11 Doors, 13% Stabilized Yield, Town of 13,000?

Atlanta, Georgia
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11 Doors, 13% Stabilized Yield, Town of 13,000?

Casey Graham
Member since 2024 · 14 posts · 10 votes

I'm nervous to post here because I'm new to this forum and don't know exactly where to start... 

So, I'll just layout my thesis & some numbers and let you pro's shoot holes in it. I'm looking for you advice with my overall strategy and garner any experience you might have to save me from learning the hard way. 

I've started, grown & sold 4 companies over the last 15 years (two PE exits). This has created a cash position and freedom that's allowed me to start my journey into RE. 

Currently, I have 11 doors under contract. 

Deal 1: 4 Plex (it's stripped down to studs, a guy ran out of money on the rehab)

Purchase price 160k, Rehab 80k, Total all in: 240k

Expected Rent: $4,000/month to $4,400/month depending on how quickly we want to rent the units out. 

Deal 2: Duplex (older home that needs TLC in good location)

Purchase price: 120k, Rehab 40k, Total all in: 180k

Expected Rent: $2,400/month to $2,700/month

Deal 3: 5 Plex (is that even a word? lol)

Purchase Price: 115k, Rehab 150k, Total all in: 265k

Expected Rent: $4,000/month to $4,400

I hired a real estate investing coach to help us build out the budgets for these 11 doors. 

I'll save you the details but...

Per door cost: $63,300

All in Cost: 700k

Total Revenue: 137k(ish) annually

NOI: 65-73% (in the expenses we included: insurance, taxes, $75/month per door repair expense, management fee 8%, grass cutting, & a misc fund for random crap business license, etc.)

Now... Here are my questions: 

1: this market is a middle georgia small town.  The management companies & local investors usually lease places up within 1-2 weeks max (depending on if you want to hold out of higher rents) How would you think about leasing these out?  Would you rather maintain a higher price for 4-8 weeks and look for a premium or would you rent it quicker with a lower price?  What's the strategies on this? 


2: bigger picture, I could probably find 100 doors like this in this same market.  The current status of the market is low end rentals land lords that let the houses look like crap.  If I could find 100 doors and put together as a group, what do you feel the exit potential is on this?  This town is growing and probably 10 years out from being fantastic.  They just got chickfila, aldi, walmart, home depot, etc etc within last 7 years. Have you seen anyone do a strategy like this in a smaller town and exit the entire portfolio?   Or, should I focus on just holding these forever type deal and build a cashflow monster? 

3: I have no idea how to determine how much to borrow verses pay cash? I have a few banks and family offices I've worked with for years that will definately do the deals with me.  How should I think about cash vs. equity?  

Overall: The thesis is... Enter a strong rental town with lower cost housing, fix it up nicer than most stuff in town & lease (and repeat over and over). 

I know I talked a lot but I'm geniunely looking for any advice or blind spots in my strategy. Any thoughts? 

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Corey ConklinPro Member
Investor · Member since 2021 · 129 posts · 209 votes
1y

This is almost an exact match to how I'm investing.

This strategy isn't talked about on BP forums as it goes against what many investors believe when it comes to good markets. I am convinced that these markets are the hidden gold mine in RE investing today. 

I had the same question when it came to my exit strategy. Will someone buy the entire portfolio when I want to exit? Who knows, but what I do know is that they will be cash flow cows when I decide to exit so that helps mitigate that risk. Another thing I'm doing which is against the grain is only investing in SFH. It gives me another exit strategy by having the option to sell off individual properties to retail buyers if needed. I am also a huge believer that with massive affordability issues in cities people will start to migrate to smaller towns that they can afford. (I'm already seeing this in the towns I am currently invested)

I know this hasn't really answered your question but I've been doing this for almost 5 years and it's working out well for me. (I've also seen some older investors in my area do really well with a similar strategy). 

My advice would be to keep leaning in on this strategy and let the other investors battle over investing in Cleveland and Detroit.

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  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
    1y
    Quote from @Casey Graham:

    I'm nervous to post here because I'm new to this forum and don't know exactly where to start... 

    So, I'll just layout my thesis & some numbers and let you pro's shoot holes in it. I'm looking for you advice with my overall strategy and garner any experience you might have to save me from learning the hard way. 

    I've started, grown & sold 4 companies over the last 15 years (two PE exits). This has created a cash position and freedom that's allowed me to start my journey into RE. 

