- Dedric and Krystal Polite amassed a portfolio of 66 units worth $5.2 million in just a few years.
- The couple’s unique real estate investing strategy is featured in an A&E series called 50/50 Flip.
- They share how to find discounted properties, secure funding, and flip them for maximum profits.
“Even though we love flipping homes, the plan here is to build up the neighborhood and develop some more housing that we can rent out and pass on to our kids to really build true generational wealth,” said Dedric Polite in a trailer for A&E’s new series 50/50 Flip.
Like many real-estate entrepreneurs, Dedric traces his passion for property investing to reading “Rich Dad Poor Dad” in his early 20s, but it wasn’t until after he met his wife, Krystal, that the former sales executive put the idea into action.
Together, the enterprising couple, who were based in Boston at the time, started renting out their apartment on Airbnb. The side hustle soon took off and earned them $50,000 of revenue in four months, recalled Krystal, who worked for an appraisal management company.
In 2012, the Polites moved to North Carolina where they struck their first wholesale deal after finding a suitable property on Facebook marketplace. In a wholesale deal, buyers do not need to renovate in order to resell the property. They get the property under contract and then sell or assign that contract to another investor for a higher price.
That first deal earned the pair an $11,000 profit, but their real estate activities soon escalated from there. Before they knew it, the Polites had made more than their annual salaries in three deals.
“That’s when we realized that we could really walk away from our corporate jobs and do this full time,” Dedric told Insider in an interview. “Our goal was freedom. And that’s what real estate has allowed us to do, which is to really become financially independent where now we have enough passive rental income where we don’t have to work if we don’t want to.”
The Polites did walk away from their corporate jobs but they are still working — on something they love. In 2017, the husband-and-wife team launched their real-estate investment firm, Be Polite Properties LLC, which now boasts a portfolio of 66 units that is worth over $5.2 million, according to appraisal documents viewed by Insider.
In addition to the cash-producing properties in their portfolio, some assets do not have street addresses or bank appraisals yet because they are vacant lots that are subdivided from houses owned by the Polites. Their estimated value is based on what comparably sized lots have sold for in the area, according to the couple.
TV-worthy real estate investing strategies
With such rapid growth in their real-estate portfolio, the duo, whose long-term goal is to own 10,000 cashflow-producing rental units, has shown no signs of slowing down. They have staffed up their real estate investment firm to a tight-knit team of eight, including virtual workers.
Most recently, their unique real estate investing strategy has become the subject of a mini-series on A&E called “50/50 Flip.” The six-episode reality show chronicles their journey to renovate and flip 10 single- and multi-family homes for under $50,000 each and all in under 50 days.
— Dedric Polite Meta-Investor (@dedricpolite) January 20, 2022
Renovating properties under a limited budget and timeline may seem like a colossal effort but finding a good deal is oftentimes the hardest part, in their view.
To locate discounted properties, the couple would drive around a neighborhood and look for vacant or distressed houses, a strategy they named “drive for dollars.” They also engage in the old-fashioned “direct mail” strategy where they send letters to homeowners asking if they are interested in selling their properties. Another strategy is to cultivate long-term relationships with sellers by going out as a team to meet people, knock on doors, and gauge their interest in selling.
“We typically buy properties at 40 cents to 60 cents on the dollar because we go directly to the seller,” Dedric said. “This is a concept we call renovational wealth, which is buying directly from sellers properties that need work, fixing them up or renovating them, as a path to building wealth.”
How to secure funding and invest opportunistically
While the Polites had stable salaried jobs before going into real estate full-time, neither of them came from money, having been raised by single parents who lived in subsidized housing.
In order to secure funding for their first few deals, the couple turned to family, friends, and colleagues for interest-bearing loans.
“My husband’s mother was our very first private investor. She gave us $10,000 to go towards our very first flip,” Krystal said. “So start with the people who are closest to you because they are going to understand a little bit more in case something goes wrong, but it’s a way for you to do it in the beginning.”
Besides private funding, the couple also suggested using the Federal Housing Authority insured loan program, which has a relatively low down payment requirement of 3.5% of the purchase price instead of the typical 20%. A caveat is that the FHA allows for only one FHA loan in an individual’s name at a time, so unless an investor can refinance their FHA loan into a normal mortgage, they cannot pursue another FHA loan. In addition, the FHA loan program is designed for borrows to purchase a primary residence, which means that the owner needs to occupy the property for the majority of the year.
Another way to secure funding in the early days is to house hack, according to Dedric.
“That’s actually what I did at 25 years old,” he said. “I bought a triplex in Boston and lived in one of the units and rented out the other two; the other two units pretty much paid my mortgage.”
The Polites like to keep multi-family properties and short-term rentals because they tend to generate better returns than long-term leases on single-family properties. After accumulating a few properties as buy-and-hold, they began to opportunistically engage in housing flipping to generate more capital for their next big project.
Bullish outlook despite uncertain macro trends
Like many real estate investors, the Polites’ success has been turbocharged by the red-hot housing market over the past two years. That could change as the
is on track to raise interest rates and reduce its $9 trillion bond portfolio to clamp down on inflation, which is a nearly 40-year high.
Already, US mortgage rates have jumped to the highest level since March 2020, with the average rate for a 30-year loan sitting at 3.55%.
The Polites acknowledge that rising mortgage rates could “put a little bit of a damper” on the price appreciation of homes, potentially bringing annual appreciation back down to single-digits from the double-digit growth witnessed during the pandemic.
However, they still view real estate as a long-term strategy to build generational wealth. They argued that the low housing inventory in the US could last for years while demand for housing continues to tick up as urban employees seek more space and better living standards in the work-from-home era.
That being said, the couple has a simple philosophy for investors looking to get into real state: invest in education and take action. “When my husband and I first got into real estate, we spent over six figures just attending conferences,” Krystal said. “So by the time we got our first deal, it was really off to the races.”
Dedric added: “When Krystal and I first met, I read all the books and attended seminars, but I was hesitant to take action. She’s a big action taker so she gave me that push to say okay we’ve done enough education, let’s start doing this.”