BRRRR Strategy + Section 8 = Massive Cash Flow | Real Estate Investing Tips

Dustin Fronk (00:00)
Actually listed my other ones for sale. I said this game isn’t what I thought it is and I was done with it.

It actually fell on Juneteenth. It was the first year that Juneteenth was a federal holiday. So because the closing was set for that day and then everyone was suddenly now as a federal holiday and it was off that day,

I held all the properties and

I built from there with that was that was on property number four and now I have 60 six years later. So that was definitely the make or break point for me when I was all in.

Michelle Kesil (02:09)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil. And today I’m joined by someone I’ve been looking forward to chatting with, Dustin Fronk, who’s been making serious moves in the low income housing space. So really glad to have you joining us here, Dustin. I think our listeners are really going to take something away from how you’re approaching your

investor business and excited to dive into all of that with you.

Dustin Fronk (02:46)
For sure, I’m excited to be here and thank you for having me.

Michelle Kesil (02:50)
Yes, so first off for people who may not be familiar with you and your world yet, can you give us the short version of what your main focus is these days?

Dustin Fronk (03:03)
Yeah, so my main focus has been the same for the last six years. I’m currently located in the Twin Cities of Minnesota and I stick to residential real estate, one to four units. Most of my stuff is actually single family, probably 80%. And then throw in some duplexes and one triplex, which was actually my first deal. A lot of people are familiar with house hacking. That was a…

kind of the booster that got me into real estate. And I’ve just stayed consistent on a consistent buy box for the past six years and just grown one at a time for the whole time that I’ve been in this business.

Michelle Kesil (03:47)
What markets do you operate in?

Dustin Fronk (03:51)
I am specifically in the Twin Cities, if you don’t know is Minneapolis and St. Paul. All of my stuff is in those two cities, so it’s a very focused area on what I’m doing. It’s all been pretty much the rinse and repeat process across the board.

Michelle Kesil (04:12)
That’s great. So yeah, how did you get started into all of this?

Dustin Fronk (04:17)
That is a good story. I actually didn’t know anyone in real estate. I had no real estate experience. I had no really interest in real estate and I was a college dropout and I got started in e-commerce and digital advertising right away. And I was super early to that. So it was a lot easier back in like 2013, 2015 to make those things work and

It suddenly got very, very competitive and there was so many ups and downs in the business. You’re up one month, you’re down one month. It was very inconsistent and I wanted something

that held equity, that retained itself. And luckily my business partner, he got connected with someone who was a big real estate investor and shout out to him. He taught us the whole game.

He taught us everything. And then obviously, you know, I’ve, I did my own research. I started reading books, podcasts, bigger pockets. Everyone knows rich dad, poor dad. And I basically just soaked up the entire real estate game. And it was the, just the perfect, the perfect business for me from, from top to bottom, everything about it with, from the taxes to retained equity. I think that’s super important. A lot of people build businesses.

but they rise and fall and you might have put five years into a business like I did in e-commerce and you don’t really have anything sellable, you don’t have anything that you can hold onto. Whereas real estate, it just retains its equity, it appreciates and I’ve really just loved everything about the entire real estate space. That’s kinda how I got into it. So I got lucky, I met some good people who helped me out.

Michelle Kesil (06:59)
Yeah, that’s amazing. And what has been like the key to keeping your business running smoothly?

Dustin Fronk (07:06)
The key is one thing, I put out some content and I say this in every video to start it and finish it, and it’s win the buy. To me, there’s winning the buy in real estate, and what I mean by that is you have to get a good purchase price up front. That’s way up here, everything else is down here. If you get that right, which I’ve been really good at doing, that’s been my M.O., you can…

Fumble along and learn the rest as you go. But if you overpay for a property, it’s nearly impossible to work your way out of it. So I think that’s been the key to my business because I’ve gotten such good purchase prices up front that I’ve been able to do cash out refis. I’ve been able to do the burr method. I’ve been able to recycle money for six years because I’m getting so much equity up front. I think that’s by far

the most important thing with the real estate game that people should know.

Michelle Kesil (08:11)
Yeah, absolutely. That is super valuable. So I know that when we chatted a bit, you mentioned you’re into like the lower income housing. Can you expand more about that for people who aren’t familiar and how you got into that, what you do?

Dustin Fronk (08:29)
Yeah, I got into low income housing specifically, and I’m kind of speaking to a specific avatar. If you’re starting out with very little money, and basically all you do have is your time and your effort is your asset, you have to have properties that cashflow and you literally can’t afford to bank on just appreciation and have assets that…

take huge down payments that kind of break even or cashflow a little bit and you’re hoping for the appreciation. So I’ve always focused on purely the numbers when I’m buying the property. It’s all just based on yield, cash on cash return. And that’s the way I invest. I’m very unemotional about the properties. I don’t really fall in love with them like that. And the low income housing, although it’s a headache to manage, I will say.

