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FIG - fourplex investment group
I'm new to the site and would love to hear some success stories with people who have invested with remax/fig in Utah or Texas. They are building new fourplex units and advertising compelling cap rates in their pro formas. Any info would be appreciated.
This is a short yet balanced review of FIG.
1. My brother-in-law owns two FIG four-plexes and is very happy. (He has them manage the units, but it is not required.)
2. Based on this, I felt comfortable doing a screen share with with an investor client and one of the agents on the FIG team. I was very impressed. My client is still on the fence and has not yet moved forward with a new-unit reservation--but he wants unrealistic 30% CCR returns (at least for Utah).
3. Another one of my clients had done extensive review of the FIG opportunity several months ago, and walked away before I met him. I asked him why, and he said after many days of review, he determined that after all the fees related to the new construction loan were factored in, the true return was less than the advertised pro-forma. I didn't try to argue with him or further explore the validity of his claims.
Few people look at as many on-market investment properties each week in Utah as me, and so I feel very confident in saying that FIG's pro-forma returns look totally awesome for Utah's investment climate.
As I understand it, the great CCR and IRR numbers can be achieved (in part) because FIG presells the units and can negotiate harder with builders who can be hired to build multiple buildings instead of just one. This is the magic, and I think it is genius.
@Scott Morgan thank you for inquiring about our investment properties. @Steve Theobald had some solid points. Happy to introduce you to actual investors that have bought our properties to answer your questions. Merry Christmas and Happy Holidays to both of you.
@Scott Morgan I just looked at some of their information. Their projections about future rents and values make pretty graphs but they are simply guesses. That is not a complaint or an insult. It is just a fact that it is impossible to know what will happen each of the next 30 years.
Thanks @Steve and @Steve for your input. I've looked a couple of their current construction projects and have mixed feelings, but I am new to the game and am trying to determine what type of deals I want to add to my portfolio.
@Michael I certainly understand that a 30 year pro forma is just a guess and put little weight into property value or rental income in 2040; however, I am curious about the year one pro forma and wanting to make sure that I have positive cash flow out of the gate. Sometimes when a deal seems good (not even too good to be true, but just good) I become skeptical and walk away. I really just wanted to see if there is anyone out there with positive or negative personal experience.
@Steve Theobald Do you mind me asking what type of experience your BIL had prior to purchasing the FIG four-plexes?
I tried to tag @Steven Bond and @Account Closedin the original response as well!
I tried to tag @Steven Bond and @Account Closedin the original response as well!
To all. The best testimonial is a previous client which we have many. If really interested to vet the reality of the Proforma I would be happy to give many names that can speak to the integrity of our numbers and how they have played out in reality. Yes, they are projections as they are new, but the amount of due diligence and research that goes into those is so we can produce positive results for our clients. Our typical client is a very savvy professional and not a get rich quick mentality with little down so they expect backing and Wen have provided it. Happy to discuss anytime.
All the best!
Steven Bond that would be great, I'd really be interested in discussing the opportunity with other investors.
@Scott Morgan Great questions that I'm glad to answer.
FIG in Utah is a popular group. I have clients who purchased 11 units and I do the ongoing management. After going through the entire process with FIG I'm glad to share my overall experience with you.
@Steve Theobald is a credible resource in the community too.
I just wanted to close this thread out by stating that I have received multiple emails and had an in depth conversation with current FIG investors, all of whom are very happy. Thanks for the info @Steven Bond.
Originally posted by @Scott Morgan:
Steven Bond that would be great, I'd really be interested in discussing the opportunity with other investors.
I have purchased 6 of these fourplexes from FIG and I am EXTREMELY happy with the end result. These will be long term holds for me and my portfolio. FIG picks locations with great upside. I have had many friends and colleagues that have had the same experience. All of those that are at FIG value integrity above all else. I dig that.
@Scott Morgan @Steve Theobald had some great points, and I've heard he's a great agent. I would add that the current Utah investment market is red hot and it is hard to find good rental units for a decent price. I have been selling for 6 years in the area now, a year ago I chose to work at @Steven Bond's brokerage and in the past year I have sold many FIG units to my various investors. I just sold a duplex this week in Provo and here's some stats for you to make a comparison. It was built in 1973, is in fantastic shape but dated, has a 4 year old roof, is in a good part of town, 1,100 square feet upstairs as well as down and both apartments are 2 bed 1 bath. Rents are $825 each, so a total of $1,650 per month. I listed the duplex on Friday for $245k, we got 9 offers, and we sold it Tuesday for $271k. That's pretty much how all my listings have been selling for the past 2 years in Utah.
If we go off of an average of 35% expenses (I use 35% for properties older than 10 years and 25% for properties 10 years and newer), then we sold that duplex at a 4.75% cap rate. My seller has now put money down to buy a triplex that FIG is building in American Fork, the cap rate is 7%. My client's cash flow is going up by almost $1,100/month, so he's very happy with his FIG purchase. There are a few additional costs when buying a FIG unit, but the benefits way out-weigh the costs and so far all my clients have been very happy with their purchases.
