes of being vulnerable with the audience. That means a lot to us and a lot to the audience. We want to learn from the ups and the downs, but this one sounds like it was pretty good. But I want to dive into something you talked about at the end of talking about that deal, which was how it helped propel you forward, because there's a lot of different strategies you can take to leverage one asset to buy more. And I'd love to learn more about how you did that, but we're going to do it right after the break. Some listeners may wonder why their insurance quote only took 30 seconds.

Some listeners may wonder why their insurance quote took 30 seconds. A better question is, how long will that policy actually hold up when you need it? At NREG, the goal isn't just getting coverage in place. It's making sure your investment property is properly protected when a real claim happens. That's why they take time to evaluate each property's unique risks and build coverage design for the realities investors face. because anyone can sell a policy. N-R-E-I-G focuses on standing behind it.

Visit N-R-E-I-G.com slash B-P-L-C to learn more. You know what changed the way I invest? Realizing that scaling rentals shouldn't mean creating more work for yourself. If you're trying to build that kind of system, base lane is giving away $10,000 to help investors build rentals that run themselves. I own and manage dozens of properties.

I travel a lot, and I still work. a W-2 job. And there was a point where I was checking multiple bank accounts, chasing rents, and updating spreadsheets just trying to stay organized. Even on vacation, I was constantly checking if rent came in. Now, everything runs through baseline. It's Bigger Pocket's official banking platform

that automates my rental cash flow. Rents get deposited into dedicated property accounts, transactions get automatically categorized, and everything stays organized without me constantly managing it. That's the difference the right systems make. You can finally step away mentally without feeling like something's going to fall apart. Now my rentals practically run in the background and yours could too.

Deposit qualifying rental income into Baselaine for a chance to win $10,000. Investing in real estate has always been smart, but it hasn't always been simple. Now it's both thanks to the Fundrise Flagship Fund. The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low-fee access to Blue Chip private. market real estate. Today, the Fundrise flagship fund has grown to manage more than a billion dollars of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its kind. For those who believe real estate has an important role to play in their

portfolio strategy, the Fundrise flagship fund has positioned itself as both a simple and a smart option. Whether you're starting with $10 or $10,000, the Fundrise flagship fund makes adding real estate's unique potential for both passive income and consistent growth, just visit fundrise.com slash pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship.

This is a paid advertisement. A lot of property managers think their job is answering tenant emails and coordinating repairs. That's not the job. of a property manager is protecting and growing your operating income and earning your trust while they do it. And that comes down to three numbers, occupancy, delinquency, and net promoter score. If those numbers slip, your income slips and your trust slips too. And most PMs don't hold themselves to performance standards. They focus on activity, not outcomes. Mind is different. They obsess over the metrics that actually grow your cash flow.

Go to mine.com slash show me to see how mine performs and get a month of management for free. Because if you're going to hire a property manager, hire one that manages your investment like an investment. All right, we are back on the Bigger Pockets podcast with investor Aaron Murphy, who's telling us all about how he got started in the Maryland area and how he's grown his portfolio from just one house hack to now 55 units. So we were talking about this multi-unit that you purchased for $96,000 that was supposed to be turnkey, which is mind-blowing. And it turned out to be mostly turnkey, but also had some problems. But once you got that thing stabilized, you said it helped you grow your portfolio. So what strategies did you use to leverage that unit to continue to grow?

The reason I say that deal helped propel me forward was that after I sort of faced the problems that were going on at that unit and got it up and running properly and all of that. I went on to buy some other deals in the next couple of years. Then a few years down the line, when I made the decision I wanted to go into real estate full time and do Burr, by that time this property had appreciated for six or seven years and the market had had a few positive things occur that cause values to go up. So because I was able to hold onto the property and not lose the asset, I was able to participate in all that appreciation. And I was able to do a cash out refinance and pull out $50,000 from that property, which then became half of the money that I used to seed the creation of my Burr portfolio,

which is where I did the bulk of my growth starting from 2022 onwards. So you pulled that out. You said that ended up being about half of what you used. So I assume you grab $50,000 from somewhere else. So it sounds like you've got this nest egg of about $100,000. And you said you used it to start building your burr portfolio. So that tells me that you decided to shift what your strategy was. Now, when you decided to do burrs, were you buying similar properties in similar areas? Or did you find a new area of town or a new type of property that you wanted to buy? Like, what was your burr strategy? So what I started doing was my wife and I actually moved to the Baltimore market. I'm a person. I don't do things in half measures. So we actually moved there and moved into like a

