110 units and retired at 36: Here's how a former Clemson football captain went from '$1,000 and my car' to a successful real-estate investor
- Chad Carson thought he'd do real-estate investing as a "temporary thing," but soon found himself immersed in the space.
- After graduating college from Clemson University - where he served as a captain on the football team - he sourced deals for investors and received a piece of the proceeds.
- Today, Carson leans on "cap rates" and a property ranking criteria in order to decide if a deal is enticing. He finances the majority of his deals through private lenders or seller financing.
- At 36, Carson retired and now lives off of the passive income generated from his 110 properties.
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Chad Carson never expected to pursue real-estate investing full-time. It just sort of happened.
"I thought it was a temporary thing to get into real-estate when I first started, to be honest with you," he said in an exclusive interview with Business Insider. "I was just kinda worn out from playing football, and tired.
He continued: "I made a run at the NFL and that really didn't work out, so I just thought I'd take a break and do something fun for a couple years."
Prior to his venture into real-estate, Carson was a two-year captain of the football team at Clemson University. He would later graduate as a biology major.
With no prior experience in real estate, Carson figured he could add value for others by sniffing out deals.
"I didn't have any money or know-how," he said. "I would go talk to other realtors, knock on doors. I would send letters and notes out to people who might have a house for sale, and so I was just sort of a deal finder."
He added: "It kinda caught fire and I just kept doing it after that."
Today, Carson lives off of the passive income that's generated from 110 units, having retired at just 36 years of age.
The first deal
Since Carson didn't have a conventional job at the time, financing deals was tough. He couldn't get a loan from a traditional lender due to his lack of income.
However, this initial speedbump would sow the seeds for his deals' financing moving forward. He'd leverage private lending and seller financing. Both methods would free Carson from the stringent terms of a traditional bank loan.
Today, almost all of Carson's deals today are financed this way. He says that what started as a necessity grew into a preference.
"We actually got a private lender, essentially," he said. "It was a professor of mine at Clemson."
He continued: "That was the very, very beginning. When I first got out of college, I had $1,000 and my car."
After sourcing a deal for a flip, Carson and his business partner asked his professor for an initial investment - and they were off and running.
They bought the house, fixed it up, and sold it for a $14,000 profit.
"That kinda got us off and running," he said. "That was the first six months of our partnership."
It's important to note that Carson had a backup plan in case his entrepreneurial aspirations didn't come to fruition. He says he had the benefit of no debt, a college scholarship, and a supportive family.
Deal criteria
"Eventually we realized that at some point we'd have to start holding some properties if we ever want to build some wealth and have some regular income," he said. "The flips were fun, but once you sold it the money is in the bank and you've got to go and do it again."
Nowadays, Carson will occasionally flip a property, but multifamily rental units are his bread and butter.
As a general rule of thumb, he aims to make $150 per door on a rental and shoots for a profit of 15% to 20% on a flip.
He looks at a deal through two different lenses. Half of which is focused on quantitative aspects (price, rents), while the other half is focused on qualitative metrics (quality of the property, neighborhood safety, potential growth in the area).
He uses capitalization rates, or "cap rates," - the ratio of income to his total investment in the property - as a general gauge of attractiveness for a deal. Carson says that a lower cap rate would be around 6%, while the higher end of the spectrum is around 10%.
As far as location is concerned, Carson ranks properties like a school teacher ranks grades. He says the "sweet spot" is around a B- to C+. These properties produce solid cash flow, since they're not too costly upfront, but are still in a nice location. He says that "A" properties can be difficult because of demand, and "D" properties should generally be avoided.
"The purpose of doing that is just to remind yourself that you have to use different numbers and a different approach depending on how good the location is," he concluded. "Real estate is about making money and building wealth, but it's also about risk mitigation."