All Forum Posts by: Marjeanne Fields

Make sure your insurance will cover you with the knob and tube. Get an estimate from them as I anticipate it might be higher than you think. 

How are you getting 100% loan with only 2% interest? That is a huge red flag to me. 

In your analysis over time you have not accounted for the roof. Nor does it look like you have accounted for the electrical. I think your expenses are just too low. 

Your Cash on Cash goes down in year 15. Why?

Overall- I would not buy this property based on your underwriting. I just think you need better underwriting here is all. 

Hope that helps though. Good luck!

@Jamane Y. Thank you!

@Mike Taravella Thanks very much. We have a third under contract here in Mesa AZ. Also working on two other seller finance deals. At this point we are moving on away from Big Spring Texas in to other markets. We love Texas in general. Also always looking in AZ and Oklahoma. 

@Luke Miller Thank you! 

@Grant Rothenburger Very good point! We are always very conservative in our underwriting. Will make sure we are covering our behind on cash reserves as well. Thanks for the nugget! 

Investment Info:

Large multi-family (5+ units) commercial investment investment in Big Spring.

Contributors:
Rebecca Stuelpnagel

Texas is a non disclosure state. If you want info on purchase price, cash invested, or monthly cashflow, JUST ASK!

Blue Sky Ranch is a 49 unit, Class C Apartment building located in Big Spring, Texas. The property is currently 90% occupied and stabilized asset with several value add opportunities. The asset was originally built in 1970 and features:
15 studio apartments
11 one-bedroom units
20 two-bedroom units
3 three-bedroom units

Investment Highlights:
Blue Sky Ranch as an excellent value add acquisition. The property is a Class C asset and enjoys an exceptional location with easy access to local retail as well as commuting distance to Midland / Odessa MSA of 278,807 people.
Operational Upside: The property currently has four down units while other units are under current market rents.
Value Add Opportunity: Improvements to the parking lot to enhance the curb appeal and interior upgrades will allow for an upgrade of the tenant base, and increase rents.
RUBS fees can also be increased as well as proper marketing and advertising of the property.

Given the current and projected job and economic growth in this area and the need for housing in this expanding area, we believe that Blue Sky Ranch’s value will increase over the years and thus allow us to generate a stable cash flow for several years while increasing the property’s resale value through tight management, improvement of its physical condition and capitalization for quality housing in the area.
Big Spring, Texas is a stable area that is poised for significant growth in the next 5 years. West Texas currently has the largest oil find, the Mammoth Oil Find, in Texas State History that is expected to last for 10-15 years.
Counteracting the oil growth has been a diversification of the local economy, focused on healthcare, education, increased manufacturing, and increased hiring by the government around the metro area. This is also evidenced by the expansion of the VA hospital which is conveniently located across the street from the apartment complex. The property is currently providing affordable housing for several veterans in the community and we are planning to continue that trend by giving back to the community we serve.

With little multi-family real estate supply being added, and a lack of affordable housing and new construction in the area, properties in the area are experiencing a solid occupancy and good rent growth.
An Early exit (sooner than 5 years) would only seem realistic if the market heats up and Blue Sky Ranch’s market value increases sufficiently to justify an early disposition that would maintain or increase our Equity Investors Returns

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

We have another property down the street from Blue Sky Ranch. By purchasing a second property in the area we were able to maximize economies of scale. We are sharing property management between both properties, which decreased our fees with the management company. We are also able to share payroll and personnel. This allows us to have a full time staff managing our properties and fully invested in increasing the NOI.

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

This deal was shared with us from our property management company along with our broker in the area. They had already been managing the asset, and knew the sellers were ready to offload this asset to another investor. Our broker managed to get in contact with the seller and negotiate the terms we desired.

How did you finance this deal?

Fannie loan with a automatic refi in year one. (Supplemental) We also partnered with investors for the cash needed at closing, and to operate the asset.

How did you add value to the deal?

We are doing interior renovations, as well as adding some amenities.

What was the outcome?

Stay tuned!

Lessons learned? Challenges?

Looking for investment partners during Christmas is not a fun experience.
Fannie took over two weeks to get us a 90/90 waiver. This is usually done in 48 hours.
JV partnerships are great when you have investors who are already committed to working with you. It is much harder to find JV partnerships after you get a deal under contract. We will actually be filing this as a syndication to ensure protection of our investors, and our team.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Yes. PM me directly for their contact info. Happy to share.

Does anyone have experience acquiring seller financing deals? I'm nervous because we are highly leveraging this (95%). Which means no cash flow in year one. Any advice here would be helpful. Also- does seller financing effect a syndication?

Looking forward to this event! Great speaker line up and anticipating some amazing info! 

@Russell Brazil freaking love seeing your response. Thanks for reminding us all that other people's opinions do not dictate our lives. Here is one of my favorite quotes on the matter "The greatest fear in the world is of the opinions of others. And the moment you are unafraid of the crowd you are no longer a sheep, you become a lion. A great roar arises in your heart, the roar of freedom."

@Shiloh Lundahl Man really sounds like you are offering some great training here. Going to send you a PM to get on your mailing list. Can not make Jan 9 but I would like to get more involved. I am truly impressed and looking forward to connecting. 

@Karthik Ramachandran Adding on to the great advice given here. We what's look for min 100,000 in population. This is more sustainable. Or at least 100,000 within 30 min because we invest in the Southwest. Look for job growth and population growth. Are there good schools? You need at least 3-4 strong economic drivers as well. Look for a book called emerging markets by David lindahl. Great way to learn about investing out of state. You can buy it on Amazon.

@Quito Keutla is 100% correct. I hate hearing people holding off because of the market. If you buy a sustainable product correctly you can still make great money no matter what market cycle. You just have to plan properly in your underwriting. We are still buying multi family. I close on a property next week that we are buying at a 10% cap. The good deals are out there.