$99,000 row house in Baltimore. So imagine my wife just finished dental school. I'm doing software sales, making good money. And we literally move. It wasn't truly moving into the hood, but it was a rough, that was a rough spot. I was going to say, like, you say a real house in Baltimore. And I start thinking about the wire. So was it like a row house like you see on the wire?

Or were we a little outside of the Baltimore metro property? No, no, this was definitely in the city of Baltimore. It was in the zip code 21202. But what I've learned about Baltimore, is that it really is block by block. There certainly are blocks that are entirely vacant. And then there's blocks that are beautiful with three, four hundred thousand dollar row houses on them.

This was somewhere in the middle. It wasn't all vacant. It wasn't all the way of the beautiful end as well. But when we pivoted to Burr, what we started doing, a typical deal ended up looking like, we would buy it for around $100,000, give or take. And then we would put in around $30,000 to $40,000 worth of renovation,

give or take. And then I think it's really important to include closing costs. A lot of people say you don't have to, but what I found is that in these lower price ranges, the closing costs can be a really high percentage of the overall deal. So I add in another 20 grand for closing costs on the front end and back into the deal. So in that situation, I'm all in for somewhere between 150 and 160. And I'm praising those properties anywhere from 200 to 220. And then so I'm doing my refinance, recovering as much of my capital as possible. Sometimes all of it. that sometimes I'm getting a little more out of the deal. Sometimes I have to leave a little in the deal. And then that's the process that I've basically been repeating over and over again for the last

now, I guess roughly four years since 2022. And that's when I bought the bulk of my portfolio. That's really cool. So as you were buying these bur deals and you switch to your burr method, it sounds great to be able to say, yeah, I just started, I found these deals and I was paying 95,000 to 100,000 and I was putting $30,000 to $40,000 worth of working. to them. I added $20,000 for closing costs and then I would refinance them at 240 to 250. That sounds great. There is actual operation that has to happen and has to happen efficiently for that to be able to work because you actually have to get in there and start renovating these. And you weren't doing just one or two of these a year. How many did you buy over the course of these

these next few years? From 2022 till now, I've basically had one renovation occurring at least at least one every four to six weeks. So it's been a consistent sort of treadmill. And sometimes they're duplexes, sometimes they're triplexes. So it has become consistent from there. So you can't accidentally renovate that many units without a system or a team or processes. So can you talk to us a little bit about how you started to build all those out and when you actually were able to take it all in-house versus hiring third parties to do it all all the time? Asking for a friend because I use third parties. Got you got to. So it started by falling on my face. So let's go back to 2022 right when I leave my job. I've got this plan in place. I'm going to start doing these burr deals. And you're right. It didn't start off with the idea of doing one every four to six weeks. That came later. So I have $100,000 to begin. And on my first two deals, I go over budget on both renovations using third party contractors. Not really their fault, but I go over budget. And I basically go over budget by a combined 65.

thousand dollars. So I'm down to about 35 grand in my war chest. So then when we start our third project, I get into this project that I'd underwritten as around a 30 to 40,000 dollar renovation. Then I realized as I had started the project that it was closer to a 80 or 100,000 dollar renovation. So I'm looking to basically because it was close to a full gut. So I'm going to go under. You got to save money. Yeah. Right. Right. So I'm going to get to the point where I'm actually going to have to go take money out of our reserves or even from our family personal emergency fund in order to just finish this deal. So I'm very much a the way out is through type of person. So instead of throwing my hands up, what I did is I went and hired some day laborers and I went and worked with them

in that house and literally worked side by side with them for four or five months straight, learning and sort of being a task master, but getting this whole renovation done. And in the process where I was doing that, I learned firsthand how to tape and mud drywall. I learned which type of drop ear elbow. worst part. Yeah. Well, there's some parts that are worse. I think demoing, demoing plaster in like a, in like a 1920s house. That's really rough. You get that lap, that lapboard behind that plaster. Yeah. Yeah. Yeah. So, so, so, so, so basically, I had to survive that situation because think about it again. I've got this, this wife that put her, she went through dental school, right? She's expecting that I have this grand plan. I'm on the

cusp of, of basically being out of business one year in and just turning to her and saying like, I don't know what to do now. So I had to figure it out. And so I did. And I figured out a bunch of things there. I figured out I could adjust, modify one non-load bearing wall to add an extra room. I figured out that I could cut the GC profit out entirely by GCing it myself. I was able to cut a bunch of other costs out by hiring these guys to work with me.

