Cory is an attorney in Harrisburg, Pennsylvania with Pillar+Aught and in 2016 he started to get involved in real estate investing. His first deal was with his mother where they decided to rehab his father’s place and rent it out for his mother. This experience worked out as a great trial run for him and a great investment for his mother. He shares how he was able to go from 2 units to 18 and a parking lot in one year.
Cory Iannacone Real Estate Background:
- A Lawyer with Pillar+Aught.
- From Harrisburg, Pennsylvania
- Been Practicing law for the past 15 years.
- Started in real estate in 2016.
- In 12 months Nov 2017-Nov 2018 Coy went from 2 units to 18 units and a parking lot. Putting under contract over 1M in real estate investments at that time
- Say hi to him at : Cory.email@example.com
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Best Ever Tweet:
“I will gladly pay a couple of hundred bucks for somebody who is actually reliable, who can get the job done and I don’t have to worry about it” – Cory Iannacone
Joe Fairless: Best Ever listeners, how you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless. This is the world’s longest-running daily real estate investing podcast where we only talk about the best advice ever; we don’t get into any of that fluffy stuff. With us today, Cory Iannacone. How you doing, Cory?
Cory Iannacone: Very good, Joe. Very good.
Joe Fairless: Well, I’m glad to hear that, and a little bit about Cory – he’s a lawyer, he lives in Harrisburg, Pennsylvania, been practicing law for 15 years. In 2016, started real estate investing while maintaining his job and 12 months, from November 17 through the next November, November 18, he went from two units to 18 units and a parking lot. He put under contract over a million in real estate investments at that time, he’s used all types of financing. So we’re going to dig into that and talk about it. So with that being said, Cory, first do you want to give the Best Ever listeners a little bit more about your background and your current focus?
Cory Iannacone: Yeah, I think you nailed it with the background right there. I am an attorney in Harrisburg, Pennsylvania. I’m originally from Maryland, and I’m up here in Harrisburg, Pennsylvania now. That’s my primary job, an attorney, but in 2016, I started getting involved into real estate investing, just something different to do. I have passion for it and it’s just taken off for the last three or four years.
Joe Fairless: What type of attorney are you?
Cory Iannacone: A good one.
Joe Fairless: You’ve used that line before.
Cory Iannacone: I have. You’re not the first one that’s asked me. I specialize in labor and employment issues. So people getting fired from their jobs, suing their employer, discrimination issues and also union issues.
Joe Fairless: Okay, got it. So I interrupted you. You had a good flow going and I just jarred it. So from a real estate standpoint, tell me about the latest.
Cory Iannacone: My focus, I think it’s what we were talking about, is multifamily. Cash flow. Just looking for that passive income is something different to do than the 9 to 5 or exchanging your time for money; I just hate that idea. So that’s been my focus, and that’s just what I’ve been doing for the last three years. Most of my properties are smaller. They’re the two to four-unit size. You mentioned before, I do have a parking lot in there, which was interesting. It was part of a package deal I bought, and it turned out to be probably my best purchase, I’d say.
Joe Fairless: So let’s dig into some specifics. So did you just have an epiphany in 2016 that you wanted to start real estate investing?
Cory Iannacone: It was either epiphany or a midlife crisis. I was flying down to my sister’s wedding in Key West and I picked up Rich Dad, Poor Dad by Robert Kiyosaki; cliche, but I have to read for my job. So I mean, I read all the time, but not really fun… And I knocked that book out in two days. I’ve never read something that quickly or not been able to put it down. I think what it was is he was just able to put into words what I’ve always thought in the back of my head for the last 36 years of my life, and just something clicked. And I remember flying back from the wedding and– by the way, backstory – my grandfather passed away two years prior and his house had just been sitting vacant all that time. So I’m flying back with my mother and I turned to her on the plane and I said, “Let me rehab pop’s house and rent it out for you. I mean, right now, how much money do you pay here in taxes, the electric bill, the utilities and it’s just doing nothing. If you let me do this, I promise you’ll never have to pay another penny out of pocket, but even better, you’ll get a check every month, put money in your pocket; you’ll make money off of it.” So that’s really my epiphany/midlife crisis back in 2016 that started this big snowball rolling down the hill.
