American Wealth Builders

Commercial Real Estate Broker · Denver, CO · Member since 2014 · 7 posts · 3 votes

Has anyone heard of these guys? They are offering turn key, cash flowing, single family properties in the $35k range, many in Columbus, OH and Georgia. They state that the properties are in good repair with both tenants and management in place and are yielding 13-15% returns.

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Nancy Brook

Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes

11y

I don't think this is a complicated business model. I buy a house for $35k. I'm getting $625 in rent. The place is fixed up. The renter is in place. I'm paying $50 for property management a month. (Yes, AWB has an exclusive property management company they deal with.) I'm making 15% net. I'm not banking on appreciation. Seriously, this is the easiest way we have bought houses. In contrast, we have other homes in Florida that we have bought at discount. We fix them. We work with the property managers. We establish the insurance, etc. THAT is way more difficult.

And for those people who are snooty about buying a $35k house, I would say there are many investors who would be thrilled to be able to buy a house! In markets across the U.S., owning real estate is out of many people's reach. I live in Montana and Florida, and the Montana market requires at least $100k for a basic rental. The only way I could become an investor was to find properties in other markets. Right now, my boyfriend is selling two rental houses in Montana to buy four to five rentals in St. Pete, Florida, and Columbus, Ohio. He can easily triple his rental income with this move.

Columbus is a great market for investing, in my opinion. You have Ohio State, state capital and lots of industry. We are looking at buying more properties there. We have owned our first property through AWB for a year and have not had any issues. Our second property we have had for about four months and it was sold with a long-term tenant. We recently bought a third at auction so this one we have to set up ourselves. I'm questioning whether this was a good idea, even though the property sold for less than our other two. We have to buy plane tickets to Columbus, stay at a hotel, interview property managers, determine repairs needed.

@Andrew Wydra, AWB has a fantastic business model! So many people want to be investors and do not have the time to go to other markets to find houses. I'm doing this in a small degree in Florida.