I saved money by working there myself. And I survived that deal. But what it gave me was a really granular level understanding of construction, which helped me understand, not only what needs to be done in a house, but about how long is it going to take and what's the cheapest way to do it. Yeah. And so from that firsthand experience, I actually did a couple of light cosmetic renovations myself after that for a couple deals.

And then from there, then I was able to bring back in workers that were able to, from there, start working on projects for me. And I sort of build it back up into those day laborers became like my full-time construction crew. So they're technically still 1099 contractors, but they work. five days we can only my stuff. We talk every single day. And that's what's enabled me now to move faster with more pace because we never have to stop. It's never a negotiation over price. We know exactly what we're paying them. They know what work needs to be done. We use the same materials in every project.

They know exactly which SKUs we need to buy, which materials we need to buy. So everything is just repeatable. And that's what allowed us to pick up this process and move faster. When people are trying to figure out, how do I manage a renovation or how do I get better? at managing contractors, they're usually pretty simple. Because if you think about what a contractor is, they're an entrepreneur like us. So they kill what they eat. And so what you provided these people is stability. You're growing.

They know they've got work coming in. They know what work is coming in. It's not a surprise every time. They know how to do the work. They know the expectation that you have. They know when they're getting paid. They know how much they're getting paid. If I could ask to add one thing to that, I completely agree with what you're saying.

And it actually, as I'm sure you know, but just for people listening, this concept of solving the problem for them and making it peaceful for them, this actually applies to almost everyone that you're going to be dealing with in your real estate business. And it's sort of the second part of the answer to your question about how I made this a system that I could repeat. What I did is I figured out what the pain points were for all the people that I was touching in the process. And I made what I was doing fit what was peaceful and easy for them. So what your hard money lender wants is they want to know that if something goes wrong, you have the capital to come in and still pay them off. So I shared information with my hard money lender, Sean Magner, who became a mentor to me, where he was able to then understand that no matter what, he was always going to get paid out.

I have conservative ARVs. Then for the contractor, they need to work every day. They don't want to do one project, wait two weeks to another project, right? So then I realized, okay, it can't be four to six weeks, then time off another four to six weeks. It needs to be consistent. Then I found that my DSCR lender, they just don't want to write me a check. They basically want me to have good credit and they don't want to give me any money. So I realized that by instead of borrowing what I used to do originally was only fund the purchase with hard money.

And I would fund the construction myself, I realized what I actually needed to do was borrow everything from the hard money lender. And then that's better for the DSCR person because they can feel it's a lower risk loan because they're giving the money to my hard money lender. not me. So I won't go through every single person in the in the situation, but every single person that's involved in my deal, I've figured out what they want, what makes it easy for them all the way down to the tile installer. We know exactly what everyone wants. We've made it easy for them. And then in turn, they all make it easy for me. One thousand percent, yes. If you want something from someone, if you need help, if you want somebody to do things for you, you have to speak to them in their language. And that language is the what's in.

it for them. If you understand what's in it for everybody in the process of you operating your real estate business and you design your business to give people what they want when they want it, you become their priority. They want to work with you. They want to fund your deals. They want to be as flexible as you need them to be because they want these, you give them what they want. That's the secret sauce, man. And you've figured it out. That's amazing. Congratulations. I appreciate that. I want to dig into a little more how you kind of leverage the same mindset to build your formula for finding a mentor. But we're going to do that right after the break. If you think property management is expensive, try mismanaging a vacancy or an eviction or a maintenance issue that

turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly, the cheapest policy

doesn't feel like the best one anymore. That's why a lot of BiggerPockets investors use steadily for landlord insurance designed specifically for rental properties. Whether you own one property or growing portfolio, they make it simple to get covered properly. And BiggerPockets Pro members get an extra 5% off their landlord insurance premiums. Visit biggerpockets.com slash landlord insurance to get a quote today. You know that thing where you discover a feature you wish your software had? And it turns out it already exists just on a different platform. Like, oh, you want rent payments processed in two days.

