The Shiles Properties in Bessemer City

[Thomas Magill]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $600,000

This was a 10 SFR purchase. The 10 homes average in size at 850 sf and were built in the early 90s by the previous owner who lived in one of the properties. We purchased the properties at around tax value. This is a joint venture with my contractor who brought me the deal (through our HVAC contractor) and will be performing the maintenance on the properties while I handle the finances and property management.

What made you interested in investing in this type of deal?

The instant equity and cash flow potential was the biggest draw. All the properties are located in the same location, so there's economies of scale. It also gave me the opportunity to joint venture with a contractor/investor friend of mine who brings a lot of value to the relationship through his construction knowledge.

How did you find this deal and how did you negotiate it?

My HVAC contractor knew the owners. He has been servicing the HVACs for some time and found out they wanted to sell. There were very little negotiations. The seller had his price and he stuck to it. But, the deal made sense at his price, so it was a good deal for all parties involved.

How did you finance this deal?

I raised $530,000 in private money and I put in $70,000 of my own money. The goal is to refinance the private money out in 6-8 months.

How did you add value to the deal?

I added value by partnering with someone who provided strengths where I am weak, and hopefully vice versa. In addition, we will be building additional homes on the property.

What was the outcome?

We will hold the property for at least 5 years and build some additional homes on it to rent. The property currently cash flows well.

Lessons learned? Challenges?

We ran into a communication issue right before the closing because we were playing telephone with our attorneys. So, we called the seller directly (who was ready to walk away from the deal) and we asked if we could sit down with him and his wife to talk it out. This saved the deal. The lesson learned were you can perceive someone's actions in a certain way, but until you look them in the eyes you won't know. Its better to make the human connection, rather than going through email, text, etc.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Most of the lenders are private money lenders and a smaller portion was a family member. I am a broker and GC so thats all we will need for the foreseeable future.