AMA
We are a very small but growing real estate shop focused on acquiring and developing Multifamily, Outdoor Hospitality and Industrial assets in the southeastern US.
Plenty of way smarter guys on WSO here is what we have accomplished so far. We started part time while keeping our day jobs in January 2017.
As of 3/8/23:
- Outdoor Hospitality: 7 acquisitions, total transaction value $26M
- Multifamily: 9 acquisitions totaling 675 units, 2 ground-up development projects totaling 126 units
- Industrial: Two projects under construction totaling 50K SF, 5 acquisitions totaling 160K SF
What was y'all's prior experience before starting out on your own? Or do you plan to, and if so when? From what I understand this is something you guys currently do on the side.
Outdoor hospitality - is this just Airbnbs/Glamping? Assuming these are very feast or famine. What type of returns do you have on these pro forma? How did you source these deals, and what type of debt terms were you getting? Did you have to operate for a whole year to produce a PnL (assuming these are some type of outdoorsy Airbnb) to get cash-out refinance proceeds from a lender?
On the multifamily side, if you have 9 acquisitions totaling 675 units I'm putting that at ~75 units/property. The economics to have a dedicated property manager per site don't really begin to make sense until you reach +130 units for a property. Do you have one dedicated team that covers all 9 properties? How does their management fee work (3% of EGI)?
Are you guys still currently doing this part time in addition to your day jobs? How many guys in your partnership?
Curious to hear your responses - I plan to go out on my own one day as well. Cheers
What was y'all's prior experience before starting out on your own? Or do you plan to, and if so when? From what I understand this is something you guys currently do on the side. I was in the construction business working as a project manager on heavy industrial projects. My partner comes from the real estate private equity world.
Outdoor hospitality - is this just Airbnbs/Glamping? Mostly RV Parks with some glamping and marina. Assuming these are very feast or famine. What type of returns do you have on these pro forma? Wide range here but we pegged the target IRR in the 16-18% range over 5-years. How did you source these deals, and what type of debt terms were you getting? Not many brokers who specialize in this product but we made friends with all of them. We only found 1 deal off market and the rest were through a broker. Debt terms were solid via Unity bank. We havent closed on anything lately but our last deal we secured 5 year fixed, 20-year amort, 5.10% with 12mo IO. Did you have to operate for a whole year to produce a PnL (assuming these are some type of outdoorsy Airbnb) to get cash-out refinance proceeds from a lender? I assume that to be the case but we have not crossed that bridge yet. We sold 3/7 parks within 14 months of ownership to a larger group. We are going to ride out this 5% rate until we have to make a move on the remaining 4 parks.
On the multifamily side, if you have 9 acquisitions totaling 675 units I'm putting that at ~75 units/property. The economics to have a dedicated property manager per site don't really begin to make sense until you reach +130 units for a property. Great question. Our unit count on multifamily acquisitions took place in this order -- 18 units, 26 units, 22 units, 80 units, 55 units, 110 units, 96 units, 128 units, 140 units. Do you have one dedicated team that covers all 9 properties? We self manage our multifamily portfolio (for the most part). One of our properties is about 4 hours from where I live so we have some help managing that property but everything else is close by. How does their management fee work (3% of EGI)? That is about right.. some are higher than others but we average around 5%. In my opinion it is hard to create a profit center via self management but it does allow us to underwrite deals quicker and with more accuracy.
Are you guys still currently doing this part time in addition to your day jobs? We are doing it full time. How many guys in your partnership? Just two partners.. We hired an asset management guy last summer though.