I Closed On 81 Units!

Oh, the intro music stopped. Hey, welcome back to Multifamily Strategy. I'm Christian, your channel host. Today, coming in with a voice that may be in and out. I'm getting off of a cold but very excited because we have some awesome news. We closed on the 81-unit. Now, this puts me— I need to redo the math, but I believe— I'm gonna double-check, but I believe this puts me over 600 rental units. Now, while unit count doesn't matter, and I own about 33% of my portfolio, It's still a cool benchmark whenever we cross the next 100 units. More importantly, it has moved Abilene, Texas to the largest market that I operate in. So I now have gone from 186 units in Stephenville to 225 units in Abilene. I still hold all these units in addition to my Houston, Laredo, Central Washington, and Western Washington portfolios. 225 units. I am hoping to do one more acquisition in Abilene this year, and if Everything goes according to plan, an acquisition in Waco this year, reopening that market for my company. But how did we get here? I'm going to share some actual really practical tips, especially in relation to my mentorship group. So assuming my voice holds out for us and you guys can put up with me being a little bit, a little bit out of voice, let's go ahead and get rocking. So if you're new to the adventure, you're listening for the first time, you're watching this video like 81 units, that's kind of cool. I wish I knew how to do that. I started with no money. I started with a 38-plex in Central Washington. I had no money to put into it, but I found an amazing deal. And with one partner who actually brought the deal to me, the two of us put together the deal, put together the operation plan, and then we asked three— actually, that's four people— hey, we need a little bit of money to close this. They're all people that I did not know before we started this transaction. Three of them gave $100,000, which gave us the money to close. And gave me the confidence to do a 12-plex, a 7-plex, a 6-plex, a 10-plex, all in the subsequent year. And then we did this again and again. We did it in blue states, we did it in red states, we did it in Seattle, Washington, I did it in Houston, we did it in small towns like Union, Washington, Moses Lake, and Stephenville, mid-sized towns like Abilene. Turns out this works everywhere in the country. Now, I'm not saying buy in downtown New York right now, or if you're looking at Minnesota Yeah, probably wait until they stop actively like protesting landlords in the streets. But generally speaking, as long as you're not in Minneapolis or downtown New York or downtown LA, the strategy will work great for you. And actually, I take that back. I have some friends who've done fantastic in downtown LA. You can play this game absolutely anywhere with or without money. It's about structuring the deal. And so let me talk about this particular deal and why it's so exciting for us. My favorite asset type. Hands down, bar none, 55+ multifamily units. The financing options, fantastic. Your tenants, you really only fall into mostly two categories when you're 55+. You've saved, saved, saved through your career. You bought a house, you retire in the house until, you know, until you get really, really old. Then maybe you retire to a home. But for the most part, there's those who saved and built in their career, then those who are just lifetime renters. And there's nothing wrong with being in either camp. It's your own personal preference. That being said, the people who are still renting at 55, typically on fixed income, typically they've lived a lot of their life as a renter. They know how to be a renter. They've already gone through all of the BS that you do when you're a young person learning how to rent. They kind of got their finances down. What you end up with is a whole bunch of tenants who have a really good idea how to act as tenants. They're easy to work with and they have very clear expectations. If you want to have a thriving community you give them the community features they want. I have one of the big things, especially in Texas, we do. It's like we always make sure it comes with a space that's fantastic for things like bingo night, card night, Bible study, the things that people want to do to bring together the community and have on-site amenities. You basically get a bunch of 55+ people who are lifetime renters who know how to rent well, many on fixed incomes, so the rent always comes in. And you just have to do community features for them. Like, if you have a great community for them to live in, they typically stay. And it costs very little to implement things like bingo night or ice cream night. We're gonna see if my voice holds up here. The hard part of doing it live when you're, uh, coming off a cold. Uh, the battle, uh, to close this one— so it is a LIHTC deal, which means low income. So we'll stay 100% occupied pretty much all the time. We're the least expensive, nicest property, one of the few 55+. If you're an older individual and you make less than 60% of the area median income, you're probably going to want to rent and stay at our place. Beautiful property, actually prettiest property that we own in the portfolio right now. And it is on the same street as our 144 units. So now we have taken over this entire street. There's an old saying with location, location, location. So you can't buy a great property in a bad area. Now, we happen to be in a good area. It's a, I would say, medium area in Abilene, which is a pretty great market. That being said, we can elevate this now because we actually bought all of the multifamily strategy, or all the multifamily on the street. That's my multifamily strategy. You can't fix the neighborhood. Unless you buy the neighborhood. We have over 20 acres of apartment buildings, offices, pools, basketball court, commercial real estate. We actually have a daycare that may be moving in, uh, very, very soon, uh, to our commercial suite on 144. 