All Forum Posts by: Casey Graham

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

1 Vote

Atlanta, Georgia

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