Thoughts and blogs on business, entrepreneurship, investing, and stuff like that.
Business & Entrepreneurship
Okay people, let’s get started on Flip #2!
After the success of the last real estate flip I did with my good friend JJ, I decided to tackle another project with him since I had some capital on the sidelines after our last multiunit apartment building sold in May.
You can see the before pictures of this project below.
Here are the details:
Purchase Price: $45,000
Rehab Budget: $15,000
Projected Sale Price: $90,000
Projected Time Frame: 4 months
Investment: $60,000 (Financing Entire Project)
Fixed Return: 22% (Regardless of Time)
Expected Annualized Return (Assuming 4 Months): 66%
Let’s see how it goes!
Here are the before photos:
Knocked out a real estate flip here in Cincinnati recently, and we closed today.
Return: 25% Fixed (Regardless of time)
Total Amount Returned: $37,500 ($7,500 Profit)
Projected Time Frame: 6 months
Actual Time Frame: 8 months
Annualized Rate of Return: 37.5%
Dow Jones Returns During the Same Period: 7.27%
I have always been more interested in the multiunit real estate side of things than I have for flipping homes. I love the cash flow, low risk (especially in affordable housing), and long term capital gain potential. As such, I never really considered doing a real estate flip, and in fact, if anything I’d be more inclined to buy, hold, and rent single family homes than renovate and sell. With that said, a good friend of mine, JJ, came to me with an opportunity to finance a flip for a fixed 25% return (regardless of time), and I gave it a shot.
JJ aspires to be a monster flipper, with a goal of doing 60 homes a year (if not more). The agreement we made was for a 25% flat return, with a projected project timeline of 6 months. Hard to turn away a 50% annualized return projection, despite the market risk (we are in an overheated market right now).
Things went smoothly, generally, though we had some contractor issues that delayed the project by about 8 weeks. As such, my annualized return shrank from the projected 50% to about 37.5%, which is still wonderful and I won’t complain about it.
We picked this home up for $70,000 and put $75,000 into it. It was sold 8 months later for $207,000. Not a bad deal for everyone involved.
Check out some photos of the project below.
Took a business trip to the lovely Newport this last week for my tiny house construction start-up, Modern Tiny Living, and it was an absolute blast. I’d never been to this part of the New England area before, and I honestly had no idea how spectacular it was. From the history, to the beer, to the “Newport Mansions“, it was a truly enjoyable trip.
Specifically, this trip was for the Newport Flower Show. The Newport Flower Show is a spectacular garden show with some of the most unbelievable flower arrangements I’d ever seen (granted, I am not a flower pro). This year’s theme included tiny “cottages”, which happened to include tiny homes. We were one of three builders invited, and the only one who wasn’t from the immediate region. It was quite an honor.
The event took place on the grounds of the Rosecliff Mansion. The Rosecliff, for you trivia lovers out there, was the location of the original Great Gatsby film. The oceanfront Rosecliff is truly unbelievable. Acres of oceanfront land, frescoes in the building, and every brick was shipped piece by piece from Scotland over one hundred years ago.
Anyway, beyond the show itself, which featured Martha Stewart as a guest (and our home was featured on her blog), Trent and I did get the chance to run around Newport, Rhode Island and explore the various nooks and crannies of this beautiful, quirky town.
Here’s my favorites list:
Best Coffee (and Donuts): Ma’s Donuts, Coffee, and More
Best Local Beer: Captain’s Daughter, Grey Sail Brewing
Best Lobster Roll: Midtown Oyster Bar
Best Casual Lobster Roll: Easton’s Snack Bar
Best Live Music: Parlor Bar & Kitchen
Best Prohibition Era Bar: Wharf Pub (Go the the small bar)
Here are some shots from the trip:
Hadn’t had a chance to update on this most recent acquisition, but our team just closed on this 33-unit apartment community in Cincinnati. We’ve decided to name it Briarwood Apartment Homes, and we’re already in the process of meeting the residents, replacing the roof, and windows. Already got the new sign up to welcome the residents home!