Joe Fairless: So first one, was it a duplex?
Cory Iannacone: That was just a single-family house. That was my grandfather’s house. So what I did was– it’s a longer story, which I don’t think we should get into, but I was going to purchase it initially, my mother didn’t really want to get rid of it. So long story short is she just kept it. She was willing to finance the rehab and I used it as an opportunity to just get the experience of what exactly you need to do – the construction part of it, the rehab, renting it out. It was a trial run for me where I really wasn’t putting any of my money into the deal, and it’s working out great for her. It’s listed at top rent, she gets a check every month and it just coasts. But once that happens, I’m up in Harrisburg, I decided to find a duplex closer to me. A lot of shopping around and eventually I landed on a duplex that my realtor said he hasn’t listed it yet, but he’s getting ready to list it and I just jumped on that opportunity.
Joe Fairless: Okay, so let’s talk about that one. Tell us about that deal.
Cory Iannacone: It’s located in the historic district in Harrisburg, which is an up and coming area. They spent the last 15 years or so– a lot of revitalization going on the area. So they’ve been taking these old historic houses that were built in around 1900 and just updating them. They have great bones, they’re all brick houses, they’re gorgeous on the outside, but the inside just needs some love. A lot of these houses were chopped up back I think in the 70’s including duplexes, triplexes, quads and turned into rental units. So that’s what this was. Old house, it was a duplex. So the first floor apartment’s rented out, but the second floor apartment was just rough and needed a lot of love and it was vacant. So that’s when I jumped in and purchased it.
Joe Fairless: What are the numbers?
Cory Iannacone: I ended up paying $115,000 for that. And you always end up learning, you put more money into that place that you initially budget for and anticipate, especially on your first deal; a lot of things come up, especially the older houses. So I think I ended up putting in around $40,000; and I rehabbed that second apartment that was vacant, so that’s part of it, but then the first floor apartment became vacant about 10 months later. So that includes that too.
Joe Fairless: You started out with a duplex and in the bio, it says, “Two units to 18 units and a parking lot.” Now, are those 18 units in total how many, or did you buy an 18 unit?
Cory Iannacone: No, no. It’s in total and they’re all comprised of two-units and three-units. There’s actually going to be four two-units and then there’s three three-units, plus the parking lot.
Joe Fairless: So you found something that you like that’s working for you that’s the two and three-units. Tell us about of those purchases, which one has been the most challenging?
Cory Iannacone: I’d say, financially the most challenging would definitely be a duplex, which I love today. It’s a great house, great building, but it just required way more money than I initially anticipated when I bought it. I bought that one for $110,000. It was all single-metered for everything, the gas and the electric. So I looked at the numbers and the numbers looked atrocious from the seller, because he was paying that bill all himself. The places need to be fixed up, so I ended up splitting the electric and splitting the heat which was very expensive, and more than I initially anticipated.
Joe Fairless: How much?
Cory Iannacone: The electric, I ended up spending between $2,000 and $3,000 at the end. And the longer story there – I had an electrician I was working with, but I decided I really should shop this around, and I got a new electrician in there, but he wasn’t licensed in the city and he had issues pulling the permits, and… I would have been better off just paying extra couple hundred bucks with the person, and that was a tough lesson to learn there.
Joe Fairless: Why did you switch initially?
Cory Iannacone: Just because I was new at the time and I was using the same electrician; getting good work, but I always felt that I was paying just a little more.
Joe Fairless: Okay.
Cory Iannacone: I always thought, maybe I could save a few dollars here and there. But going back to that same guy because you know what, I will gladly pay an extra couple hundred bucks for somebody who’s absolutely reliable, gets the job done and I don’t have to worry about it.
Joe Fairless: Alright. What about the heat?