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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
Hey Peter - My boyfriend and I have bought two houses in Columbus from American Wealth Builders. The experience has been awesome. We own 15 properties between us and the rentals from American Wealth Builders are stress free. They take care of the tenants, managing the property manager, repairs, setting up insurance (which is a great company by the way) and all the other details. We just collect the ACH deposit each month.
The returns are as promised. Ours are around 15% for our properties, but of course, it depends on the area of town you want to buy in.
If you have any other questions, feel free to hit me up on the thread or through PM.
Nancy
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Peter Lohmann
Property Manager · Columbus, OH · Member since 2012 · 309 posts · 275 votes
11y
Do not purchase 35k homes as investment properties in Columbus (from anyone). You will break-even or worse in the long run. We manage 261 units (about half is SF) in Columbus and I've been purchasing and managing property here for 7+ years. For details, see:
http://www.biggerpockets.com/renewsblog/2015/01/20...
or
http://www.biggerpockets.com/renewsblog/2015/03/03...
-Peter
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Andrew Wydra
Professional · Chicago, IL · Member since 2015 · 32 posts · 9 votes
11y
Peter-
I'm somewhat hesitant when buying real estate from companies like this. There are many variables and you can be assured that if the market goes sideways, you will be the one feeling the pain, not the management company. Look at the 13%-15% return- make sure appreciation is not factored in. Also, make sure there is a capital improvement expense (example: the roof is going to have to be replaced as some point, this could eat all your profit if you don't account for it in the pro forma).
That being said, my partner and I are discussing if we should offer something like this in the areas we are currently operating ie Des Moines, Omaha, and Iowa City. We have bought and held everything so far (about 100 units) but we continue to find properties that make great investment opportunities.
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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
I don't think this is a complicated business model. I buy a house for $35k. I'm getting $625 in rent. The place is fixed up. The renter is in place. I'm paying $50 for property management a month. (Yes, AWB has an exclusive property management company they deal with.) I'm making 15% net. I'm not banking on appreciation. Seriously, this is the easiest way we have bought houses. In contrast, we have other homes in Florida that we have bought at discount. We fix them. We work with the property managers. We establish the insurance, etc. THAT is way more difficult.
And for those people who are snooty about buying a $35k house, I would say there are many investors who would be thrilled to be able to buy a house! In markets across the U.S., owning real estate is out of many people's reach. I live in Montana and Florida, and the Montana market requires at least $100k for a basic rental. The only way I could become an investor was to find properties in other markets. Right now, my boyfriend is selling two rental houses in Montana to buy four to five rentals in St. Pete, Florida, and Columbus, Ohio. He can easily triple his rental income with this move.
Columbus is a great market for investing, in my opinion. You have Ohio State, state capital and lots of industry. We are looking at buying more properties there. We have owned our first property through AWB for a year and have not had any issues. Our second property we have had for about four months and it was sold with a long-term tenant. We recently bought a third at auction so this one we have to set up ourselves. I'm questioning whether this was a good idea, even though the property sold for less than our other two. We have to buy plane tickets to Columbus, stay at a hotel, interview property managers, determine repairs needed.
@Andrew Wydra, AWB has a fantastic business model! So many people want to be investors and do not have the time to go to other markets to find houses. I'm doing this in a small degree in Florida.
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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
I should have said rent above was $675 and it's $625 after property management fee.
1 Reply
Joshua Springer
Residential Real Estate Agent · Columbus, OH · Member since 2013 · 281 posts · 110 votes
11y
The problem with low income properties are generally your capex can break a full year or more in net income from just one major issue. These major issues tend to happen more often also on low income rentals because the renters generally care less for the properties as well.
How many months at $100 profit to replace a roof, furnace, AC, repaint, recarpert etc.
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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
I've personally found that if I provide a nice, clean, updated place, I attract a better quality of tenant and they tend to treat my places better. I make my places look nice when I do a renovation.
I've had problems when I've bought a property with deferred maintenance and tenants in place. We got places for a deal and paid when the tenants left. As far as capex, any investor should know if a property will need a new roof or other major expenses upcoming. That's doing your homework.
1 Reply
Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
And where did you come up with only making $100/month profit?
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Daniel Miller
St. Petersburg, FL · Member since 2012 · 173 posts · 44 votes
11y
I have not heard of them before but any person or entity that is in between you and the deed to a property has an obvious financial incentive and motivation in the deal. They are a business that creates value through the purchase, renovation and resale of properties to investors. It's not the investing route I would take but each person walks their own path. If the deal was really good they would keep it for themselves. This eradicates any chance of you hitting a "home run" with your investment. I prefer to derive my deals organically through research as there is potential for future appreciation rather than buying $35,000 properties in South St. Petersburg that have not seen appreciation in a quarter century.
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Joshua Springer
Residential Real Estate Agent · Columbus, OH · Member since 2013 · 281 posts · 110 votes
11y
Nancy you said you made 15% net. 675 x .15 = 101.25. Did I miss something, it looks pretty straight forward from your writing.
Regardless of homework if you have $10,000 in capex over a 10 year period...
120(months) x 100(net monthly profit) = 12000
That obviously doesn't include write offs or depreciation on work being done but it's too risky in most peoples book.
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Account Closed
New Braunfels, TX · Member since 2015 · 13 posts · 8 votes
11y

And for those people who are snooty about buying a $35k house, I would say there are many investors who would be thrilled to be able to buy a house! In markets across the U.S., owning real estate is out of many people's reach. I live in Montana and Florida, and the Montana market requires at least $100k for a basic rental. The only way I could become an investor was to find properties in other markets. Right now, my boyfriend is selling two rental houses in Montana to buy four to five rentals in St. Pete, Florida, and Columbus, Ohio. He can easily triple his rental income with this mov
It's funny to me that some people look down on buying cheap houses for investing! That is all my husband and I buy. Cheap houses are easier for investors to buy and are easier for buyers or renters to afford.
Our current model of investing is to seller finance the houses to good buyers in our community after a minor rehab. It works so well for both sides!!