They just have the best rate of return. I mean, I’m buying properties, low 100s, and they have rents of say 2K, 2K plus sometimes, depending on bedroom count. So I’ve just built that way. It’s also much easier to expand on it to go to the bank and refinance and do the BRRRR method because you also have the numbers backing you if they’re underwriting you in a commercial way.

in a commercial sense on your ability to service debt.

So that’s kind of my approach to it and why I’ve always stuck with the low income housing.

Michelle Kesil (10:46)
Yeah, that’s fascinating. I think that’s going to be an interesting perspective for people that are, yeah, maybe just getting into this space.

Dustin Fronk (10:56)
Yeah, definitely. That’s just how I the properties. And I’ve talked to a lot of people about real estate, obviously. And of course you want the super nicer stuff, everything brand new turnkey stuff. But when you break it down numbers wise, unless you have an amazing income, if you just have an amazing income and you’re a doctor or a lawyer,

You can play a little bit of a different game, but if you’re just a person starting out with limited funds, this low income housing is the place to start off for sure.

Michelle Kesil (11:37)
Amazing. So every operator I know in business had a moment where things maybe got more real. Maybe you had a deal that just went sideways or had to make a fast pivot. Would you mind sharing an experience like that for you?

Dustin Fronk (11:56)
Yeah, I actually have a really good story on this. Like I said right away, I had a buddy who kind of dragged me along. Because I was still iffy on the whole real estate thing, even as I understood it. But when you’re to real estate, it’s a lot of money down up front, 20 % down payment, et cetera. And it was my third, or I think it was my third property I ever bought.

Sorry, it was the fourth. I remember, it was the fourth. And I still wasn’t totally bought in. And what I had happened is I bought a property and the new tenants didn’t have my number when I bought it. So they had a minor thing. The thermostat battery ran out. That was all it was. So they were calling the old landlord. He was ignoring them.

And finally, within the same day, this is all within a day, they finally got my number and I went out and I had someone, I went out and I fixed the thermostat and the heat was back on and everything was good. But in that window, they actually called the city about it. And this was my introduction to government, government interference in, in real estate. When the inspector got out there,

He got his foot in the door and he said, okay, the thermostat is fixed, but now that I’m in here, I see all these other things. And the guy kind of had a reputation for being that guy. And he built out this 13 page report of all the things that I was now required to do. And he was going to condemn the building. I’m not sure if the audience in Minnesota, we have vacant buildings. called it. They’re condemned.

Basically you can’t rent to them.

And this just totally blew me away because I’m just getting started. I don’t really have cash flow or anything. And now I have this report that’s going to cost tens and tens of thousands of dollars. And I’m terrified to be honest with you. At the same time, it was COVID. If you remember COVID, there was COVID laws where you couldn’t get into a property. Like they could be the tenant could basically refuse entrance at for just because COVID.

I don’t know how well people remember that and I was quite a few years back. But I had this report that kept building and they kept coming back while simultaneously the tenants won’t let me in and they were protected by the law. So now I have the city breathing down my neck, the city’s fining me and I also simultaneously can’t get in and do the work. And that was kind of the breaking point where…

actually listed my other ones for sale. I said this game isn’t what I thought it is and I was done with it.

Ended up selling that property for a loss and the day of closing actually on the other properties, because I was seriously going to be out. I kind of had that come to Jesus moment.

Whereas like this, this is just the first hurdle. You couldn’t have thought you were just going to go straight to the top with no problems. These are things you just have to figure out. You got a raw deal on this one. It just passed inspection a week before when you bought it. You got screwed on this, sell that one for a loss and move forward. And the craziest thing about the, the closing, the crazy part of the story when I was going to sell it, the other properties.

It actually fell on Juneteenth. It was the first year that Juneteenth was a federal holiday. So because the closing was set for that day and then everyone was suddenly now as a federal holiday and it was off that day,

the closing was missed and that was the maker break point in my career where the closing was never back on.

I held all the properties and

I built from there with that was that was on property number four and now I have 60 six years later. So that was definitely the make or break point for me when I was all in.

Michelle Kesil (17:06)
Wow, yeah, what a story. It’s honestly what separates the people that are just dabbling for the ones that are ready to have this be like their long term vision.

Dustin Fronk (17:18)
Exactly, it’s a real estate is definitely a commitment. I wouldn’t go into it, especially if you actually think your plan is to hold rentals for the long term. You’re not going to be a flipper or a wholesaler. You got to have, you definitely have to have that commitment and you have to have that resilience to know that things are going to pop up forever. As long as you hold them. There’s no one who holds real estate in.

Michelle Kesil (17:44)
Yeah. Yeah.

Dustin Fronk (17:49)
Things don’t just, it’s a commitment that you, your phone’s gonna ring, you’re gonna, even if you have property manager, whatever, things are gonna happen for the life of you owning that property. And it’s something that you have to just be okay with and commit to anyways.