Rent ready does it. Oh, you want to block tenants from making partial payments mid-eviction. Rent-ready does that too. Oh, you want full accounting and tax-ready reports without paying for a second tier. Rent-ready does it. And oh, you want tenant screening that doesn't. doesn't overcharge your applicants, Rent Ready also does this. Basically, if you've ever complained out loud about your property management software, Rent Ready probably already built the fix. It's

$12 a month. You're welcome. Sign up right now for $50 off your first year of RentReady with promo code BP Cash. BiggerPockets Pro members get it completely free. Sign in through your pro account at rentready.com slash bigger pockets. That's rentrere.com slash bigger pockets. That's rent rEDI.com pockets. Buying real estate has a funny way of making the future feel very real. You start thinking about mortgages, cash flow, tenants, and suddenly you realize, if something happened to me, would the people I love be okay? That's why life insurance is one of those things that's easy to put off, but is super important to actually deal with. Ethos makes getting life insurance fast and easy, 100% online. You can get a quote in seconds, apply in minutes, and potentially get same day coverage. There's

no medical exam, you just answer a few simple health questions online. You can get up to $3 million in coverage and some policies are as low as $30 a month. Ethos helps provide financial security and helps protect the people who depend on you. Take 10 minutes to get covered today with life insurance through ethos. Get your free quote at ethos.com slash real estate. That's ethos.com slash real estate. Application times may vary. Rates may vary. What is Toyota affordability? It all starts with buying smart, and your Toyota dealer has great deals available to qualified customers on reliable cars and SUVs, including the redesigned Rav4, spacious Grand Highlander, sporty Camrys, and Corolla's. It means driving for less,

with efficient hybrid and plug-in hybrid options available throughout the lineup, extending your overall driving range, and delivering great MPGs, saving you money at the pump. And it means trading for more. Toyota is known for building long-lasting vehicles, and as the best resale value brand, according to Kelly Bluebook, your Toyota can be worth thousands more than average when it's time to trade in. That's Toyota affordability. Buy smart, drive for less, and trade for more. Shop Toyota.com or your local dealer for deals and details. Vehicle projected resale value is specific to the 2026 model here. For more information, visit Kelly Bluebuck's KB.com. Toyota brand average resale value is 53% versus the average vehicle at 45%.

Toyota, let's go places. All right, we are back on the Bigger Pockets podcast with investor Aaron Murphy, who has built quite a business, not just a business of properties that are producing cash flow, but a business where he is essentially vertically integrated by hiring his own in-house contractors. Technically, they're still contractors, but they're only working for you because you figured out the what's in it for them and doing your own in-house property management. When we were talking before the break, you had mentioned that you've developed this system based on very similar principles about how to get mentors to want to mentor you for free. So I'm very curious

about how you built that and what that actually is. Sure. Absolutely. So I call it the full proof plan to get the best mentors in the world for free. And the first part of this is reframing the way that you think about what a mentor is. What most people want when they think about a mentor is they want someone that's going to sort of come alongside them and hold their hand and make sure that the first deal goes really smoothly. They're going to tell them, I think it's a good deal. I think you're paying a good price. Really what they want is they want that person to take on the emotional burden of the fear or the risk of that deal working out and make sure that they feel it's going to be okay.