We picked up this property for $690,000 (~ $21,000/unit), and expect it to be worth at least $1.1 million ($33,000+/unit) by the time we’ve got it completed updated and streamlined (should take about 12 months). There is a ton of upside in this property, mostly due to deferred maintenance and – frankly – poor management. The residents haven’t been particularly thrilled with how their community has been running, and we can’t wait to get in there and really shine it up.
Besides the exterior landscaping, power washing, etc., we’ll also start updating the units that are vacant. There is good and bad news here – this property is mostly occupied. So we’ll do what we can to the exterior and rehab the few vacant units, and then update the other units as there is resident turnover (or, more frequently, the existing residents move into the newer, updated units that we’re taking care of now). We’ll obviously do a rent raise on the newer, updated units, but it won’t be anything that will typically break the bank of our existing residents. More often than not, the residents are happy to pay an extra $50-100/month to move into a freshly rehabbed, updated apartment.
Briarwood is going to be a shining beacon of real estate glory in this community, and I can’t wait to show you guys some update pictures as we build it out.
Very excited to announce that today we closed on Hillcrest & Hillview, a 95-unit apartment community in Cincinnati, Ohio. Not only that, but it just so happens we knocked it out the same day we sold Four Lanterns, our 34-unit community. Sell one community in the morning, buy another in the afternoon – it was a crazy day.
We were able to pick up Hillcrest & Hillview, a 95-unit project in total, for about $2.3 million. We conservatively estimate we’ll be able to get these properties beautified and improved enough to command a $3.2 million price tag in 2-3 years, though we are pushing for $4MM+.
I’ve had a few people ask me how it is so easy to do multiunit, value-add deals like these. Easy answer: it’s not. It has taken my partners years to develop the relationships in the local market to get access to properties like this. It has taken me years to build the foundation I needed to be able to invest into projects like this. ll good things take time, people.
This also ignores the fact that these properties require a ton of work. We are buying distressed properties. These communities have often been abused – or at the very least, neglected – by their owners. Deferred maintenance, trouble tenants, and way-below-market rents are very common in these deals. It takes a team that is willing to get their hands dirty to turn these types of properties around. Fortunately, I’ve been blessed to be partners with great people. People who get just as much value from improving our city (Cincinnati) as they do earning spectacular profits.
One of the great lessons I’ve learned in business the past 15 years is the power of your partners. Choose wisely. I’ve had a lot of bad business partners – dishonest, selfish, and lazy people. I’m glad to have finally found the right ones. Don’t worry, you will, too.
Four Lanterns, our 34-Unit Apartment Community in Westwood (Cincinnati), is sold!
We purchased Four Lanterns 18 months ago for $485,000, and we’re excited to announce we just sold the property to a group of excellent real estate investors for $1,125,000.
This was a spectacular project all around – for our team, for our investors, and for the residents. We turned Four Lanterns into one of its market’s leading apartment communities, and not only that, we managed to return a 60% ROI for our investors in only 18 months. That’s the equivalent of turning a $100,000 investment into $160,000 in only a year and a half – that’s market-beating stuff right there! I’m truly grateful to be involved with such a wonderful team of people who are truly committed to excellence, and will tirelessly work to create a beautiful, safe community for our residents.
We are currently shopping for our next property, and I’ll definitely keep this blog updated on what we are able to find.
Check out Robbie’s other recent real estate projects:
HGTV/DIY’s film crew followed us around while we built this awesome tiny home, The Grand, for a customer a few months back, and our episode is finally about to air – should be a lot of fun!
If you have any interest in watching, tune in here:
9 PM EST
Here are some photos of the show’s featured Modern Tiny Living build, The Grand, for your pre-show enjoyment.