Michelle Kesil (18:05)
Absolutely. So let me ask you this. What are you most focused on solving or scaling next?

Dustin Fronk (18:16)
The thing that I’m most focused on, there’s two parts to that answer. As far as the real estate itself, I’m focused on bigger stuff, bigger units. So focusing more on duplexes and triplexes. Because I have the sample size, I have the actual numbers, my tax returns. Those just perform a lot better.

And I’m also focusing on if I’m doing single family, doing ones with higher bedroom count because in square footage, because bedroom count and square footage, at least where I’m at, moves the needle in a completely outsized way. Like rents for a four bed versus a two bed are ridiculous. The spread between the two.

So that’s my focus on the real estate side, like the actual investment side. The other side is doing things like this podcast, putting out more content, and I’m actually getting licensed this month as well. I just have to do the course. I’ll probably have it in maybe a week or so. And now that I’ve put out so much stuff and people know me for real estate.

I’m excited to actually start using what I know, using my lender contacts, contractors, everything I know about real estate and starting to work with other people. That’s what I’m most excited for the rest of this year going into 2026 and beyond. That’s my main focus.

Michelle Kesil (19:51)
Yeah, that’s exciting. What are you like looking in your collaborations?

Dustin Fronk (19:57)
Sorry, could you repeat that?

Michelle Kesil (19:59)
Yeah, like what are you looking for in those collaborations, like working with people?

Dustin Fronk (20:05)
I think I like the actual client side, helping people maneuver the process. Like really just being a good agent. Because I’ve seen so much being the investor. I’ve had 100 plus closings. I know the lenders, I know how they operate with points. I know how you can do different things with closing costs. I’ve seen a lot of people get…

messed up with contractors, overpaying for contractors, miss buying a property, goes back to how I started the video, overpaying. And I really think that I can just help a lot of people maneuver the biggest purchase in their life. That’s what I am most excited on and where I think I can provide the most value. The other part of it, I may get into

taking outside money and growing the portfolio that way. Because obviously the returns haven’t good, the returns have been good for myself, but putting gasoline on the fire, I know there’s other people who want to get involved in real estate, specifically low income housing. In my opinion, it’s not something that you can just, if you’re doing low income housing, I would suggest partnering with someone if you’re the money guy, if you’re the LP.

That’s not something that most people really want to do. So because I have the management wherewithal, I think that would be another thing that I would focus on is partnering with people who have high paying jobs and I’m the GP managing the properties.

Michelle Kesil (21:52)
Yeah, that’s exciting. think there’s a lot of value that can be added in those collaborations.

Awesome. So what is like the next big goal that you have for your business?

Dustin Fronk (22:14)
The next big goal for me is definitely cleaning up and crystallizing the management side of the business. By the way, my portfolio basically has doubled in the past 12 to 18 months. So there’s a lot more properties. The big goal would be getting more systems in place instead of me just.

taking scratch notes and remembering everything off the top of my head and having things more automated with just basic stuff. Rent collection, maintenance requests, setting up Zapier, AI’s hot now, AI automations, evictions, all of that stuff, just having it more of a streamlined process is the thing that I’ve been focusing on the most the past couple of months and probably my big target to

have some of that streamlined and then I go work on actually finding deals. The other thing I’ll add is flips. This is the first year I’ve flipped. I’ve always refinanced. The first 50, 60 deals I did, all of them were refinanced and held. And this year I realized it actually makes sense to sell them sometimes and just take the profit, walk away from the property and move the money on to the next deal. Those are the things I’m focused on right now.

Michelle Kesil (23:20)
Yeah.

Amazing. Yeah, that’s important big stuff. All right, so before we wrap up if someone wanted to reach out connect Learn more about what you’re doing. What’s the best way for them to reach you?

Dustin Fronk (23:58)
I’m definitely most active on ex formerly Twitter. I’m also I’m not on Instagram as much, but I do post on Instagram. And my main one where I’d probably want people to check my stuff out is YouTube. I’ve just started putting out a little couple more long format videos, very in depth, live videos, walking properties, kind of

long format where I can explain things about the business. I would definitely say that YouTube probably number one and X number two. And if you really want to, Instagram number three, those would be the main places. And my handle’s the same on all three. It’s just at residential OG. Or if you look up Dustin Fronk, those will be the main places that I’m posting and showing a lot of behind the scenes stuff on the portfolio.

Michelle Kesil (24:52)
Perfect. Well, listen, I appreciate your time, your story, and your perspective. We need more people in this space doing things in this right way. So thank you for being here.

Dustin Fronk (25:03)
For sure, thank you. I really appreciate you having me and hopefully we can do another one soon.

Michelle Kesil (25:08)
Absolutely. And for those of you that are tuning in, make sure you’re subscribed. We’ve got plenty of more conversations coming with operators just like Dustin who are out here building real businesses. And we’ll see you all in the next episode.