In this blog article you get a real look into the founder and CEO of Residential Investment Advisors. What you will see when you "Draw back the curtain" is a real genuine person who's goal is to use his years of experience to help investors secure their future in multi-family real estate market. This desire is exactly why the word "Advisors" is in our name. Enjoy!
My first deal was a 2 unit duplex in Madison, TN that I bought from an owner that was getting foreclosed on.
The plan was to buy and hold the property with some out of state investors.
I was actually just trying to wholesale houses at the time, and so I dug this up as a wholesale deal and tried to sell it with a fee to an out of state investor. Instead of him just buying it and being a landlord from 2,000 miles away, he offered me ownership for managing the property. So, for about 7 years I managed the property, but we ended up selling it after that.
So being in Nashville, we were specifically targeting Nashville properties since we live here, but we were mostly looking for cash flow and appreciation. We were always looking for deals with great cashflow first. For example, that first duplex was bought at a huge discount because the gentleman we bought it from was going into foreclosure, so there was money left on the table. So we walked right into equity, but the main reason for that deal was the cashflow it provided. Overall, we aren’t looking in any specific area, we are just trying to find that deal with the cash flow and yield that we’re looking for.
We definitely still ran our numbers and did our due diligence even though we already knew the deal made financial sense. However, even to this day, I’ll put something under contract and I start second guessing myself; “Is this really a good deal?” “Am I missing something?” “Am I looking at everything right?” So having an extra set of eyes is great. Which is why I think partnerships can be very beneficial.
Nothing. I was really out there just trying to find value. When you’re wholesaling houses, you’re just trying to find that dollar bill for 60 cents. So that’s how I look at any piece of real estate. Is there still meat on the bone? Is there still money left on the table? For example, that first deal, we paid $90,000 for it. I could have added a $10,000 fee and sold it for $100,000 while still leaving meat on the bone for the buyer. You really have to understand the value of things and what it costs to improve it to maximize the value.
Not really. I did learn a lot from that little duplex though. The great thing about starting small is that the hard lessons that have to be learned are scaled down. So if you make any mistakes you can correct them with little money. If you go big with your first one, the cost of mistakes are amplified because of the size of the property. Overall, I learned the in’s and out’s of the game through that little duplex. I thought I’d have to be there constantly checking on the property and tenants, however towards the end of my time with this property I may have only gone out there once in the last 3 years.
I didn’t really set out to be a landlord. I truly just wanted to flip houses; I loved the fast big money from flipping that you don’t get with the long-term buy and hold strategy. But I started to realize that, though we were making some decent money on the front end while flipping, I can hold the property for a little, refinance and pull my capital out while holding on to an appreciating asset that I now have none of my own money in. Overall, this was about the time all this started to click for me and I started to buy and hold rather than flipping.