My First Out of State Deal

Up and until August of this year, everything we owned was in Maine. I love Maine—Maine is home, I know the area, I know the people, and it was a great launching pad. But I recognized early on that it would be tough to scale our business where the population (of the entire state) is around 1M people, and I had been itching to do a deal in an out-of-state growth market.

Charleston, South Carolina made the most sense to me. I was stationed there while I was in the Coast Guard, I knew the area, and 40 people were moving there every single day. It reminds me of Austin, Texas in the early 2000s. Additionally, Volvo recently signed a development contract for a facility, thereby creating hundreds of jobs in Charleston’s secondary and tertiary markets. Mercedes-Benz has a huge presence and Google’s data service center is just outside North Charleston in Moncks Corner, SC.

I also had friends that I trusted and were similarly situated and looking to grow their real estate portfolio. They needed a legal/financial background and I needed management/boots on the ground.

I wanted to test the waters on a smaller deal, so we put an off market 18-unit multifamily in Moncks Corner under contract for $740,000 and planned to put another $180,000 in capital improvements. 

Two months in, this property is killing it. We have replaced four roofs, renovated two units with new flooring, granite countertops, new paint, and modern fixtures. We’ve also systematically brought rents up to market levels. In two months, we’ve increased our Net Operating Income by $10,636 and increased the value by $152,000 (assuming 7% cap rate).

To close this deal, we raised $250,000 from private investors. We are paying them 10% preferred return while their cash is deployed and giving them 10% of the equity after they get all their money back. At our current pace, our investors will earn their preferred return on the quarterly basis and get all their money back in eighteen months after we refinance. 

To learn about our other deals or join our Investor Club, go to averyinvestments.me