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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
Investment of $35k. 15% net is related to return on investment. The gross profit is $8100 or over 23%. After management fees, vacancy allowance, insurance and taxes the return is 15%. The monthly profit is NOT $100. It's $437.50 (estimated). If I were making a net of $100 per month that would be a 3% return, which is a horrible investment.

Originally posted by @Joshua Springer:

Nancy you said you made 15% net. 675 x .15 = 101.25. Did I miss something, it looks pretty straight forward from your writing.
Regardless of homework if you have $10,000 in capex over a 10 year period...
120(months) x 100(net monthly profit) = 12000
That obviously doesn't include write offs or depreciation on work being done but it's too risky in most peoples book.
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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
@Daniel Miller:

I prefer to derive my deals organically through research as there is potential for future appreciation rather than buying $35,000 properties in South St. Petersburg that have not seen appreciation in a quarter century.
We are talking about Columbus, Ohio, related to the $35k house. But Interesting you bring up South St. Pete. I say it depends on the area. We invest in clean, working class neighborhoods. There are some houses in South St. Pete neighborhoods that fit this bill. Our approach is to drive the neighborhood, look at how other houses are kept up, see if there are a lot of people lingering around during the day, note the cars people drive. The house we just purchased in South St. Pete was sold for $150k in 2005. We picked it up for $38k. So don't see how what you are saying about houses not appreciating applies universally to the south side.
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Daniel Miller
St. Petersburg, FL · Member since 2012 · 173 posts · 44 votes
11y
Using an artificially enhanced 2005 value to justify making a sound investment decision in today's real estate climate holds no water.
I congratulate you on your success. I was not trying to imply anything and was only sharing my thoughts on low-income investments. Generally, my belief is that yes it might be a good cash flow situation but it's thinking small. And it's kind of boring. I like to look at properties, and I strive to purchase properties, where I would be proud to own the property. I know many southside investors and they do well. None of them are overly wealthy...another trait I noticed and like I said I like to set my sights high.
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Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
I should also mention that we buy houses based on ROI on rental receipts. Appreciation is a bonus!
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Joe Cummings
Philly Burbs, PA · Member since 2015 · 338 posts · 133 votes
11y
Sounds like they are in the business of selling dreams. Dreams are nice, but they vanish into thin air when you wake up
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Joshua Springer
Residential Real Estate Agent · Columbus, OH · Member since 2013 · 281 posts · 110 votes
11y
Nancy your numbers seem extremely fluffy. You're telling me you are experiencing, and expect to continue experiencing an expense ratio of about .35 on a $35,000 house. To me this seems like you're either trying to convince someone you are doing the right thing or work for this company and want everyone to believe that everyones investments will be just as good.
I'm not saying you shouldn't spread your success but I don't want to trick people into thinking any investment is all roses, especially cheap houses.
0 Reply
Nancy Brook
Investor, Realtor, Writer, Podcaster · Billings, MT · Member since 2013 · 175 posts · 97 votes
11y
Those are the numbers, Joshua. Obviously, repairs will be needed the longer one owns a house. That's true with any house. But we are making 15% net ROI after taxes, insurance and property management fee and one month vacancy budgeted per year.
The question was whether anyone has heard of these guys. Yes, I have. My boyfriend and I have done business as clients. Our experience has been positive. The returns have been great. The buying process was hassle free. I'd recommend them. If you want to argue the strategy of cheap houses, that's a whole other thread!
1 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Account Closed
you must be another Joe Pickett clone.. what is up with guys and your owner finance crappy properties.... ? John the owner of the company must have an army of you folks
Podcast Guest on Show #222
JLH Capital Partners51 Review
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Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
