All Forum Posts by: Chris Jackson

@Percy N.  - we added SFRs only to add to our overall strategy to achieve solid returns for our investors.  We are finding even with our MF marketing that we are coming across fewer opportunities in MF that meet our criteria. So we can either wait out the market cycle, do less deals per year or bob and weave and be flexible and add to our strategy. Liquidity was not the factor.  Opportunity for yield was our factor.

No we do not secure non recourse as we are buying 1 or 2 at a time most.  We have private investors for each property securitized by each property which has enough equity in each to make the note holder feel healthy.  We refi at a lower rate once the property shows the banks we have relationships with that the property has seasoned with renter for enough time.  The private investor is made whole with payment of their principal returned along with their agreed upon remaining interest and if the private investor wishes to continue we put them into another property.

We have a PM on all of them already.  We would never do a deal without a PM.  I'm obsessed with scalability so managing each property make us too linear and that makes me cringe.

We would consider putting a commercial loan on the pool in the future if it was financially advantageous for us to do so in the future. For now, offering our investors a different option, in this case a debt option is resonating with them favorably. Plus to get into a non-recourse loan to purchase would mean we would have to purchase probably over 25+ at a time and based on what I am seeing in the SFR pools out there, the pools are gross. I wouldn't touch them. If we ever pooled up our SFR portfolio the next investor would put a premium on the portfolio because of the overall quality of all the SFRs. This is why we are hand picking each we decide to purchase. That takes time but worth it in the long-run

@Ramon Fyffe  Thanks!

@Joe Fairless - good question, lessons learned are:
- stay focused and commit to the plan. We decided to try out this SFR model as a POC ( proof of concept) and at first seemed like may not be the best fit given the work required and not as many properties that fit our criteria were showing up in the pipeline. We stayed committed and kept pushing
- reconfirmed the value of SOPs (standard operating procedures) - we created checklists and subchecklists in order to allows us to not think about the process and forget an item that causes a roadblock in the process.  We are constantly adding and revising the checklist

@Percy N. - also a good question - yes need to work backwards on how to minimize the issues with SFRs where you don't get the advantages of economies of scale.  
1) 1 roof, 1 boiler. We mitigated this risk with only choosing properties with decent roofs, young boilers.  If we start to take on SFRs with roof with end of life in next 1-3 years we start to creep into the problem that occur from no economies of scale like you get in larger apartment complexes
2) systems - need to have checklists at a very detailed level or it would be very easy to say 'forget this' this is too much work

I am not going to try to say that 50 SFRs is able to achieve economies of scale with the right systems and process as compared to taking down a 50 unit building.  That's why we prefer apartment buildings.  However the yield we are getting with our SFRs coupled with our systems is proving to be viable model for us as an addition to our company strategy moving forward.

@Hardeep Bindra - thanks!  Don't give up.  I was a newbie too once. I was 'thinking' about being a real estate investor for about 7 years before I decided I had enough of the start and stop and going nowhere.  Patience and persistence. 

@Noam Adler - thanks Noam.  PS if I had to pick a market right now that I wish I could duplicate our team and allocate time to it would be Cleveland. Get on it!

@Danielle Fattizzi - thanks! Actually its the opposite.  We are MF investors first but opening up to SFRs with an MF mindset.  We prefer MF but right now MF is super heated and our marketing is out there but we are very selective.  Need to be extremely conservative right now in MF space if you are long gamer like we are.  SFRs offer us cash flow yield and equity cushion we are looking for right now.  But we have not taken our eye off the Multifam ball dont get me wrong.  we are still players in that space ;) 

@Sam Steadman - thanks! one needs to celebrate victories too.  All too often in real estate because closings are 'slow' you get the closing and its 'phew' and anticlimatic.  Thats the incorrect move.  Celebrate victories.

Hi @Hudson Oliveira welcome to BP.  In addition to asking here I would network at a few Houston REIAs and ask around.  See if you can triangulate on a same broker or two that are mentioned by a few different people.  

Good luck

@Gino Barbaro - exactly! - my second deal ever was an 8 unit, 2009, 80% ltv commercial loan with a federal credit union.  Practically had to collateralize my dog. :)

@Account Closed   thanks so much.  Lots of hard work patience and persistence goes into creating, executing and maintaining systems that allow you scale your business

@Desteni Barnes - hard work, persistence, marketing, relationship development, pipeline forecasting.  work while your competitors are watching Marco Polo series binge on Netflix (i just watched that actually lol but just late at night after my fam was in bed and I had put in a 10 hourer   ;) )

@Luke G. - same as above but a variety of ways.  feeders from brokers, postcards etc  no magic pill i hate to say, wish there was

@Michael Noto - in Syracuse NY.  But now that my POC (proof of concept is working and have picked up 15 this year, I am looking for other cities as well that fit the same model. They are out there.  Rochester, NY and some others as well)  But I caution, It VERY EASY to make mistakes in this model.  There really is no room for error.  I have been in this game for 8 years and know what I am doing. I am also not saying this to keep competition away.  I have to say I am buying properties from investors who made mistakes and lost their shirts and I come in and know what to do.  Be careful don't rush into this model.  I am a multifamily guy applying a multifamily approach to a single family model.  It a very different way to think about things.  At its essence its simple but simple is usually lots of hard work and experience masked as simple.

@Sean Ray you listed out quite a few positives 

- sounds like you have educated yourself 
- you paid off your debt 
- you have a significant amount of liquid cash
- I assume your credit is decent if you paid down debt and have some cash

You are committing what I call the 'if-only' excuse.  Which quite honestly every does.  "If only had 200k and not just 50k"  "if only l lived in an area where houses cost 150k and not 350k" "if only my family had some money to lend me" "if only I had started investing in 200X (fill in the blank)" 

Everyone does this.  Even me "if only I knew then what I know now I would have purchased everything in xyz at that time" Its a waste of time though to think that way.

Sean you are basically a really great candidate to get out there , network hard and find a money partner.  There are many people out there that want to be involved in real estate that have the money but have no interest in doing the work to get a deal or manage a deal.  You bring that to the table.  Now lets take the next step.  There are many folks out there that have the same qualities as you but are saying "if only I had no debt and 50k in my pocket, man I could really do something" 

One of the biggest challenges for a person in your position is that they sound great, they know their stuff, they are probably trustworthy, they find a money partner that is interested , guess what happens next that would seal the deal "how much skin in the game are you putting in this deal? since this is the first deal we are doing together"  booooom and then it all falls apart because most people cant get that skin in the game part right. You have solved that so you really have all you need to make this happen.

If you are willing to pony up at least 25k you can seal the deal on that objection.  Wanna get 200k-300k from a money partner, pony up the 50. You'll get it.  The ratio works in your favor.  Mr money partner you put up 250k and i'll put up my 50 and I'll do all the work.  we can split it xyz %

- go to chamber of commerce meetings where there are business owners who have this type of temperament and have a few bucks. start talking about deals you are looking at
- go to REIAs and seek out the folks who may not have time but have some money and you are the answer
- begin talking to friends and family about opportunities and how you can build wealth (don't go the hard sell, but get really excited about it.  Passion sells, you don't even need to sell when you are passionate about something. people gravitate towards passion)

Go big Sean you have the tools.  50k is alot from a partnership perspective.  Go find your money partner. 

wow thanks guys @Levi T. and @cory crane 24 bucks per search?  that's not bad