Cory Iannacone: That was more expensive. That was closer to $10,000, because I had to put a new furnace in there. So at least the first floor apartment, we ended up putting central air in there, because that’s the new heat source we put in for the first floor apartment. All the other ones were running on a gas boiler. So we just kept that to run this apartment number two, which was floors two and three of the building.
Joe Fairless: Okay, and did you know going into it that splitting the heat was going to be 10k?
Cory Iannacone: No. Initially, I think I was budgeting for $6,000. So it’s just a couple thousand dollars add up, but it’s that and there’s a lot more that added on to that.
Joe Fairless: What was it that changed the estimate? Because I imagine that did your research and you spoke to someone like, “Hey, I got to split the heat. I need to make an offer. You need to make sure these numbers work. How much is it? 6k? Great. I’m gonna roll with that.” What changed?
Cory Iannacone: I don’t know, honestly. It’s a great question, but when you’re backs to the wall and things needs to get done, I don’t really have a bargaining at that point. I know the electric initially– the first guy I told you [unintelligible [00:11:30].08]. So he’d probably get this done for $2,000, and then he was saying, “Well, no more than $3,000,” and that’s where I got a bad feeling and I said, “Let me get somebody else in who I know is definitely gonna get this done for less money,” and that’s what caused the issue there. The heat, I think part of it had to do with those radiators were much heavier than I realized in the building. It was removing the radiator, cutting holes, and I don’t know if that was the only thing. So it’s just an estimate in the beginning when he initially just looked at it, and then we actually get in there, and then he gave me his final quote.
Joe Fairless: Is this deal the one that you did the most amount of work on in terms of dollar amount?
Cory Iannacone: Dollar amount? Yes. So one other thing I missed was repointing. These old historic houses are all built brick. I’ve repointed before. That first duplex I told you, I did some repointing there, but this one needed the entire side repointed and I just didn’t catch that when I initially went through to purchase it, and they’re big buildings too. So the same guy who did repointing also added some gutters. I ended up paying him just over 7 grand between repointing, brickwork and gutters on the place.
Joe Fairless: After the dust settled, how did the numbers look on that one?
Cory Iannacone: So that one, I bought for $110,000, and I ended up putting close to $60,000 into that place by the end of the day when everything was done, and that includes rehabbing both apartments.
Joe Fairless: What’s it rent for, all-in $170,000?
Cory Iannacone: Oh, yeah. The first floor apartment rents for just over $1,000; it’s $1,005, and upstairs rents for $1,250. So it’s just under $2,300 a month on that duplex; and then my mortgage on the thing’s $1,100, and I’m on the hook for water, sewer, trash. So trash, I spent 30 bucks a month and water sewers, something around $70, $80-ish a month. So it’s still cash-flows at the end.
Joe Fairless: How did you find so many properties within a relatively short period of time?
Cory Iannacone: Good question. So I did the first duplex, and you notice – it’s so addictive, especially when you’re getting started that I was depressed when I finished it. I rehabbed that first apartment and I was like, “I want to do this again; this job’s done. I can’t just sit back and do nothing.” I called my realtor and another duplex had just gone on the market, and we went and looked at it the same week I finished the rehab on the first one and rented it out, and I told him to just put an offer on the thing. I did and I got that and that was November of 2017. So that’s the first duplex, which ends up getting rehabbed. I finished that one up in February of 2018. Once that’s done, I did my own direct mail marketing campaign. I sent those all out and I got some hits off of that, but what I did was a cash out refied on those two duplexes I had and I got close to $50,000 cash. I had enough for two down payments on two more buildings just like the ones I just did. So that’s what started that. I found two more. I found somebody in Colorado who had a three-unit and a two-unit. The one two units, the one we were just talking about, the money pit one.
Joe Fairless: Someone in Colorado, so an out of state owner?
