All Forum Posts by: Mack Lengel

Quote from @Brent Horst:

Hello all. We have a peice of land in seiver county we are looking to build on. What are appraisals coming in at a sq ft? We are looking to build at $180 to $200 and sell $250 to $275

Would it be a residential home or a STR? I personally like the margins on 1-2 bedroom cabins. Build for 300 a sqft and sell for around 500 a sqft. Lots of factors that go into that and would be happy to discuss it further if you need more insight on it. 

Quote from @Brent Horst:

Hello all. We have a peice of land in seiver county we are looking to build on. What are appraisals coming in at a sq ft? We are looking to build at $180 to $200 and sell $250 to $275

Would it be a residential home or a STR? I personally like the margins on 1-2 bedroom cabins. Build for 300 a sqft and sell for around 500 a sqft. Lots of factors that go into that and would be happy to discuss it further if you need more insight on it. 

Quote from @Todd Goedeke:

@Brent Horst check on Zillow or MLS to find out what price per sq ft properties recently sold for.

Why is your cost to build so high? If this is a cabin for STVR there is no need to include a garage.if your property allows for a walkout basement that’s more cost savings.

 Every market is different. 180-200 per sqft is very low in the Smokies, I initially read that and thought there was no way that he was going be able to do it for that price until I saw that he was a contractor and figured he would be doing it at cost. 

Quote from @Rachel White:

Hi! I'm looking for a lender for a new build under an LLC. Does anyone know of some good lenders in the smoky mountain/sevierville area? I have two options so far (one is 25% down, and the other is 10% down but they want the builder to be a guarantor on the project/property)

 Hey Rachel, great question! The lender I have had the best experience with is Brad Guinn with Northpointe Bank. He is a wealth of knowledge and grew up in Sevierville so he knows the area like the back of his hand.

This link should have all of his info on it but if not just reach out and I can provide whatever you need.

https://www.northpointe.com/ho...

Quote from @Chris Henry:

@Mack Lengel

I might’ve missed it, but I see you’ve searched for 1.6m-1.7m list houses, but I don’t see where you’re validating they will perform at 160k-170k to be 10x.

 I didn't validate the rental capabilities of the properties in the previous post. I was more so just looking at the sale prices of properties that fall along that 10x guideline. Every property is different and should be underwritten as such. Thanks for the question and hope this clarifies it for you.

Hey @John Carbone I'll take a crack at this one!

Just went on the MLS and pulled the data for this:

In the past 3 months of sales for properties with a list price of 1.6m-1.7m (going off that 10x), there were 6 closed sales. For a total list price of $10,073,000.

The actual sales price for those 6 came out to $97,880,000.

Based on that it shows that they sold for 97.17% of the list price or just a bit under the 10x multiple.

Note: Here's where my calculations are a bit skewed. 1. This math does not account for all of the original list prices before price reductions on these properties if they had them 2. I only filtered based on list prices of 1.6-1.7, if I were to go thru every listing remark, rental history, or projections then we would have a greater sample size and thus be subject to change.  3. Because I only looked at properties with a 10x multiple of 160-170k a year then I may have missed out on some properties that sold at a higher or lower multiple based on the individual revenues.

Cash buyers don't have to worry about rate buydowns, monthly payments, etc that non-cash buyers do to make their numbers work. There are also other factors in determining what makes a good deal for them such as needing to reinvest from a 1031 or buy for a cost seg to reduce a tax bill. Cash buyers have the ability to make the decision that best fits them rather than just making it cash flow. With all that being said if it is a solid property that will continue to generate good income then it makes sense from my perspective.

I hope all that somewhat answered your question and if not feel free to reach out and I would be happy to look further into it for you!

Quote from @Bill Esposito:

First post! I'm selling my only investment property and looking to move about 500k into a STR in the Smokies. I'm in the process of listing and am having difficulty finding a realtor who can identify the best cash flowing properties for my budget. I like the Smokies for the year-round draw and the likelihood that Short Term Rentals will be allowed to continue to thrive there along with the strong infrastructure of cleaners and handymen, as I will be self-managing from out of state. I understand most realtors only give attention when you are ready to buy but I only have a 45 day window to find my property with a 1031 exchange and a budget of 1.5M. Given cashflow is my main goal what type or specific property should I zero in on?

Hey Bill, good question here!
First off you definitely want to find a good Realtor who understands what a good investment looks like and is able to help walk you thru the numbers but you really want to have a good understanding of what a good deal looks like to you. I would recommend spending some time analyzing properties. I have a spreadsheet I use to plug all my numbers into.

Regarding what to look for in terms of cash flow, you'll want to look for an existing cabin... you can do a reverse 1031 exchange for builds but it can get a bit more complicated. I personally would recommend you look more towards new construction and maybe something a little more modern and unique than your standard log cabin. But there are plenty of average-looking cabins that perform really well.

Quote from @Mike Turano:

Has anyone been able to recently purchase a property with 25% down that cash flows? If so, what area was it in. I know that TX, FL and TN are the best markets currently and I'm leaning towards TN. I just keep having the same problem. I'm ready to buy, but nothing on paper will cash flow. Any help or suggestions would be appreciated. Also if there's any agents in TN that are investor friendly and could help with doing a BRRRR property please let me know.

Thanks!

 Not the same I know but turn-key construction in the Smokies often time have enough equity that you can pull out in a refi to cover your costs. The numbers I ran on a small build recently but it didn't cash flow much more than 1k a month. Basically a BRRSTR at that point

Quote from @Patricia Robb:

PrairieFire is taking over FrontSight. https://pvtimes.com/news/here-...

& https://www.prairiefire.com/

 That's exciting! Thank you for sharing that. I would love to make my way back out there some time in the future

Great question @Account Closed!

I would say it mostly depends on how you are looking to invest and what level of involvement you are comfortable with.

For example, I am helping some family members build a small modern cabin in the Smokies, and in 6 months' time, they will be able to sell it and almost double their investment. Something like that could be an option for you if you're simply looking to get a return on your money and scale up for a larger investment. 

If that example isn't quite in line with your goals... the amount you have is even enough to get into a nice STR if you are looking to hold and bring in more cash flow.

All food for thought there. Best of luck and feel free to reach out anytime for more ideas.