All Forum Posts by: Rhett Kelton

Don't know about East/West Tennessee, but in Middle Tennessee, for cash flow and appreciation, I would recommend the areas around Nashville.  In a lot of Nashville, it will be harder to find things that will cashflow immediately.  It seems like a lot of older houses are being torn down to build new.  Also might be harder in the Brentwood/Franklin (Williamson County) area, as a lot of that is newer builds.  But many of the other areas will still have opportunities.

Investment Info:

Other other investment in Murfreesboro.

Purchase price: $295,000
Cash invested: $100,000

I purchased several tracts of land and put them together, got them rezoned with the intention of building a 13,800 sq/ft mixed use building. We have come up with elevations, site plans, architectural and engineering documents. Our primary strategy has been to sell the residential units to pay back the bank debt and then keep the commercial debt free.
This doesn't really fit into any specific category, as we are developing, with our primary strategy to sell/build to rent, secondary strategy to build all the building to rent, and third strategy to sell the entire development.

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

Understanding all the different moving parts of development and raising money through syndications.

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

Drove past a FSBO originally. I didn't really negotiate it- they were originally handshake deals, until

How did you finance this deal?

Owner financing, personal loan, LOC

@Jaspreet Taneja  Three other things I noticed.  If you want to get something in the Pidgeon Forge/Gatlinburg/Smoky Mountain areas, expect to pay crazy high prices.  From everyone I have talked to the return is solid, but the entry point will likely be much higher than a new build in the suburbs.  Definitely do a lot more research before, but you might find a steal!-

Clarksville is also a good rental market- I'm not sure how much new stuff there is though. Lots of places to make money in real estate in the greater middle Tennessee area, just pick a focus! The more and more I am involved, the more different strategies/areas/niches I hear about that I wouldn't have thought of. I think buying new construction in Murfreesboro (or the south side of Nashville), or the East side of Nashville, is a great niche and fits in with your desires. It sounds like you don't want to worry about CapEx or high maintainance issues, but might have some cash to put down on downpayments, then it might be ideal.

@Jaspreet Taneja unless you are pretty confident with dealing with HOA's, I wouldn't go condos for your first one. The HOAs can cause headaches- although there is certainly a market for them in an investors portfolio and I'm sure there are some that specialize in them.

If you are buying for the first time, and are looking at new construction, it's hard to go wrong with the SFR. I don't deal with those specifically, so I couldn't help you out as far as best builders. I would just call a couple realtors, or post the question on the Rein Facebook page. The same two or three names should come up.

I think the closest you can get to the interstate in your price range the better. Rockvale/ Christiana areas are really hot, esp since they built the new school there last year.

Although, I do have a friend who bought a new construction house out in the middle of nowhere and does just fine....

At least in Murfreesboro, you should still be able to cashflow.  Maybe not the 1% rule, so you would want to look at other metrics. 

Depending on how much you put down, I have seen new construction that would cash flow positive.  But that is totally dependent upon down payment. 

The "fee" I am  offering to pay to the guarantor is $75,000, on a note of approximately 2.1m.  The bank has said it is a Line of Credit, but hasn't defined any sort of specific cap.  They have seen the proforma and understand the hard costs.  It is my understanding that they will include my personal financials as needed.  This is a community bank and they don't have a lot of cut and dried specifics on loans of this size.

Should I be offering equity instead, or a higher fee?  As of right now, the cosigner will be a friend/family.

I am starting to talk to some developers/syndication in the area. I have been afraid this might be too small of a project for them, but you are right, it would be great to get someone who has some extra experience.  

On the bigger pockets site, go to NETWORK- Meetup. 

Pretty much everybody at these meetings likes to have new people come. Try not to feel too intimidated.

2 ways.  

1. Ask a experienced real estate agent.

2. Search for "Rein" or "Reia" and your city.

Go to your networking opportunities!  REIN, bigger pocket meetups, etc.  They will guide you the quickest way. 

Convincing them to fund your deals-  I would use the Bigger Pockets tools and provide a good set of information for them. It makes you look more professional.  I used these to show both my work and to provide good information.  In the beginning, the private lender will be investing in the deal,  unless they are good friends/family, who would be investing in you.