One of the biggest buzzwords of the last 12 months has, without a doubt, been cryptocurrency (and Bitcoin, Ethereum, NEO, and all of the other coins out there). I’ve gotten dozens of questions from dozens of people, and broke it down to the three main questions:
1. Do I invest into cryptocurrency?
2. Should they invest into cryptocurrency?
3. If so, how much should they invest into cryptocurrency?
These answers are pretty easy (though I am definitely nowhere near expert-level in this industry).
Do I invest into cryptocurrency?
1. Yes, I do. I believe the technology will change the world. I don’t know exactly how it’s going to look, how it’s going to shake out, or who the market leaders will be in 10 years, but the technology itself is inevitable, and I am willing to take well-researched risks to play around in the space. I’m not willing to bet the rent on it (or on anything, for that matter), but I am willing to take reasonable risk for what could be a robust upside in a technology that will certainly disrupt dozens of industries, and possibly the entire world economy.
Should they invest into cryptocurrency?
2. What YOU should do is entirely dependent on your financial plan, risk tolerance, and willingness to research. You shouldn’t invest into things you don’t understand, and you absolutely should not invest into things because “everyone else is doing it”, because they’re not. If you’re not willing to study and learn about something before you invest into it yourself, you probably need someone to manage your finances for you. As an entirely new ecosystem, cryptocurrency is extremely volatile, and will experience bull (good) and bear (bad) runs that could, hypothetically, have you down 50% or more on your investment for a time period (or, of course, up 1000%). If that scares you, don’t invest into it. If you have tons of financial flexibility and just want to throw your money at something blindly, then sure, go for it.
If so, how much should they invest into cryptocurrency?
3. As with all investing, don’t invest money you can’t afford to lose, especially into something that is still speculative. Just because cryptocurrency, and more importantly, the technology behind cryptocurrency, isn’t going anywhere, it doesn’t mean that what is leading the market today will lead the market in the future. As with anything, start small if you’re really interested, and don’t invest anything until you take the time to understand the philosophy behind it.
There you go. Happy investing!
Obligatory Disclaimer: I am not a financial adviser, and this is only my opinion.
With all the ridiculous drama recently, I just had to write this post. I don’t think it’s controversial, but you may think so. It’s intention is not to offend, but to open.
Please be careful about how up in arms and opinionated you get about stories you hear from the media, no matter what twist (and there is one) your specific network or source of choice is making on a subject. Don’t ever forget the media has a motive, and the motive is definitely not to provide you with accurate, truthful, unbiased news coverage. The motive is to sell, to cripple, to create fear, to create hate, and to get you to submit – this includes getting you to purchase something of choice, or to elect someone of choice (conservative or liberal). And of course, to get you to keep watching.
Just trust me when I say this: no matter what “side” you’re on with the Middle East, Ferguson, the government, the economy, and politics, if CNN/FOX/NPR is your main way of getting information, you really have no idea what’s exactly happening. You are getting a morphed version (or sometimes, a completely manufactured one).
I’m not saying I know exactly what’s happening – I’m not there. That’s why I don’t start fights or take sides too easily. But please, just think bigger than what you think you know, and especially what the media tells you to think. And don’t respond with hate, or you’re just a part of the problem and you’re falling into the very trap they want you to fall into.
Even right now, you’re probably reading this post from the perspective of “I am Conservative”, “I am Liberal”, “I am Black”, “I am White”, and by doing that you are still falling into the trap, the trap of labeling and generalizing – because they are this, they must be this . Because they are “liberal”, they must “hate rich people and love minorities”. Because they are “white”, they must “be conservative and hate black people”. Because they are “muslim”, they probably “kill innocent people for Allah”. It’s all bullshit. You can generalize all day, but you’ll be wrong 90+% of the time, and if you make up your mind on races, religions, and people on generalizations (and what the media tells you), you are going to have a lot of hate in your heart, and that’s no way to live. Just because one group gravitates towards specific tendencies or habits certainly, CERTAINLY doesn’t warrant hate for the group as a whole.
All I know is that love works, and though it may lose battles, it never loses wars.