Cory Iannacone: Yeah, he used to be here, but he ended up moving out to Colorado. He got one of my mailers and so he called me. So I bought those as a package. Once I signed the contract on that, another three units in a perfect location went on the market and it was way below value. So I called my realtor right away and I said, “I want to put an offer on this place and go take a look at it,” and he told me this is way undervalued. It’s going to go for way more than that. So I said, “Alright, I’ll offer $105,000.” He said, “You’ll never get this place for $105,000. It’s gonna go for a lot more” and I said, “I’m okay to offer up to $110,000,” and he goes, “You’re never going to get it. It’s going to go for a lot more,” and I said, “Make it a cash offer because I don’t care. I don’t even have the money because I’m buying this three-unit and two-unit. So that’s where my cash is going anyway. So I don’t have $110,000; it doesn’t matter if I don’t get it,” and he calls me later that night and he says, “You’re not gonna believe this. You got that three-unit, and the reason I told you you weren’t going to get it is because my other clients, he put in for $125,000 for it, but he did a conventional loan. You did cash and they were really scared. The seller’s agents just not from the area and doesn’t realize what this thing’s worth and was scared it wasn’t gonna appraise. So they want you to buy it.” So it was like– I don’t know what the feeling was. I was happy but—
Joe Fairless: Confused? [laughs]
Cory Iannacone: Confused, sad, scared, all of it. I mean, it was like I was going through all these emotions at the same time. It was late at night; it was 8 or 9 o’clock at night. I went to bed, I woke up the next morning, I just got on the horn and started calling everybody who told me, “Oh, we’re totally in. If you ever find a deal, let us know. We’re totally in.” Well, I don’t know if you’ve ever done that, but everybody who says they’re in when it actually comes to [unintelligible [00:16:15].02] to play ball, people get nervous about it. They’re like, “Well, my money’s tied up in brokerage accounts. So maybe in December, maybe three months from now.” I was like, “No, I got seven days to come up with cash.”
So long story short, there was a doctor who I had a relationship with and he’s like, “I’m gonna give you $60,000 for this. I’m behind this, I want to learn about real estate anyway, I trust you.” So he gave me $60,000. I got hooked up with a hard money guy who’s like, “I’ll give you $100,000.” I was like, “Just give me $60,000. That’s all I want right now.” So he gave me $60,000, I closed on that deal, and that one turned out– that one cash-flows very well. So there’s three units in that. The first two rents for $900 and upstairs, which is not rehabbed yet, that one rents $600. So you’re up to $2,400 coming in. My mortgage on that one’s just over $900 bucks a month. So it was my most anxious one probably I ever bought, but it also was very profitable.
Joe Fairless: How many people did you speak to prior to getting to the doctor?
Cory Iannacone: Well, I talked to the doctor the first time; he said, “No.” That was two or three follow up phone calls. He actually told me, “I’m pulling in if this other guy’s in.” I was like, “Well, the other guy actually said he’s not in.” So then he’s like, “Well, I don’t know. Let me think about it.” I don’t know. I sent so many emails. This is just on one day. I would imagine I hit close to 20 people between emails and phone calls. Just anybody I know who said they might be interested in it.
Joe Fairless: You had multiple calls with that doctor… Was it initially no, and then you’re like, “I’m gonna give them one more call” or was it, “Maybe talk to me in a day or two”?
Cory Iannacone: Well, initially, it was, “I’m totally in if someone else’s in,” because we all know, we all three go in together, and I was like– I already knew the other guy was not in because his money’s tied up and it just wasn’t the right time for him. So I was like, “Look, the other guy’s not in. It’s just gonna be you and me,” and he’s like, “I really got to talk to my wife about this. I’m not sure.”
So it was two or three follow up phone calls where he talked about “well, how would it be arranged? What’s the second one were we doing? Am I gonna get an ownership interest? Am I just loaning you the money?” We talked that through, and then I remember getting the email. He actually emailed me later that day and said, “You know what? I spoke to the wife. We’re in. I trust you 100%.” So that was that.