    Currently, I have 11 doors under contract. 

    Deal 1: 4 Plex (it's stripped down to studs, a guy ran out of money on the rehab)

    Purchase price 160k, Rehab 80k, Total all in: 240k

    Expected Rent: $4,000/month to $4,400/month depending on how quickly we want to rent the units out. 

    Deal 2: Duplex (older home that needs TLC in good location)

    Purchase price: 120k, Rehab 40k, Total all in: 180k

    Expected Rent: $2,400/month to $2,700/month

    Deal 3: 5 Plex (is that even a word? lol)

    Purchase Price: 115k, Rehab 150k, Total all in: 265k

    Expected Rent: $4,000/month to $4,400

    I hired a real estate investing coach to help us build out the budgets for these 11 doors. 

    I'll save you the details but...

    Per door cost: $63,300

    All in Cost: 700k

    Total Revenue: 137k(ish) annually

    NOI: 65-73% (in the expenses we included: insurance, taxes, $75/month per door repair expense, management fee 8%, grass cutting, & a misc fund for random crap business license, etc.)

    Now... Here are my questions: 

    1: this market is a middle georgia small town.  The management companies & local investors usually lease places up within 1-2 weeks max (depending on if you want to hold out of higher rents) How would you think about leasing these out?  Would you rather maintain a higher price for 4-8 weeks and look for a premium or would you rent it quicker with a lower price?  What's the strategies on this? 


    2: bigger picture, I could probably find 100 doors like this in this same market.  The current status of the market is low end rentals land lords that let the houses look like crap.  If I could find 100 doors and put together as a group, what do you feel the exit potential is on this?  This town is growing and probably 10 years out from being fantastic.  They just got chickfila, aldi, walmart, home depot, etc etc within last 7 years. Have you seen anyone do a strategy like this in a smaller town and exit the entire portfolio?   Or, should I focus on just holding these forever type deal and build a cashflow monster? 

    3: I have no idea how to determine how much to borrow verses pay cash? I have a few banks and family offices I've worked with for years that will definately do the deals with me.  How should I think about cash vs. equity?  

    Overall: The thesis is... Enter a strong rental town with lower cost housing, fix it up nicer than most stuff in town & lease (and repeat over and over). 

    I know I talked a lot but I'm geniunely looking for any advice or blind spots in my strategy. Any thoughts? 

    Hey @Casey Graham, welcome to the BP Forum! Great detailed description of your deals - I wish I got this level of detail from my CFO clients. One thing I didn't see was the ARVs. Is $800k a good estimate (~ $73k door)? Here are my responses to your questions

    1) Not my area of expertise, but the numbers on this are very strong

    2) I'd generally lean towards building the CFM, but strategically selling some properties when someone gives you a offer you can't refuse.

    3) Most HMLs would lend you 75%-85% of your purchases prices plus up to 100% of the rehab costs (though some HMLs like to see the rehab costs at or below the purchase price). Then after the units are stabilized (perhaps with some seasoning), you could get a bank/HML to refi this up for 75%-80% of the ARV.

    [email protected]
    1Reply
  • Jake BakerBusiness Member
    Flipper/Rehabber · San Diego, CA · Member since 2020 · 1k+ posts · 694 votes
    1y

    @Casey Graham

    Aggregating 100 doors in a growing market could create significant value for an institutional buyer. The key is to standardize property quality and management systems, which would appeal to buyers seeking scale.

    If you’re thinking long-term, holding these properties for cash flow while leveraging local appreciation is also a strong play. A mix of short- and long-term strategies could hedge against market shifts.

    Borrowing allows you to scale faster, especially if you can secure favorable terms. For example, using 70-80% leverage could preserve your cash for more deals while maintaining strong returns.

    A blended approach might work: pay cash for smaller deals to avoid delays and borrow on more significant properties to spread risk.

    [email protected]
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    1Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y
    Quote from @Jaycee Greene:
    Quote from @Casey Graham:

    I'm nervous to post here because I'm new to this forum and don't know exactly where to start... 

    So, I'll just layout my thesis & some numbers and let you pro's shoot holes in it. I'm looking for you advice with my overall strategy and garner any experience you might have to save me from learning the hard way. 

    I've started, grown & sold 4 companies over the last 15 years (two PE exits). This has created a cash position and freedom that's allowed me to start my journey into RE. 

    Currently, I have 11 doors under contract. 

