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Updated almost 5 years ago, 03/01/2020
Spartan Invest Turnkey Case Study
Hey guys!
Just wanted to start a case study based on my experience with Spartan Invest out in Birmingham AL. After some experience with purchasing my primary residence with a detached guest house (first cash-flowing deal), I was excited about passive RE investing. I tried wholesaling, and couldn't pull the trigger because of all the moving pieces that had to be put together. I knew it was something I COULD do, but didn't WANT to do. So, turnkey it is. After having a conversation with someone from Morris Invest, I was disheartened to see how they do things, and started searching through my podcast library. Norada RE started to get me thinking about other turnkey options, and I stumbled across some interviews featuring Maureen McCann who is the Sales Director and Partner of Spartan Invest. I was super impressed with the Alabama market. The numbers are shockingly amazing. I was even more stoked on Maureen and Spartan. After already being prequalified...I decided to reach out.
September 14th: First attempt.
Called their office and also emailed them. Got on the phone with a pleasant receptionist who told me it would be best to chat with Maureen. Was told she was out of town on vacation and that I would receive a call back that day or tomorrow.
September 15th: Second attempt.
Called at the end of the day, was told that Maureen was still settling back into the office.
September 18th: Third attempt.
I found Maureen's number online and just texted her. She responded within minutes. Got on the line with her immediately. Chatted for over an hour. Was totally sold on her and Spartan. Turns out we share our hometown! Answered all my questions, was really helpful and sweet. She also walked me through some deals and strategies that could be beneficial for me. It was SO much better than my cold, 3 minute phone call with someone from Morris just looking to sell C- homes at 40k. Was thankful for Maureen. Could not be more stoked on her. Was told she would follow up with an email introducing me to her assistant. Got sent an email telling me I was on the waiting list and that it would be a month before I could get any properties sent to me. She also sent some property examples of some of their recent work.
October 4th: I get sent a batch of properties.
I was excited to receive the property list 2 weeks early and immediately went through an analyzed all 12 that were sent to me. I was told I had to act fast and let them know if I wanted one and if I wanted to order for multiple inspections as well. I tossed out every property that didn't at least cash flow 300/month. I landed on 2. Picked 1. Here are some numbers on the property I liked:
-117k purchase price
-1100 rent
-B neighborhood
-Cash flow: 230-330/month depending on how you analyzed the deal
I asked to reserve that one, and opted to throw in the inspection reports. I got an email shortly after saying that it was mine and they took it down from others being able to have access to it. Was sent a contract to sign. It was more of a formality showing that it was reserved for me. They would start renovating it and it would most likely close on Dec. 1st. Note at this point, I haven't put any money down.
October 5th: Had questions about purchase price and appraisal
Was able to email them and see if I could get on the phone with Maureen. She was available within 24 hours. Was told that it's very rare the appraisal comes in lower than purchase price and if it did, they would make it right. Was excited about that answer. I just wasn't used to paying the asking price. Here in San Diego, my offer on my primary was significantly lower than asking. That's just how it works out here in this type of market. Either way, was encouraged by my conversation and Maureen told me she was excited about the deal I got. I signed the contract and waited.
October 10th: reached out to be sure my contract was effective
I didn't hear back and usually am used to a more active role with this kind of stuff. I was prepared to set up my lender with these guys but evidently (after not hearing back, trying again, then getting a response a few days later) they were already on it. Super cool! I asked for some renovation photos. Was told I would get some when the time comes. Was also told to sit back and take their lead. I was happy to do so.
I will keep you all posted with as much detail as possible and hopefully we can analyze this together. I also hope this encourages investors to take the plunge and TRUST but VERIFY.
-b
UPDATE:
11/4-Received update email from business developer saying closing date and process is being pushed back.
Will have photos within the next couple weeks or so of "before reno".
I'm Keeping an eye on this thread. Thanks for the update!
UPDATE: Received "Before" pics.
On 11/28 I received some before pics. I have attached some here to keep you guys posted:
As you can see, this is going to be a fun one. A lot of work to do. I am trusting that the team lives up to their excellent reputation with their renovations.
Looking to close sometime in Jan '18 (about 6 weeks later than expected).
Will update you when I receive more information.
Thanks!
-b
UPDATE: Received email from Business Developer Coordinator.
On Dec. 27th, I received an email saying they were on the tail end of renovation and are visiting the property the next day to do a preliminary walkthrough to make a final punch-list. Once this is done, depending on what he finds that still needs attention, they should only need another week or so to finish up. They may tack on a couple of extra days to that than normal due to the holidays and everyone working different schedules.
He contacted my lender. My lender is working hard to push this down the road some more.
I asked for some updated pictures and didn't receive a response. Once I get those, I will post them here.
Thanks!