11y
@Nancy Brook
your in the honeymoon period with your Columbus properties. I have invested there as well and I rather like the town..
you just over time will never hit a 35% expense... not with snow .. and wear and tear a good number to use is 50 to 60% over 10 year run.. that's where you will end up I would guess. and its probably still a 8 to 9% return and if you like it that's fine.
turn key is a nice way for busy people to get started just have to pick quality company and use your own math.. again my rule of thumb is 50% to 60% if I do better that's great but I want to be realistic for a long term run as opposed to being disappointed that my 15% return I thought I was going to get year in and year out is really 8% especially since your paying cash.. you could buy well positioned first trust deeds and make 12% with much less stress and risk for instance.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
1 Reply
Denny Lobach
Hixson, TN · Member since 2015 · 4 posts · 1 vote
11y
I think the issue is not so much 'has anyone heard of these guys" but rather does the deal make sense. A $35,000 house either has to be a wreck from prior tenants and foreclosure or a section 8 house. The ongoing repairs will destroy nearly any ROI. One roof or Hvac will bring you down to 3% or less.
Has anyone even tried to do a search for $35,000 houses in good condition in desirable neighborhoods.??? Nearly "Mission Impossible."
As for hearing of these guys... they are always sending emails for webinars and properties so the question should be has anyone successfully accomplished profitable deals with them and the one person on this forum that indicated they did also stated numbers that are not realistic.
As a financial planner for 30 years there is an old adage that that I've always told my clients that rings true. "If it sounds too good to be true it probably is!"
1 Reply
Kevin M. Rooney
Turn Key Supplier · Indianapolis, IN · Member since 2015 · 111 posts · 21 votes
11y
Look at Indianapolis!
0 Reply
Jean Sullivan
Dallas, TX · Member since 2013 · 1 post · 0 votes
10y
You should read about this company on rippoff report. I always do this as part of my research.
0 Reply
Ahmed Khidre
San Jose, CA · Member since 2016 · 2 posts · 0 votes
10y
Nancy and everyone, i'm reading it is possible to buy house in Columbus, OH with ,say, $40K and having ROI 11~15% through AWB company. If this is true, for how many years the cash flow (the honeymoon as someone commented) would last? Would it be easy to sell the house with at least same price in, say, 5 years?
Please advise
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Marek Mika
Real Estate Investor · Corona, CA · Member since 2017 · 9 posts · 3 votes
8y
2 years after last respond but this is my experience with AWB
My 2 cents after buying and owning for 3-5 years several properties from AWB in Columbus and Cleveland.They're not even worth 1 star. My big mistake was to trust pushy Sales AWB staff and not doing research at all. Be careful. If possible only buy in your own backyard. Don't trust high ROI. Higher ROI more maintenance and end up with braking even or being in the red. Always research area, crime, school district. It looks like AWB going for higher ROI on paper but the low end rental nightmares. Inspect properties, even get home inspectors, it"s worth to spend $300-$500 than get into nightmare. Run property comps. Take a drive around area during day and night. Ask yourself question can I raise my family in that area? Can I walk around area at nighttime? Interview Property Management, research them on the web. So far I had horrible PM's. If tenant in place check with PM copy of the lease and quality of the tenant. One property which I bought with tenant, as owner I was responsible for water and sewer which is BS on single family home. Protect yourself with monitoring utilities or PM can do it, for extra cost. Schedule with PM to inspect property with pics once per 4-6 months even on your dime, its worth it. In Cleveland area recently spoke with 3 PM's with good reviews and guess what, they said no to manage my 3 properties. AWB stuff its great during buying process but after that be on your own. If you want to buy property, I would say only buy from licensed by the state brokerage firm with proven record. I noticed Dan W gave 5 stars guess what, he worked as salesman for AWB. If possible keep contact with PM as often as possible not only via email and calls but face to face.I remember slogan from AWBCEO buying remotely its another BS.
Hope this will help you before making investment decision and also will help you if you’re already in it. Look into best quality PM for the the area. I can’t help you at this time since I’m in process of changing to new ones.
Mark
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