    Deal 1: 4 Plex (it's stripped down to studs, a guy ran out of money on the rehab)

    Purchase price 160k, Rehab 80k, Total all in: 240k

    Expected Rent: $4,000/month to $4,400/month depending on how quickly we want to rent the units out. 

    Deal 2: Duplex (older home that needs TLC in good location)

    Purchase price: 120k, Rehab 40k, Total all in: 180k

    Expected Rent: $2,400/month to $2,700/month

    Deal 3: 5 Plex (is that even a word? lol)

    Purchase Price: 115k, Rehab 150k, Total all in: 265k

    Expected Rent: $4,000/month to $4,400

    I hired a real estate investing coach to help us build out the budgets for these 11 doors. 

    I'll save you the details but...

    Per door cost: $63,300

    All in Cost: 700k

    Total Revenue: 137k(ish) annually

    NOI: 65-73% (in the expenses we included: insurance, taxes, $75/month per door repair expense, management fee 8%, grass cutting, & a misc fund for random crap business license, etc.)

    Now... Here are my questions: 

    1: this market is a middle georgia small town.  The management companies & local investors usually lease places up within 1-2 weeks max (depending on if you want to hold out of higher rents) How would you think about leasing these out?  Would you rather maintain a higher price for 4-8 weeks and look for a premium or would you rent it quicker with a lower price?  What's the strategies on this? 


    2: bigger picture, I could probably find 100 doors like this in this same market.  The current status of the market is low end rentals land lords that let the houses look like crap.  If I could find 100 doors and put together as a group, what do you feel the exit potential is on this?  This town is growing and probably 10 years out from being fantastic.  They just got chickfila, aldi, walmart, home depot, etc etc within last 7 years. Have you seen anyone do a strategy like this in a smaller town and exit the entire portfolio?   Or, should I focus on just holding these forever type deal and build a cashflow monster? 

    3: I have no idea how to determine how much to borrow verses pay cash? I have a few banks and family offices I've worked with for years that will definately do the deals with me.  How should I think about cash vs. equity?  

    Overall: The thesis is... Enter a strong rental town with lower cost housing, fix it up nicer than most stuff in town & lease (and repeat over and over). 

    I know I talked a lot but I'm geniunely looking for any advice or blind spots in my strategy. Any thoughts? 

    Hey @Casey Graham, welcome to the BP Forum! Great detailed description of your deals - I wish I got this level of detail from my CFO clients. One thing I didn't see was the ARVs. Is $800k a good estimate (~ $73k door)? Here are my responses to your questions

    1) Not my area of expertise, but the numbers on this are very strong

    2) I'd generally lean towards building the CFM, but strategically selling some properties when someone gives you a offer you can't refuse.

    3) Most HMLs would lend you 75%-85% of your purchases prices plus up to 100% of the rehab costs (though some HMLs like to see the rehab costs at or below the purchase price). Then after the units are stabilized (perhaps with some seasoning), you could get a bank/HML to refi this up for 75%-80% of the ARV.


    Thank you for this. Your model is awesome. I believe ARV will be higher than this but starting at 800k is a safe and conservative number. I appreciate you feedback. Quick question... When you say "perhaps with some seasoning"... I am assuming that means... After time of showing quality rents and low vacancy rates?

    thx again for helping with my first post lol

    1Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y
    Quote from @Jake Baker:

    @Casey Graham

    Aggregating 100 doors in a growing market could create significant value for an institutional buyer. The key is to standardize property quality and management systems, which would appeal to buyers seeking scale.

    If you’re thinking long-term, holding these properties for cash flow while leveraging local appreciation is also a strong play. A mix of short- and long-term strategies could hedge against market shifts.

    Borrowing allows you to scale faster, especially if you can secure favorable terms. For example, using 70-80% leverage could preserve your cash for more deals while maintaining strong returns.

    A blended approach might work: pay cash for smaller deals to avoid delays and borrow on more significant properties to spread risk.


     Thanks for this.  I like the idea of a both/and.  I believe their is a strategy here to acquire, stablize and liquidate along the way to build a self funding cash machine.  

    Do you think this strategy gains strength if lets say... in five years interest rates are at 5.5 vs 7.5 now?  

    This being my first go at this, I'm curious about that building the exit value/attractiveness? 

