All Forum Posts by: Garrett McIntyre

@Ella Alpina St. Louis, MO. We really like the South East as well. 

@Terri Sarappo I am a Sacramento local currently residing in Folsom. I wasted a year of my investment career trying to find cash flowing deals in Sac. I read a few books about out of state investing and realized it is very possible, the key is to build a team. The property manager is the key player, followed by a good RE agent, contractor and lender. The PM will let you sleep well at night. If they are good and know the market they will be able to give you insight on rent, expenses and other costs of doing business in their market. The bonus is if you can find boots on the ground to partner with(easier said then done!) 

I personally have assets in Saint Louis, MO which is a solid cash flowing market but definitely street by street. I really like the Atlanta MSA and the Carolinas right now. That is where our company is targeting apartments. Sound like thing are opening up a little in Sac. If you would like to grab a cup of coffee one day let me know. Good luck!

Hi Jon. I've lived in Sac for the last 8 years. I started in looking in midtown about 4 years ago. The price per door in this area will make it very hard to find cash flow and potential for rent control sucks. If you are going for an appreciation play then you might have a chance. Looking back at some of the deals I was looking at they would have had a nice appreciation bump but still not much cashflow. I wasted a year of my investing career trying to make deals work out here. I went out of state to find cash flow and it was the best move I made. If you buy right out here you can do well but most will tell you it is smart to invest for cashflow. It will get you through tough times, like we are dealing with now with COVID. If you need some guidance on how to get started out of state feel free to message me. Thanks!

Unreal! Great job!

Ej I think it is a solid market, it’s not a crazy growth market which is against most peoples metrics. There is Great potential for cash flow and most importantly I feel we have a competitive advantage there. 

Investment Info:

Large multi-family (5+ units) commercial investment investment in Saint Louis.

Purchase price: $1,300,000
Cash invested: $280,000

Contributors:
Lee Fjord

38 unit apartment. This was our first step into our goal of multifamily syndication. We wanted to take down a decent size commercial multifamily deal (get into the game). My partner Lee Fjord and I went 50/50 on this deal. This is a Value Add deal that we plan on cash out refinancing in the first 12-18 months.

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

I have wanted to get into commercial multifamily since I started learning about real estate investing. I love the power of forced appreciation, tax benefits, and scalability of commercial multi family.

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

This was brought to us by a local broker. We negotiated a selling price of $1.3M with a $55k credit toward closing costs and year one deferred maintenance.

How did you finance this deal?

We initially were going to go with a CMBS agency debt but the fund dried up on day 40 of our 60 day contract. We scrambled to find a local bank that would lend to us. They liked the deal and believed in us as operators. 80% LTV, interest only for the first 12 months and no pre payment penalty. This will allow us to refinance after we get NOI to where we believe it can go.

How did you add value to the deal?

Half the units have already been updated. We are turning every unit that becomes vacant. This includes paint, floors, kitchen boxes, vanities etc. We are painting entire exterior, cleaning up curb appeal and re-branding. We will add coin laundry in the basement and possible storage. We are making this apartment a cleaner and safer for our tenants. We hope this will help us get rents up.

What was the outcome?

TBD.. Stay tuned

Lessons learned? Challenges?

Commercial multifamily is completely different the SFR or small multi families. You must learn the rules to the game(debt options, dealing with brokers, etc.) Try to keep emotions out of your decision making. Having boots on the ground is comfort if you are an out of state investor. Im sure I will learn plenty other lessons as we enjoy this ride.

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

Yes my partner Lee Fjord is a stud and I am grateful to have him. We used Peoples bank in St Louis. Our Property management (Real Property Management Gateway) are also rock stars.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $27,500
Cash invested: $6,000

This was my first deal with my current business partner @LeeFjord. We met on bigger pockets when he was out visiting in California. Lee resides in St. Louis and he is the boots on the ground. Our goal was to eventually syndicate large multifamily deals but we need a trial run first. We found this deal from a local wholesaler. We initial thought we were going to buy about 4-6 of these similar type SFR from the wholesaler. This was the only property worth moving forward with.

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

Looking for a 2% deal.

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

Wholesaler

How did you finance this deal?

This was a cash purchase. Our initial plan was to roll 4-6 of these into a portfolio loan but that never happened because the ARVs from the other houses did not justify how much rehab we were going to put into them.

How did you add value to the deal?

Mainly small upgrades. Paint, tree trimming, some minor tuck pointing, etc. Lee did all the work himself which saved us a ton of money! Took 2 months to get all the work done and rent ready. We got a 2 year lease signed at $775 per month.

What was the outcome?

2% rule! Currently rented on a 2 year lease at $775/month

Purchase: $27,500
Rehab: $6,000
ARV: $38,000
Cash Flow: $650/month.... Tenants pay all utilities. We pay for insurance and taxes. No debt.
Cash on Cash: +/- 20%

Lessons learned? Challenges?

Be careful with wholesalers! Start small when starting a partnership with some one. Jennings is a C/D class. We found a great little pocket in the area and found great tenants. Take Action!!! Get off the sideline.

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

Lee Fjord. He is a stud and works his butt off. More to come from us!

@Scott Doyen Welcome bud, I agree with Blake. Good is relative and it depends on your investment strategy. I can tell you from experience looking in Sac that it will almost be impossible to find a 2% deal. If you do, contact me and I will find you the capital you need to get started!

If I were you I would be looking for a house hack SFR where you can rent rooms out to your buddies or a duplex or 4 plex where you can use the same strategy. You can qualify for an FHA loan which means you don't need to bring as much money to the table initially. I would look for something you add value through sweat equity. Your other stratagy out here is flipping but that is a whole different ball game.

If you are looking for 2% deals or deals that will cash flow you will have to look out of state. I know @Blake Edwards and he and I both invest out of state. Wether its a BRRRR or buy and hold, you have better rent to value ratios in the mid west or south. That will allow you to find properties that will cash flow. You will not see the appreciaton spike that you see on the costal markets so dont plan on making money that way in those kind of markets.

Continue to educatue yourself and look for deals. I read @David Greene book on investing out of state and it gave me the confidence to take action. There is plenty of information out there the key is taking action when you are ready. 

I hope this helped bud. Feel free to reach out with any questions!

Hi BP. I'm looking for a referral for a rock star, investor friendly contractor in St. Louis, MO. We have a 12 unit full remodel that me and my partner @Lee Fjord are looking to do. Please let us know if you have anybody in mind. Thank you!!

@Jason Thomas, yeah more on the lines of tenant turnover, the processes of dealing with HUD, and maybe a risk profile? Im not overly concerned with the financing.