But what I found is that no one actually wants to do that. People do not want. to take on the responsibility for you of your deal working out. So instead, what you have to do is reframe the idea of a mentor. Instead of being one person that's going to sort of do it all for you, it's going to be a group of people that you can ask questions to about what you're dealing with. And those people are going to give you real precise advice about what you're going through because they've been through it as well. And that's why I say they're the best mentors in the world because they may not be a

Grant Cardone or the biggest name, but there's someone that's in your market, that's specifically doing what you're trying to do, whether it's real estate related or not, that's the person with the most salient advice for what you need. So that's the first part is reframe the idea of a mentor to a group, a network of people that you're going to ask questions to, not one person that's going to come alongside you and essentially do the deal. So then the second part of the way to get these mentors for free is that you've got to put yourself in proximity to these people and start asking them real practical questions based on actual

action steps that you're taking. So you can meet these people at meetups, at your local RIA, on bigger pockets forums, at bigger pockets events, at industry events. You can meet these people in a lot of different places. But when you meet them, it's critical that you're not asking questions. Like, if you were starting over and you were my age, what would you do? All the time. Right, right. If I could pick your brain, no one wants to have their brain pick.

That doesn't even sound fun. And we also don't even, you know, we don't need people to buy us coffee or lunch. What people love to do, though, is they love talking to. other people about real estate when it's practical and real. So a question like, I've been underwriting rents in this zip code and I've been thinking I can rent a two bed for 1,500, do you think that's about right? That's a question that someone can actually engage with from their experience and they're going to enjoy answering rather than having their brain picked. So that's the second part is get around those people and start asking them practical, real questions about actual action steps that you're

taking. And then the third step is the one that I think people often miss, which is that you have to go back to those people and tell them how you implemented what they suggested and what the outcome was. And what that last step does is it creates a feedback loop where they're actually getting joy and sort of being happy with the fact that they helped you. And what ends up happening is some of those people that were in the network of mentors, they end up becoming a mentor in a more similar way to the original way you were thinking about mentors. They end up becoming people that you talk to day to day that answer questions, practically. Some of them end up becoming peers or mentees down the road. It's interesting to see how it all progresses. But either way, that's that's sort of what I've learned. And this,

this works outside of real estate. I've used this when I was doing competitive debate in college. I used it when I was doing software sales. I became one of the best people selling our product in the country. I was able to become one of the best debaters in the country. This works across all disciplines. You think of a mentor as a network. You get around those people and ask them real questions about action steps you're taking. And then you tell them what the outcome was. You complete that process and those people will help you and they're not going to charge you anything. You know, I consider myself a master networker and the reason I'm so good at networking is because I don't think networking is about me. I think networking is about what I can provide to other people.

And so a lot of networking is listening and providing value and providing value to someone then turns human nature in your favor because if you help someone, they naturally want to help you And so I love the third step of your program, which is to tell someone how what they told you benefited you because that activates the warm fuzzies, the feel good in them. And as soon as you do that, what do they want? They want to keep doing it for you. You just gave them what they needed, which is that dopamine boost. Because a lot of people don't get that. They get the opposite at networking events.

Somebody wants something from you and then you give it to them and then they disappear. or either they don't disappear, but they don't do anything with what you told them. So providing that feedback to them gives them that dopamine hit, and it puts another investor friend in your pocket that will always want to help you because they know you're going to listen, you're going to try to implement, and then you're going to let them know if it worked. Like, that's gold. Good stuff, man. And those people, they want to help you. I've never had someone that was more successful than me that didn't want to answer questions. and try to help as long as I was really doing stuff.

All right. Let's do a quick recap. Can you talk to us a little bit about where your portfolio is today? I know we talked about it earlier, what I want to make sure people understand kind of what you've built. So today we're at 75 units. The majority of those are houses and townhouses, a couple duplexes and triplexes mixed in. 75 total units. They're all in the state of Maryland, mainly concentrated in Baltimore and the surrounding counties. And it's all long-term rentals. So, you know, one-year leases, two-year leases, typically market rate tenants. And is your plan to continue to grow that portfolio to do similar deals, or are you working on something different now? Right now, I'm just continuing sort of a steady state of growth where we're doing, like I said, one deal every four to six weeks.

I am sort of starting to get to the point where I'm realizing if I were to continue doing that for, let's say, 10 years or something like that, I'm going to turn around and have 200, 250 of these Baltimore area townhouses. And I do like the market, but I'm starting to have to ask the question of, do I want that? Do I want 200 of these? So I'm thinking through that now. And right now I'm on this sort of bucket list trip with my wife. And I've been using that as a, I've been using that as an inflection point to really think through what I want that next step to be. Okay. Yes.

