All Forum Posts by: Quentin McNew

@Charles Cooper I use "JSJ property management" for most of my Champaign area properties now. I am not sure if they are taking on new property owners though (unless have big portfolio, but I am not 100% sure). Coronavirus has property management even more difficult now. 

I live downtown Champaign, IL and did my undergraduate and graduate degrees there. It is one of the only places in Illinois I would invest. REIA groups, meetup.com, or Central Illinois Rental Property Professionals (CIRPP) are real estate associations are great to go with. It helps joining groups/masterminds where the "desired behavior is the normal behavior". You will find out full time real estate investors network is small world.

End of the day you can get caught up with thousands of ways to make money in real estate. Align your short term actions with long term vision. Getting real estate license has been HUGE for me. Negotiate my own contracts, walk into house anytime I want in flip flops, commissions on property, commissions on referrals ANYWHERE in the country ($$$ big if California deals, etc that lot of people don't realize), and  joined eXp realty only around $150 month overhead (1 deal covers this expense). Having you real estate license is kind of like golf.... you can do FOREVER. Getting your real estate license is subjective debate and you definitely don't need your license at all (you have to disclose you are a realtor on mail pieces, certain regulations to follow, etc), but it was a NO BRAINER for me personally.

I STRONGLY believe in "7 Habits of Highly Successful People" habit "start with the end in mind", then work yourself backward. Don't get caught up in how you look or other people goals, because distractions are everywhere if you have no vision for yourself.  

I agree with you. Green Street Realty seems to be at every corner now and looks aggressive from a outside 3rd party view I would say. Syndications have been huge on campus. The opportunity zones (deferring capital gains if placed in these developments) as tax incentives are leading the way to building instead of demand, but time will tell. 

It will be interesting to see how everything plays out after election, eviction moratoriums, forbearance with lenders, etc. 

1. Yes those properties are away from campus. Gramercy is 5 minutes west and right off the interstate 72. I would say Gramercy is around a C class asset types even with extensive remodel they just completed this past year. 

2. Student housing hard to get statistics on facts. The city just approves permits if it passes zoning, permits, etc. The city doesn't tell people how to operate business, but just follow the local zoning and ordinance. I don't have crystal ball, but think virtual learning isn't going anywhere. Supply is going to start cutting rents if not already and already increasing concessions (free rent 1 month, etc). You never know what private equity or syndications are happy with 3% returns and capital preservation. It's a different game for small investors that want higher returns for it to be worth full time investors time. 

3. I have been managing property 8 years, but bought my first property in Champaign as a "house hack" 3 years ago. I guess only 3 years since first purchase (After knocking out my housing expense, then I burned the ships and went full time investing last year), although seems longer than that but that may be just because coronavirus. I started out all creative financing, seller finance, etc and focus on single family with around 70 SFR in Champaign area and the remaining 20 in Indianapolis, IN (mix of property and 8 unit building in Indianapolis). It would of been a lot more easier doing 10+ unit deals or buying a 70 unit apartment building, but since local to me and boots on ground allowed more creative acquisitions. Coronavirus and this year has been the worst for me on rent collections with about 10 homes not paying (10-20% vacancy...bad). Class B and class A areas have done well (Mahomet homes are 100% collection, example), demographic, etc are all variables though. I know some investors that haven't been affected at all primarily in the B class residential and I believe the screening process mitigates most of your risk. A couple properties inherited bad tenants, eviction moratoriums, etc has made perfect storm for me. This is why I have adjusted a little bit and couple recent acquisitions have been section 8 housing for guaranteed rent and hedge. End of the day: if I find houses all in at "cost basis" under 75%..... I am buying still

I love Champaign, IL. I don't know if I love Illinois as a state haha. The macroeconomics have me thinking Champaign, IL area solid growth. You hear economic drivers like new sports complex in Rantoul, casino coming to Danville, etc. I have always counted rentals in Danville and Rantoul you buy for 30-35k that rent for $700 to NEVER have appreciation. If it happens then great, but I am not expecting it. 

Lot of variables to pay attention in the "tax" game. Rantoul, IL (10 minute north) actually had the highest "tax rate" in the county for awhile, but the houses were assessed super low that you didn't realize it. Mahomet, IL (10 minute west) has some of the highest assessments per house, school district, etc. 

My personal opinion is "cheap money" and "tax incentives" boomed building more than supply and demand fundamentals the past 4 years. Private equity building on campus with no localized knowledge of market research. I have talked to multiple apartment owners, some that have owned for 15+ and 20+ years in Champaign and they have told me this past year is the highest vacancy they have ever had (this may be from coronavirus... but I think it's from overbuilding more than anything). I don't know the building unit count statistic influx, but I can't believe it is anywhere close to the net migration (supply/demand fundamentals). I would be pretty nervous being on campus anywhere with the huge influx of supply, especially if you have "maturity date" within 2 years coming due on commercial loans that would only work at what are historically low interest rates right now.

This is article that was showing the new building inventory becoming a problem that will serve you good market research @Abhishek Banerjee

"The owners of the Gramercy Park Apartments in west Champaign asked the board of review to reduce the assessment of their property, with a weighted age of 52 years, by more than a million dollars.

“As of January 1, 2019, CoStar (a commercial real-estate information provider) reports vacancies in the Champaign-Urbana area at 10.5 percent,” said the Grammercy appeal. “New deliveries have outpaced demolitions by 275 units in 2018.”

Grammercy said that enrollment increases at the University of Illinois are fueling the apartment construction boom but noted there still are too many units in the market.

“Currently the market cycle appears to be at the end of Phase II — Expansion or at the beginning of Phase III — Hypersupply,” said its appeal.

Grammercy said its annual net operating income has dropped from more than $1 million in 2014 to a loss of more than $300,000 in 2018. It said its vacancy rate was 41 percent in 2018."

https://www.news-gazette.com/news/local/housing/tom-kacich-apartment-landlords-call-for-lower-tax-assessments-amid/article_b8b70990-e3b7-5f57-bd2b-a9a0689150a5.html

@Ross Alex does Real Acquisitions do Champaign, IL or Indianapolis, IN area? 

@Michael Willard thank you. 

@Sharon Zou Feel free to reach out and message me. I just accepted your friend request. I live downtown Champaign and 100% focused on investing side with investing full time myself in the area. Look forward to opportunity and seeing what your goals are. Thanks

After the value add and refinance into bank financing will hold 25% equity? I would also be interested in first right refusal to buy you out potentially if you are just looking to flip it. I plan to hold forever if possible. Obviously you hold all the cards though haha. I will message you now. Thank you 

Interested and this was on my radar last year. This is only debt investment though (12% and 2 points)? No equity? 

@Marshall Shen I would be EXTREMELY careful of Champaign-Urbana campus housing. Out of town private equity and MASSIVE AMOUNTS of oversupply of apartments being built from incentives (opportunity zones, etc)........ instead of logical supply and demand reasons to build. City approves new builds if meets building requirements, zoning, etc, but they don't tell people how to run business. VACANCY INCREASING and PRICE DROPS seems inevitable here at this point, but the numbers and time will let us know for sure. Here is interesting article last year on Champaign, IL here. https://www.news-gazette.com/news/local/housing/tom-kacich-apartment-landlords-call-for-lower-tax-assessments-amid/article_b8b70990-e3b7-5f57-bd2b-a9a0689150a5.html