Hopefully that helped.
Merry Christmas!!
Thanks for all the help guys, I really appreciate it!
Curious as to whether you pursued the fourplex and if you could share any details?
I originally asked my questions before the project I was considering had formally come on line. Since that time I did reserve a unit and am moving forward, but construction does not formally begin until March. FIG has been great to work with so far and I'll keep the thread updated as the project moves forward.
Awesome @Scott Morgan! Yeah, definitely keep us posted. The model sounds interesting to me and I would love to hear your experience as you move through the process.
I just wanted to thank everyone on this thread for the integrity of the conversation and willingness to share. FIG has grown pretty viral because of our great clients. We've made plenty of mistakes along the way given the nature of development and mixing that with hundreds of hands that become a part of the process with construction but reality is....at some point every piece of real estate was a construction project at one point. Our clients pick up the upside of getting in up front, the integrity of a solid warranty and company that stands behind our product, and management that is passionate about making our clients success a reality for years to come. So thank you again for your contributions and business. We'll continue to post updates to our projects direct to our clients and new developments on our website for great returns....
@Scott Morgan -- Can you tell us where you are at now with FIG in July 2017; and how things have progressed to date? Any experience(s) you are willing to share is appreciated. Thanks!
@Rex Lindsey If you have specific FIG questions I'd love to answer them for you, or I can put you in contact with repeat clients who have bought multiple FIG properties. Let me know how I can help.
@Sam Newell I actually met with FIG yesterday about their project in Herriman. The mental hurdle I need to get over is the time frame from putting cash down on a project to taking over the finished rental property. An 18-20 month turn around time is a long time to have cash tied up doing nothing for you. I understand there is the potential upside of equity appreciation, but I have typically been more interested in COC return than equity increase. Also, I lack familiarity with the construction loan process and what protections that may be in place (if any) to prevent FIG and their builders from going over budget on the project. To that end, I would be very interested in the experience @Scott Morgan has had so far, and the experiences of current/former FIG clients.
@Rex Lindsey FIG's contracts are "fixed bid" contracts which means you pay only the contract price and they build the property for you for that amount. Personally, I don't buy off of equity upside either, it's a very nice perk, and a big one at that, but I want a great return for a long term purchase. I sell lots of different investment properties all over Utah and Idaho (I'm licensed in both markets) and I always go for conditions, location and cap rate before I look at equity upsides. I just bought a townhome by Edge homes because it was a 6.6% cap, I'm also buying a triplex from FIG (construction starts in October) the cap rate on that one was right around 7%, and I'm buying a fourplex with FIG in Boise at a 6.6% cap rate. With an average cap rate on the market of 5.5% (I've sold multiple listings at a 4.8% to 5% cap rate this year) I know that buying at a higher cap rate and CoC, even though I have to wait for my FIG units to be built I will still be ahead of the game in the next 3-5 years because of the better cash flow. My current purchase in Boise with FIG will cash flow at $610 per month once complete. If I bought that same unit at a 5.5% cap rate it would cash flow at $17 per month. The difference needed to be made up after 18 months is $306, that's made up after 1 month of buying the higher returning property. That's my math anyways, let me know if you have more questions
@Sam Newell -- The CAP rate and COC returns through FIG's new 4-plex constructions are the selling points in what is otherwise a very competitive rental property market in Salt Lake and Utah counties. I have been looking at existing duplexes/fourplexes for the past 8 months, and finding anything above 5% CAP rate is rare. When these properties do pop up, they get 15+ offers in two days; and they are quickly tied up under contract. It seems investors are overpaying for properties, or they are making money in ways that I can't figure out. It's crazy! So despite the long construction process, FIG appears to be the best choice in a market where good options are difficult to come by.
@Rex Lindsey I'm out of the UT market until it REALLY cools down. Even in WVC the prices are ridiculous anymore. Up on Ogden there are some good deals to be had, but you have to be quick. It may be, and probably will be, the market will sustain this growth for a year, maybe two, but we're due for a recession, and I think prices will come back to, somewhat, moderate levels to start in vesting in UT.
@Rex Lindsey I agree, personally I don't like to buy anything under a 6% cap rate, it's just too hard to make money unless it's brand new or in near perfect shape and rents can be increased. Investors buying 5% cap rate properties are most likely banking on rental increases while taking appreciation losses on their taxes as well as mortgage interest. If you haven't already, look into cost segregation, it's a great way to save a lot on taxes for items that wear out faster than 28 years. I am going to continue buying as much real estate as I can while rates are low, as long as it's over a 5.5%-6% cap rate and is in great shape and in a great area. When there is a market correction I will be ready to buy more as well. I'm focusing on buying where there is population and job growth, i.e. the Lehi (South Salt Lake County and North Utah County), and I'm staying away from less stable but cheaper markets/cities. FIG just sold out its Herriman project, but still as openings in Boise and Houston.