And then right at that same time, right after I closed on that, and the other two from the Colorado guy, the three unit and the two unit, I got another hit on a mailer who is this woman who said, “My mother, she’s 87 years old. She’s living in the area. She’s got 50 units. She’s been doing this for 30 something years, and she’s moving to North Carolina. Do you want any of them?” She lived in a duplex in a great location. Next door to the duplex was a three unit and there was also a single family that was next to it, and there was also a parking lot which she owned all of them. They were all right next to each other. So I was feeling ambitious after I got that one three unit with no cash, so I told her, “I’m grabbing [unintelligible [00:19:09].02]
Joe Fairless: Cash. I’ll pay double.
Cory Iannacone: Well not that ambitious. Not that ambitious.
Joe Fairless: Okay.
Cory Iannacone: I told her– I go, “I’ll take them all, but I have no money, and I need you to finance the deal,” because I knew she owned the mall outright; except she had a HELOC on the two units she lived in. But the other one she owned outright. And she said, “Okay, that’s fine,” and I asked her to delay the closing on the two unit, so we get the other ones locked up, and she was fine with that. So she financed those deals. One was the parking lot and that was probably my more interesting deal if you wanted to hit on that.
Joe Fairless: Real quick. I wanted to ask you about that, yeah. Will you, just high level?
Cory Iannacone: Yeah, real quick. So my realtor told me– I think the parking lot’s probably– I ballparked $60,000 or $70,000 is probably what you should go in for an offer. I had known from the daughter, the daughter told me the neighborhood already offered $24,000. So I said, “You know what? I’m going to offer you the same the neighbor did, $20,000.” She came back with $30,000. We agreed on $25,000. The day I closed where she was financing, I called my bank and said, “I need a mortgage on this thing.” I actually told her not to renew any leases on these parking lot spaces, and what I did was I paid the rent for the parking lot for the first month, so she wouldn’t renew it, and I did brand new leases where I increased the rents on all of them, because I knew they were way below market value. So when I called my bank, I said, “Here’s all the new financials on the parking lot.” The bank came out, they appraised it at $60,000 with the new rents on there; it’s commercial. So within a month, I had her paid off, because the bank gave me a 75% loan on that. So $45,000 out of which $25,000 goes to pay off the seller, and there’s an extra check for $20,000 leftover which I used towards rehabbing some of the other properties.
Joe Fairless: That is such a sophisticated move. Nice work on that. Clearly, you’ve been practicing law for 15 years, so you’re a smart cookie. But just from a real estate standpoint, to pull that off into that type of structure, bravo to you. Nice job.
Cory Iannacone: Thank you. I appreciate it. It’s exciting, anxious at the same time, but it keeps life interesting.
Joe Fairless: Based on your experience, what’s your best real estate investing advice ever?
Cory Iannacone: I would focus on mindset. Honestly, you have to be in this right mindset to do anything and that’s in life in general. If you can get your mind in the right place and practice every day, whether meditation or whatever it is, I think that’s the key to everything in life, not just real estate.
Joe Fairless: We’re gonna do a lightning round. You ready for the Best Ever lightning round?
Cory Iannacone: Let’s do it.
Joe Fairless: What’s the best ever way you specifically one way – and you might do multiple – one way that you hone your mindset?
Cory Iannacone: Meditation. Every day, spend ten minutes, whatever it is just in silence and think and focus.
Joe Fairless: How can the listeners learn more about what you’re doing?
Cory Iannacone: About me specifically?
Joe Fairless: About you specifically.
Cory Iannacone: You can find me on BiggerPockets. I have some articles up there. That story that we just talked about going from two to 18 units, there’s an article that BiggerPockets blasted out. So that’s the best place to find me.
Joe Fairless: Awesome. Well, Cory, thank you for being on the show talking about some challenges with that duplex and splitting the heat, splitting electric, the challenges with some other things, but holy cow, some major wins too with those mailers. I think that’s obviously a key part of this, as well as the parking lot in that creative structure. So I enjoyed our conversation. I hope you have a best ever day and talk to you again soon.
Cory Iannacone: Thank you Joe. I appreciate it.
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