    Thank you Jake 

    0Reply
  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 726 votes
    1y
    Quote from @Casey Graham:
    Quote from @Jaycee Greene:
    Quote from @Casey Graham:

    I'm nervous to post here because I'm new to this forum and don't know exactly where to start... 

    So, I'll just layout my thesis & some numbers and let you pro's shoot holes in it. I'm looking for you advice with my overall strategy and garner any experience you might have to save me from learning the hard way. 

    I've started, grown & sold 4 companies over the last 15 years (two PE exits). This has created a cash position and freedom that's allowed me to start my journey into RE. 

    Currently, I have 11 doors under contract. 

    Deal 1: 4 Plex (it's stripped down to studs, a guy ran out of money on the rehab)

    Purchase price 160k, Rehab 80k, Total all in: 240k

    Expected Rent: $4,000/month to $4,400/month depending on how quickly we want to rent the units out. 

    Deal 2: Duplex (older home that needs TLC in good location)

    Purchase price: 120k, Rehab 40k, Total all in: 180k

    Expected Rent: $2,400/month to $2,700/month

    Deal 3: 5 Plex (is that even a word? lol)

    Purchase Price: 115k, Rehab 150k, Total all in: 265k

    Expected Rent: $4,000/month to $4,400

    I hired a real estate investing coach to help us build out the budgets for these 11 doors. 

    I'll save you the details but...

    Per door cost: $63,300

    All in Cost: 700k

    Total Revenue: 137k(ish) annually

    NOI: 65-73% (in the expenses we included: insurance, taxes, $75/month per door repair expense, management fee 8%, grass cutting, & a misc fund for random crap business license, etc.)

    Now... Here are my questions: 

    1: this market is a middle georgia small town.  The management companies & local investors usually lease places up within 1-2 weeks max (depending on if you want to hold out of higher rents) How would you think about leasing these out?  Would you rather maintain a higher price for 4-8 weeks and look for a premium or would you rent it quicker with a lower price?  What's the strategies on this? 


    2: bigger picture, I could probably find 100 doors like this in this same market.  The current status of the market is low end rentals land lords that let the houses look like crap.  If I could find 100 doors and put together as a group, what do you feel the exit potential is on this?  This town is growing and probably 10 years out from being fantastic.  They just got chickfila, aldi, walmart, home depot, etc etc within last 7 years. Have you seen anyone do a strategy like this in a smaller town and exit the entire portfolio?   Or, should I focus on just holding these forever type deal and build a cashflow monster? 

    3: I have no idea how to determine how much to borrow verses pay cash? I have a few banks and family offices I've worked with for years that will definately do the deals with me.  How should I think about cash vs. equity?  

    Overall: The thesis is... Enter a strong rental town with lower cost housing, fix it up nicer than most stuff in town & lease (and repeat over and over). 

    I know I talked a lot but I'm geniunely looking for any advice or blind spots in my strategy. Any thoughts? 

    Hey @Casey Graham, welcome to the BP Forum! Great detailed description of your deals - I wish I got this level of detail from my CFO clients. One thing I didn't see was the ARVs. Is $800k a good estimate (~ $73k door)? Here are my responses to your questions

    1) Not my area of expertise, but the numbers on this are very strong

    2) I'd generally lean towards building the CFM, but strategically selling some properties when someone gives you a offer you can't refuse.

    3) Most HMLs would lend you 75%-85% of your purchases prices plus up to 100% of the rehab costs (though some HMLs like to see the rehab costs at or below the purchase price). Then after the units are stabilized (perhaps with some seasoning), you could get a bank/HML to refi this up for 75%-80% of the ARV.


    Thank you for this. Your model is awesome. I believe ARV will be higher than this but starting at 800k is a safe and conservative number. I appreciate you feedback. Quick question... When you say "perhaps with some seasoning"... I am assuming that means... After time of showing quality rents and low vacancy rates?

    thx again for helping with my first post lol

    Thanks @Casey Graham! As for the "seasoning", some lenders will require the property to be "stabilized" (perhaps 80%-90%+ occupied, depending on the lender) for 3 months, 6 months, etc. before they'll do a cash out refi. I suspect a local bank/credit union would waive the seasoning with such a strong DSCR on this.

    And yeah, I was debating on the ARV, particularly given the amount of rehab you will do. The $800k represents only a ~15%-20% forced appreciation. With some of my other heavy rehab CFO clients, they'd probably expect at least 30% on this type of deal. And really, any ARV over $800k is extra "cash out" for you.