2 transactions, 1 year of looking for the right deal. We had to get 2 people to say yes. 225 units. For almost anyone, that is a life changing move. That is a business that you can build from scratch in a year. I personally, for all this real estate, the two transactions combined, there's about $13 million in acquisition and we have about $2 million in reserve. So it's about a $15 million total project. I put $100,000 into the project. Maybe it was $200,000. The point being, in the perspective of $15 million, $200,000 is very little money, and I could have done it without putting any money into it. I just, I had money to invest and it's a fantastic deal. So I always invest in great deals. You could go into the same exact project with the same opportunity, construct the deal the exact same way I did. You could, at the end of this year, own 225 units. In a town like Abilene. So what are we looking for? Why Abilene? We have the largest data center in the US being built right now at half a trillion dollars, and it is awesome. Really cool technology. They're doing a whole bunch of, uh, part of it's powered by modular nuclear reactors, so it's not as big of a draw on the power grid. It's adding a ton of jobs, even though data centers don't traditionally do that. It's so big, we actually had quite a few jobs And it's continuing to expand and increase the median income. All of these things where you have lots of jobs, lots of people moving in, you have higher and higher wages, that means higher, higher rent, less and less vacancy. All of these are fantastic things. Abilene is not the only market in all of Texas you can invest in, and it's definitely not the only market in the US. But this is the type of things that you're looking for. First of all, are people moving in? Second of all, Are there a diversity of jobs? So you look at like an Abilene, 3 colleges, all 3 of them have grown year over year over year over year over year for the past 10 years. We have a military base there. They do our stealth bombers. So we, they're doing $100 million expansion. They're bringing on a whole bunch of new people. That's a growing base. Positive. There's farming and ranching and oil that all surround it. And there's a huge medical district. All of these things in 180,000 person population trending towards 250,000. All of these things come together to make a market that is just unbelievably attractive. We got the people, we got job diversity, we got income growth. I buy all of our deals based on can we get to market rate today in the next 5 years? We factored for no growth. We factored for, I think, 7 or 8% vacancy on the start, trending towards 5%. We factored for like just hitting today's market rent. We stack the deck so that we are in a position to outperform on every single deal that we do. Now, a little bit of drama on this one. This is a lesson for everyone, and then I'll get into the questions that we do every single week. We found the day we were supposed to close that there was some items that may or may not have been completed. We actually— we literally don't know. I'm just not— I'm not being coy. I just— they may or may not be in compliance, uh, on every item that we thought they were on the, uh, LURA. So in LIHTC, you have certain rent restrictions. Some units we might actually have to close and slightly reduce rent. This could be a huge problem. Now fortunately, we found that there was a proportional amount of units that were significantly under the rent cap, so we still have more upside than we originally thought too. It looks like some of our numbers in due diligence, the rent roll didn't exactly match the rent roll received post-close. So we're fortunate on this one where we were able to get, sit down, do the math, and it ends up actually being a slightly better deal than we thought. But it's one of these things that you have to know going into a deal. If you are operating off of not perfectly correct data, your entire underwrite could be skewed. We happen to be skewed favorably, it appears. On our end, but this caused like sincere delays and stress. We had to come in and re-underwrite the entire deal, uh, technically the day after we were expected to close. We had to come up with a game plan. What would it take if these compliance things don't get into place? Lawyers had to meet and discuss. It's really stressful even when you've done, in my case, 30 transactions. The actual underwriting and the due diligence period is Absolutely critical. And it was a good reminder for me, just like every deal, it is impossible to factor for everything. There will always be surprises, which is why you always start every single deal with a reserve. So now we've closed the property, we've onboarded, we're setting up our staffing model, we're transitioning all the leases, we're fixing the little structural problems in the way that the property is managed. It's actually a pretty well-managed property to start, and we're off to the races. One of the more complicated closes that we've done, and interestingly, uh, it is actually a seller finance transaction. We originally were going to go bank financed. It was taking longer than we wanted. The seller said, hey, why don't we go ahead and do financing on this if you guys can just push through the bank financing here this year as rates continue to drop? Uh, maybe you guys get a little lower interest rate, we can close this a little sooner. So, uh, we actually ended up closing this seller financed with a game plan to quickly refinance it into a conventional agency debt, which we are already working on. So it should be there by month 6 at the very latest. That is the deal, and that is how we took it out. That's how we chose the market. Uh, capital raise on this particular one was, was a 506(b), which means we were allowed to raise capital from more than 4 people, and only 2 people that we already had an existing relationship with. So one of the advantages of playing this game for a little while, I've worked with enough people long enough that I was able to call a bunch of past investors, friends in real estate already, people who already invest in Avaline, and we pretty easily put together the team to take this out. About at the end of the day on this particular deal, it ended up being about a $1.5 million raise, which compared to my raise in December was actually quite a bit smaller. Now, if we have any questions, of course, this is our YouTube Live, so I always share, uh, any questions that we can't answer on the channel on real estate, on business, on building your portfolio, on acquisition, on choosing your market, you name it, you can ask it here in the chat. And as the questions come in, I do see one popping up here from Instagram. It says, I have a question. So we'll see this appear here in a second. Uh, I wanna apologize for joining right now. Yes, my voice is almost out. So I will, uh, I'll keep today's relatively brief. All right. So the question here, my screen's a little bit far away. So I apologize for squinting as well. All right, so, okay, this is interesting. So I just had a deal. We've gone through due diligence. I had an investor on board. They just decided that their main— their main investors decided they're going to back out of the deal. It looks like they were in for about $650,000. They have 5 weeks to find a new investor. This could be a lot worse. 