-b
Thanks for doing this case study, looking forward to seeing the "after" pictures. I will contact Spartan invest next week to chat with them. It is encouraging to see the CEO be involved on BP and give us real numbers vs generalizations.
Any update on the property yet???
UPDATE: Jan 16, received Scope of Work and "After" pictures
We are doing the inspection/appraisal tomorrow! The purchase price is also $2000 LESS than previously agreed to. Really excited about that!
Chat soon
-b
Hi Blake,
Loved all the information you’ve provided. I’m also in San Diego and am looking into Spartan. Would love to pick your brain some more or even meet up when you have some free time?
Thanks mate!
That looks great, Blake! Thanks for sharing.
@Blake La Grange Thanks for updating this thread. It has been really impactful as I am also considering working with Spartan Invest. If you don't mind, may I ask what your purchase price was and what your all in costs (Down Payment and Closing Costs) will be for the property? Thanks again!
@Benjamin Mann I'd love that! Always love meeting local investors. "Free time" isn't really in my vocab, but I am flexible :) Hit me up!
@Andrew Stanton thanks man!
@Jaye Seay I was told the purchase price was going to be 117k + closing costs. However, the scope of work indicated that the purchase price ended up being 115k + closing costs. Pretty sweet! I should have the appraisal sometime this week. I have the inspection sitting in my inbox, just haven't opened it yet. Closing costs are around 1-2k...haven't finalized that yet. Down payment, 20%.
Is it going to have tenants in place?
@blake Awesome sounds good Blake! Sounds like you’re a busy guy so what are the best times for you?
@Blake La Grangeundefined
.
@Zac Burke no guarantee, but this is a great area for renters so I assume there will be occupancy shortly after close.
@Benjamin Mann dm me.
Hey Blake: Thanks again for sharing your experiences. Would you be willing to share your appraisal on the property? I too have been favorably impressed with Spartan and my only reservations come down to market values and realistic exit options should I need to sell the property. Thanks! Chuck
Hey Blake, how did the appraisal go?Are you planing on using the equity to finance your next property/properties?
(Because the closing cost includes the rehab will you gain equity?)
Cheers!
It is very unlikely that built-in equity at purchase date would exceed the 20% down payment.
As already mentioned, my concern is that flippers are setting market prices and the appraisals are driven by investor purchases rather than by homeowners. I believe this translates to limited exits and inflated pricing at purchase. I would think that sans a big move in the area's housing market, an investor would be waiting for years before they would have equity to take out of the property. I would love to hear what Blake found on his deal.
I agree with @Chuck Van Court
I recently purchased some of these turnkey properties. Exit strategy is limited for several years. If i wanted to sell tomorrow i would loose quite a bit due to sales commissions and closing costs, and that is in the event that i sold it for what I paid. These markets definitely have influence from investor money so there are some risks and limitations.
I think without a big move and some 3-6% appreciation, i will be 3-5 years in equity paydown to be able to sell without capital loss, and maybe 10-20 years to have enough equity to start thinking using equity to make a decent 1031 or HELOC move.
Not ideal, but at least i understand what i am in to......
Originally posted by @Rob Hakes:
I agree with @Chuck Van Court
I recently purchased some of these turnkey properties. Exit strategy is limited for several years. If i wanted to sell tomorrow i would loose quite a bit due to sales commissions and closing costs, and that is in the event that i sold it for what I paid. These markets definitely have influence from investor money so there are some risks and limitations.
I think without a big move and some 3-6% appreciation, i will be 3-5 years in equity paydown to be able to sell without capital loss, and maybe 10-20 years to have enough equity to start thinking using equity to make a decent 1031 or HELOC move.
Not ideal, but at least i understand what i am in to......
Yep, exactly.
But, so long as you've released all your anchors and expectations based on experience in your high-demand, high-priced, increasing population local market, have convinced yourself of the accuracy of your own projected returns, and believe it's the best available investment option to you ... go for it!
I would like to say thank you for this thread! I am new and have been talking to Spartan and am thankful to see the experientce others have had with this company.
Originally posted by @Eddie Aviles:
I would like to say thank you for this thread! I am new and have been talking to Spartan and am thankful to see the experientce others have had with this company.
Do you have any positive and/or negative feedback based on your interaction with Spartan?
UPDATE: Signed closing docs! // Feb 23
Hey guys! It has been a while since I last updated you all. Here are some brief facts now that we are closing this week:
-Purchase price estimate: $117k
-Actual purchase price: $115k
-Appraisal value: $140k (WOW)
-Rent estimate: $1100
-Actual rent: $1150
-House on the market and getting great traction! Should most likely have a lease signed by the time we close
All in all, this is such amazing news! I will keep you posted when we actually get the keys or when we sign a tenant.
You can always ask questions as I am here to help!
-b