    [email protected]
    0Reply
  • Corey ConklinPro Member
    Investor · Member since 2021 · 129 posts · 209 votes
    1y

    This is almost an exact match to how I'm investing.

    This strategy isn't talked about on BP forums as it goes against what many investors believe when it comes to good markets. I am convinced that these markets are the hidden gold mine in RE investing today. 

    I had the same question when it came to my exit strategy. Will someone buy the entire portfolio when I want to exit? Who knows, but what I do know is that they will be cash flow cows when I decide to exit so that helps mitigate that risk. Another thing I'm doing which is against the grain is only investing in SFH. It gives me another exit strategy by having the option to sell off individual properties to retail buyers if needed. I am also a huge believer that with massive affordability issues in cities people will start to migrate to smaller towns that they can afford. (I'm already seeing this in the towns I am currently invested)

    I know this hasn't really answered your question but I've been doing this for almost 5 years and it's working out well for me. (I've also seen some older investors in my area do really well with a similar strategy). 

    My advice would be to keep leaning in on this strategy and let the other investors battle over investing in Cleveland and Detroit.

    2Reply
  • Travis TimmonsPro Member
    Rental Property Investor · Ellsworth, ME · Member since 2021 · 1k+ posts · 2k+ votes
    1y

    Stabilize this one and go slow. Nothing fails like success. I have sold a couple of businesses as well, and speaking from experience, you are never more vulnerable to make a mistake than when you are sitting on a giant pile of cash.

    Also, I agree with @Corey Conklin - I'm a big fan of "overflow cities/towns" in the sun belt. Go where the population is growing 5-10% per year (even though it is a small denominator) over chasing year 1 cash flow in a stagnant/declining market.

    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Casey Graham 

    1) Your #1 goal with tenants is consistently, smooth cashflow. Thus it's often more profitable to find long-term tenant than squeezing out every rental dollar you can. 
    - RentReady repairs & vacancies between tenants can blow any projected ROIs.

    2) Warren Buffet - go where others aren't. You may also be able to "make your market" if you can hit a critical mass. Dan Gilbert did that by snapping up a large part of Downtown Detroit.
    - If you build a good/great portfolio, you will have multiple exit options you can evaluate annually or whenever.

    3) Don't overleverage beyond your risk tolerence. Be sure to have funds you can tap in case of emergency or inevitable market dips. 
    - Most Fortune 5000 (and others) companies do this. They always make sure to have line(s) of credit to get them through challenging periods.

    [email protected]248-209-6824
    Logical Property Management4.9450 Reviews
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    0Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y

    Drew, very helpful. 
    I really appreciate the feedback. 

    Follow up question… I’ll have 700k into the 11 doors over 3 different properties. 

    Let's say my ARV = $900k

    Do you recommend doing my loans based on actual cost (700k)? Or off the ARV?

    0Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y
    Quote from @Travis Timmons:

    Stabilize this one and go slow. Nothing fails like success. I have sold a couple of businesses as well, and speaking from experience, you are never more vulnerable to make a mistake than when you are sitting on a giant pile of cash.

    Also, I agree with @Corey Conklin - I'm a big fan of "overflow cities/towns" in the sun belt. Go where the population is growing 5-10% per year (even though it is a small denominator) over chasing year 1 cash flow in a stagnant/declining market.


    0Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y

    @Corey Conklin thanks for the follow up on this and the confirmation it's workin. I agree that some of these smaller towns have great buys and strong rents. question for ya... Do you use traditional financing or do you us DSCR loans? thx

    0Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y

    @Ericka Parrott interesting.  I will reach out today! Thank you. 

    0Reply
  • Casey Graham
    OP
    Member since 2024 · 14 posts · 10 votes
    1y

    @Travis Timmons good word.  I appreciate your feedback.  I agree, in the entreprenuer world... speed matters.  I'll heed your advice and stabilize these 11 before taking on more. 

    0Reply
  • Corey ConklinPro Member
    Investor · Member since 2021 · 129 posts · 209 votes
    1y
    Quote from @Casey Graham:

    @Corey Conklin thanks for the follow up on this and the confirmation it's workin. I agree that some of these smaller towns have great buys and strong rents. question for ya... Do you use traditional financing or do you us DSCR loans? thx

    @Casey Graham I have used traditional lending for my properties. My wife and I have good W2 jobs currently so we get better terms with traditional lending in comparison to DSCR lending.

    0Reply
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