And one of my next questions was going to be is what has building this portfolio allowed you to do in your life? But it sounds like what it has allowed you to do is take a bucket list trip. So what is this bucket list trip? And how is real estate helping you do it? Yeah, absolutely. So this has been a really cool experience. My wife and I have been able to go for about a year and travel all over the world. We'll be able to hit a bunch of different destinations that are kind of too far to travel to normally.

Like somewhere like Australia for us would have been over 24 hours in the air. But if you're going there from the Philippines, it's not quite as far and you can get there more easily. So what this trip is, it's different things for me and my wife. For my wife, what it is is this 11 out of 10 experience bucket list trip. Like I said, something that she is completely floored about. For me, the purpose of this trip was alignment. When I was looking at my goals for real estate, I started to realize that there was a lot of sacrifices we were going to have to make

along the way in order to achieve some things I wanted to achieve. And so I was trying to think, how am I going to make it so that we're on the same team rather than us being on a team? She's a very frugal person, but I wanted to be, how do we be on the same team? instead of maybe her wanting to do this activity and I'm saying no and all of this. So what I realized was this type of trip would be, as I said, an 11 out of 10 experience for her. And the only way we could really do this responsibly would be if we built up enough cash flow and income from someplace, in our case it was going to be real estate, but it had to be from somewhere

that we could go on the trip, not feel like we were punting on future retirement, not feel like we were doing something irresponsible, not be in a bad situation if we couldn't get jobs when we got back. And so she came on board with that idea. She was excited about the idea of the trip. And so we worked forward from there to build the portfolio to a place where it could support the trip as well as save up enough money to be able to do the trip responsibly. So it's been an incredible experience. You got to see the Great Wall of China.

We got to cook pasta with an Italian chef. We got to learn to make French baguettes. It's like a bunch of different stuff that we got to do. But it's been a reward for all of that work. And it's been a really cool experience. I love that. I love that. Real estate can help you.

and support you in whatever life that you want to live. The other thing that I like is that you're enjoying the fruits of your labor, not 50 years down the road after you've built a portfolio and everything is paid off, but you're enjoying the fruits of your labor along the way. And I feel like that's important too. Like if you're not enjoying what you're doing and your past year three, then you can probably make some adjustments and really enjoy what you've started to build. If you're in the first one to three years, sorry, you got to be in.

the trenches. Like if you really do want to grow a big portfolio, if you're trying to, if you're trying to just do one or two deals a year, not a big deal. But if you're just getting started, the first couple of deals, the first few years, it's going to be tough. But you can really start to enjoy a unique life after you've gotten five to ten decent deals under your belt. On this trip, I'm still working. I have a 24-inch monitor that I'm traveling with. I have my laptop. I'm having meetings with my team that's running the property management. I'm having meetings daily with my construction staff. Some people that I've met on the trip have said to me, they're like, oh, I'd hate that to need to work while I'm on the trip.

It's like, okay, but you're going to go home in two weeks, and I'll still be able to be here experiencing all of this. So if I needed it to be perfect, we would have never been able to go. So whatever those goals are that you have, try to figure out how could you do them. Don't try to make it perfect. Just find a way to make it work. And you might be closer to taking a leap than you thought and getting to do some of the things you wanted to do. Great words of wisdom. I don't need to add anything else.

What a fantastic way to end the episode. Thank you so much, Aaron, for sharing your journey. Thank you so much for sharing the good and the things that didn't go so well and being open and transparent. Congratulations to you on the portfolio that you've built. That's allowed you to take this amazing trip with your wife. How can people get in contact with you should they choose to? Sure. I love talking to people answering questions and try to help.

I've got a podcast called Active Rental Income. It's on YouTube, Spotify, and Apple Podcast. So you can check, look me up. there. And then you can also reach out to me on Facebook, just Aaron Murphy. I'm active in the Bigger Pockets Facebook pages as well. Awesome. Thank you. And if you are listening to this and you are thinking I would love to share my story on the Bigger Pockets podcast, you can actually apply to be a guest on the show. You can go to BiggerPockets.com slash guest and fill out the application. We would love to be able to review that and have you come on and share your inspiring story.

Thank you so much, everyone, for listening. And we'll see you on the next episode.