Our first Out Of State deal
So I wanted to write up our first OOS real estate deal. There was a lot of research that lead up to us pulling the trigger and going for it; lots of books and podcasts. One thing I want to mention is that these books and podcasts serve for more than just a knowledge base, they give you the nerve to jump over that phycological fear barrier, which In my opinion keeps more people out of the game than lack of knowledge or skill. I put off doing this for a while, but then I stumbled across a book by @David Greene “Long-Distance Real Estate Investing” which was the playbook for our purchase so, thanks David! Asides from David, there was another person I couldn’t have done this without, my wife @Catherine Metzenberg. She was apprehensive but supportive and understood where this fit into our long-term goals. She listened to some podcasts, read a bit and determined that I wasn’t out of my mind and allowed me to proceed.
The area I settled on was San Antonio. I liked the landlord friendly laws, I liked the net inward migration, I liked the multiple industries and I liked that it was easy to get something near the 1% rule. I wasn’t worried about knocking it out of the park this deal, I just wanted to get one under my belt that was ‘good enough.’ I was expecting this to be a learning experience.
I found a wholesaler off of bigger pockets. He networked me with a property manager. I vetted the property manager as David says to in his book. This PM was the acquisition specialist for a large PM company. She would serve as my agent in the acquisition, project manager for the rehab and then pass me off to marketing for getting a tenant in. She was great, a real professional who not only managed her business but managed my newbie anxiety. I was kind of a wreck the whole time, uncharted territory and the overwhelming impending feeling of loss can keep you up at night. Luckily for me I have friends who have travelled this path before. It was really helpful to talk to them and put my mind at ease. ProTip: don’t talk to your naysaying parents; don’t talk to fearful people when you’re doing scary big boy sh*t that certain people are too afraid to do. You don’t need that negativity. Now that we’re leased I’ll talk to them….smugly….very smugly.
The PM acquisition specialist used her contractors to do a mild rehab; new granite and some new carpet. She charged cost plus which I’m normally very skeptical off; cost plus contracts are the most heavily abused contracts. If it was a larger scale job I would have gone for something that had a time component to it. Regardless of the contract type, in under a week the place was rent ready; she’s a Rockstar.
Once the place was ready to be put on the market I got passed off to the marketing team. Ok, this is where you find out that you are a small potatoes investor in a big big machine. The marketing team wasn't the best at communicating and wasn't the best at listening. It almost got to the point where I was going to leverage my relationship with the acquisition specialist to get marketing on their game, but it didn't come to that. Tip: that acquisition specialist is expecting repeat business from me and won't be stoked when marketing messed that up for her. Property management is an economy of scale game. When you're just a single SFR investor with their PM firm, it's unrealistic to expect the treatment for someone with a large portfolio with them…sadly. However, the place was only on the market 20days. I rented the place out 50-100 bucks less than the CMAs I was shown; right between the CMAs provided to me and rentometer.
It’s been a great learning experience and we’re looking forward to that first owner draw and refinancing in a few months to a Fany/Fredy conforming loan. We’d like to acquire another few SFRs in the area we bought this one, but I’d really like to find a small multifamily. We’re also looking forward to talking to those naysayers we’ve been ignoring for the last month…smugly, very smugly.