SAVE   |   EMAIL   |   PRINT   |   RSS  
The power of sweat equity
Tycoon in the making: John Fragnito turned a small investment into an impressive portfolio.
June 23, 2005: 11:27 AM EDT
By Les Christie, CNN/Money staff writer
John Fragnito
John Fragnito
One of Fragnito's holdings
One of Fragnito's holdings

NEW YORK (CNN/Money) - John Fragnito budgets his time carefully. There are barely enough hours in the day to get in all he tries to accomplish.

The 27-year-old rises early and drives several miles from his home in Chelan, Washington to nearby Manson, where he opens his coin laundromat for business. Next, he races to one of the apartment buildings he owns, where he will work on renovating or repairing a unit or cleaning up the yard.

His next stop is to a check cashing/payday loan store he recently launched. Those doors open at 10 and he stays until closing at 6. Then he runs back to one of the apartments, then on to the laundromat to batten things down for the night.

"I pretty much go 24/7," says Fragnito, who returned to the Lake Chelan area, where he grew up, about a year ago.

He had moved to Los Angeles after graduation from college, stayed a couple of years, and moved back to Washington little more than a year ago. In L.A., he had worked for a real estate company, handling apartment rentals, but he had hoped to get into the hot housing market there.

That didn't work out. "I couldn't find anything I could afford to buy," he says.

Still, by pinching pennies, he managed to save $15,000, which he has combined with plenty of hard work to piece together several businesses.

Father and son project

Fragnito and his dad, who has a heating and sheet metal business, went in on a project together to build a spec house on some land they bought.

"We were waiting for the architect's plan and my father said, 'Why don't we remodel a house for something to do.' So we paid $80,000 for a shell that used to be a Jehovah's Witness church."

Father and son remodeled the place themselves -- from plumbing and electric to walls and floors -- sinking about $45,000 in materials into the project. Afterwards, they rented it out as a single family home. They have positive cash flow and it was appraised recently for $241,000.

By taking a loan on that property in February, Fragnito was able to buy the laundromat and the building it occupies. The building has a second storefront, which he rents out to a hair salon.

About a month before that purchase, Fragnito had opened up the check-cashing store, which has not yet paid off. "I just started five months ago," he says, "and I have to build up the clientele."

Meanwhile, he keeps busy with a 14-unit apartment building he purchased last September. "I got the seller to carry the contract on it," says Fragnito. "He gave me a great deal, 10 percent down ($15,000) and a 6 percent interest rate."

The per-unit rate came to just under $11,000, a bargain just about anywhere. But the apartments are small, two bedrooms and under, and several are tiny studios with shared baths. Gradually, Fragnito will renovate each one as it comes vacant, combining the smallest studios and installing private baths in them.

The wood-framed building is old by Pacific Northwest standards, built in 1885. It has taken a lot of work, however, to get it into peak condition.

It didn't help that a freak wind storm took off some roof shingles and that was followed by rain, which caused water damage. He's now negotiating a settlement with his insurance company.

He also bought a four-plex, one apartment of which he now occupies. He renovated one of the apartments already and was able to command $680 a month in rent for it, up from $500 before he did the work.

The four-plex is the only property he owns that doesn't show a profit. The loss, however, comes to about what he would pay for housing costs, so he figures it's a wash. He paid $280,000 (a per-unit price of $70,000) for the property.

Investing his earnings

Fragnito says his key to financial success is "investing every dime I make." He's careful where he spends his money. He drives, for example, a 16-year-old Ford Thunderbird that he grandmother gave him.

Looking five years down the road, Fragnito says he would like to own two or three more check cashing businesses and continue to add to his property holdings. He also expects to have built himself a nice house by then.

Fragnito has put a lot of physical labor into the properties and spent perhaps $50,000 on materials. He figures the net value of all his holdings comes to about $500,000 more than what he owes on them.

To read how a North Carolinian has built his real estate holdings, click here.

Mortgage applications continue to rise. Read more about that story here.  Top of page


Personal Finance
Real Estate
Manage alerts | What is this?