All Forum Posts by: Logan Freeman

@Travis Drake good on you for posting here in BP. I have found some amazing connections that way, this year. I would definitely get to a few of the meetups here in KC - your net worth is directly tied to your network! Let us know how we can support you. 

@Beth Gansereit welcome to th BP community. I truly believe that KC is positioned to become a powerhouse here in the Midwest over the next 10 years, if we play our cards right. Real estate, and developers are going to play a big part in that. Kudos to working on making KC a better place to live, let's all do our part! 

Investment Info:

Large multi-family (5+ units) buy & hold investment in Kansas City.

Purchase price: $1,250,000
Cash invested: $380,000

The riches are in the niches! This is one of our boutique Bed and Breakfast hotels located on the KC Country Club Plaza. It is an art hotel that is nestled in between the KC Art Institute, Nelson Atkins and Kemper Museums.

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

The yield, and the barrier of entry is high. Everyone wants multi-family investments, but that asset class is very saturated. This asset class allows us to return impressive yields.

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

Found this deal while doing due diligence on our other sister hotel on the Plaza. ALWAYS sit down with the seller directly!

How did you add value to the deal?

It was not operational when we purchased. We are adding value by actually brokering art out of the hotel, more efficient management, marketing and implementing a corporate rental strategy.

@Jake Randolph I have a few thoughts and hopefully you find some value in them. I am also continuing to grow my list of investors as we are building our syndication business up. Local meetups are OK, I agree with @Henri Meli with starting your own. Adam Adams was recently on Michael Blanks podcast and I would listent to that, as he has some great tips there. The whole goal is to build your thought leadership platform, Joe Fairless's book is incredible as well. Victor Menasce and Matt Faircloth have both written extensively on this topic too. Send me a DM and I will share my summary of those 2 books and have been successful in implementing these tactics. I build a website, and started getting content out there. That's helping. I am exploring starting my own podcast. And believe it or not, I have raised a few million off of connections here on BP AND utilizing a LinkedIn approach as well. Hope this helps! 

Be great today! 

@Account Closed Meet these people in person and look them in the eyes. Have you met the seller before? 

@Jeff Kehl thank you for your thoughts and all of your points have been thought-provoking. They are also an encouragement. MJ Demarco taught me that anything that is "brain-damaging" and the barrier of entry is high, there is $ to be made. We get rewarded in proportion to the size of the problems we solve. We had a ton of success completing 100+ BRRRRs on small multifamily and SFRs this year, however in my opinion that market in KC has continued to be more and more saturated making it very difficult unless you have a unique acquisition strategy. Maybe @Andrew Syrios has some tips there. 

I am using syndication to fund our deals, and have the team with the commercial experience. Just took down 2 hotels on the plaza.  

What I am running up against right now is finding the right tenants before we source the properties and then how picky they are. 

Interest rates are definitely my #1 concern, However; I did recently listen to a podcast by the real estate guys that was reassuring. 

Thanks for all the thoughts. 

@Bob Starlin I am active here in the KC market and have around 4-5 attorneys I can refer you to depending on what you're looking for. Shoot me a DM and I will do my best to help! 

@Jimmy Klein we closed on our first hotel last Wednesday. Another one closing in February. Would like to speak with you about your experience on that asset class if you're open to it?

@Jeff Kehl Agreed, why do you think most investors don't understand or attempt these types of deals?

@Lee Ripma Thanks for the feedback, I am building 3 AirBnB units in the lofts, to which I own a few already and know the expenses on these pretty well. As for the retail tenants, I am striving for NNN leases, so we will not have any costs there (hopefully). With the location where it is, it should be do-able. I am new to working with leasing agents - so this will be a new adventure.

I have a great group of brokers finding us deals, some decent firepower behind us, and a team that has a lot of experience. I am excited about this "new" model and think we've found a bit of a hunny hole here in the KC market. 

@Kristopher Orr I am with @Lee Ripma, residential or commercial?

I am traditionally more comfortable with the BRRRR strategy in SFR's and small multifamily buildings and have successful at completing over 400 of those types of transactions for our investors, however; a new model has come to me, almost by happenstance.

In our market, in Kansas City, SFR home prices have only continued to climb in the 80-130k price range making it harder to find subject properties to BRRRR. I am not saying it CANNOT be done, I am saying the level of effort that it takes to find one of these properties has become increasingly more difficult. As an investment property specialist and investor myself, I started to search for a new model that would allow us to provide our investors a healthy return while being able to return their capital. I believe I have found it in a new asset class: commercial buildings.

I have been saying for some time now, that the "riches are in the niches." I believe the higher barrier of entry, the lower your competition will be. 

Now, anyone can go buy a bunch of ugly bricks and make them pretty bricks, so how does this model work? Just like Stephen Covey taught us to start with the end in mind, We are starting with the tenant first. We are using our network in the KC market to find the best local good credit tenants who are looking to expand their business or open another location, then we source the property, then we raise the funds for the deal. 

Has anyone done this before? Sample deal I have under contract below. 

Mixed use bldg - airbnb, retail and event space/art gallery

Purchase price - $775k

Rehab - $800k

Holding Costs - $50k 

ARV based on income, see below -

 - 3 AirBnB units generating 175k a year (40k, 40k, and 95k)

- 4,000 sq ft of retail storefront generating 20 per sq ft = 80k per year (also paying insurance, utilities and maintenance)

- An event space in the basement renting conservatively for $2500 per month = 30k

- Total Gross Rents - $285k at 40% expenses (should run lower) = $171,000 NOI at a 7 Cap = $2.4MM

I would think this building will be worth 200 per sq ft = 8,000 x 200 = $1.6MM and 4,000 x $150 = $600,000 = 2.2MM

Someone please tell me if I am crazy?