5 weeks that you can actually do a lot. You can do a lot in 5 weeks. So you had 1 person at $650,000. If they were funding your entire deal, you can still do this as a joint venture structure and just have, you know, 2 or 3 investors. So you're, you're talking about a mid-size investment for 2, 3, at most 4 other people. Joining in the deal. You have a lot of time on this. What I usually do— so I've had deals where we had to do the scramble. So you get to the— you're a week before close and someone backs out or something happens. Or one time, uh, the would-be investor, uh, went to prison for pretty much for life, uh, right before we got to close, which was unexpected to everyone, including their family. Um, A little bit scary when you're like, uh-oh. Well, on one hand, glad that happened before we closed our deal. That would've been horrible to be partnered with someone like that. On the other hand, happened 3 days before we closed the 26-unit. I had already landed in Texas to close this deal. So I flew in from Washington. This is before I moved. We're getting off the plane and we get the notice like, oh dude, while you guys were in the air, a whole bunch of stuff went down. Partner actually turns out has been embezzling funds from his clients and, uh, they just picked him up. He's looking at like 30 years of prison. Well, that's less than ideal. So the good news is I've done the scramble in 3 days and we still closed on time with no delay. We actually like signed all the paperwork, we're texting and finishing the negotiations with our investor, got the operating agreement amended, and then rapid fire. Boom, got it, uh, got the wire sent, wire hit same day, we made it happen. That is a hard project to do. 5 weeks, you got a lot of time. I would do a few things. Uh, one, don't, don't openly market, like market market the deal unless you've filed a 506(c). You're not actually allowed to solicit for capital, but you should be talking about what you're doing and your goals for the deal at meetups, in online groups. You should still be talking about the deal. I've sometimes hosted events where it's like, hey, I am, I'm working on this deal. This is in this market. So anyone who's interested in this market or investing, I appreciate your feedback. I'll go through my entire structure there. Very clearly not asking for capital or partnership, but I am giving a full review of this is the deal I'm working on. And in that presentation, there's nothing wrong with you saying like, hey, here's how I was structuring the capital returns. I had a partner back out. So I'm fixing that, but this is my last step in closing this deal. But this is what we're looking at. This is the returns. Love feedback on the structure. And if anyone has feedback on this market, love it. So you can still host events. You still can talk about your deal, uh, talk to people in your network, in your sphere of influence. Uh, but the easiest way to do this is like real estate meetups, real estate groups, friends of friends. The beautiful thing about real estate is there's no lack of people. Want to invest in real estate. And so if you have the deal, there's a lot of people— like, how many people have looked in your own market and been like, man, it's really hard to find a great deal? Someone comes in, you have some money, someone comes in and they have that deal and they can communicate to you why it is the deal to invest in. It's the easiest part of all of real estate. So fortunately, you still have time. I would not give up right now. You had it raised once, you can get it done again. I'm assuming you probably had like a 8 to 10 week close period. So you're sitting at like halfway through your close period. You, you're still, you're not even close to being in overtime. You should be good to go. All right. Any questions in from YouTube? I see all of none, which isn't a requirement. If you guys don't have questions, we don't have to. I see a wave, so I'll wave back. Other than that, my voice can use a rest. Uh, earlier this morning I sounded almost exactly like RFK, so I'm doing a lot better than I was. But I am going to be running our webinar series again tonight. So you guys can check that out. If you're brand new, multifamilystrategy.com/workshop. It's going to be an hour and a half. I'm going to try to just down tea and get my voice fixed here. But what we're going to be covering is we're going to cover creative finance. We're going to cover creative creativity on the equity side. So how do you like this deal? How do you partner where you can do bank financing even when you don't have the money to close? We're going to talk about different money models on how you can get paid to buy this real estate. In many cases, last year I got paid about a quarter million dollars to increase my income for life by about $25,000 a month. I did 4 transactions, and in those I got paid to buy the deals that continue to pay me every single month. I go through the exact model and how it works and why it works and exact deal examples in this presentation. So if you're interested, would love to invite you to that completely free. It's like 90 minutes. You're more than welcome. Other than that, you guys, thank you so much for joining today. I'll get my voice back hopefully in the next 30 minutes, and I'll see you guys on the next episode.