Episode Transcript
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Speaker 1 (00:07):
Welcome to Northwest
Arkansas Investing Podcast, your
go-to source for real estateinvesting in Northwest Arkansas.
Speaker 2 (00:13):
With your seasoned
investor just starting out.
We bring you expert insights,market trends and practical
strategies to help you buildwealth through real estate.
Speaker 3 (00:20):
From buying and
selling to property management
and long-term investmentplanning.
We cover it all so you can makesmart, informed decision in
this fast-growing market.
Let's dive in.
Welcome back to NorthwestArkansas Investing Podcast.
I'm here with Mr Brian Wagersand Mr Zach Stanley and we're
going to get into real quickly.
Another deep dive here.
Deal deep dive with Zach andkind of talk through a little
(00:44):
bit about his first couple dealsor some deals that he really
loves that he's done, and talkabout how I got him, talk about
the financing that he puttogether on it, maybe the value
add, yeah, the stabilization,and then, even if you've exited
from it without to hear kind ofwhat that looks like, but yeah,
give us a view there.
Speaker 1 (01:01):
So my, my first
couple properties were all five
percent down move in, live therefor a year, move out.
And so tori, my wife, has beena trooper.
She's great, I'm finally built,I'm gc'ing our dream house
right now.
So I'm finally giving her thatand we're settling down and
probably kids shortly on thehorizon after that.
But our she's, we probablymoved like six or seven times
(01:24):
and it's just into the next one,next one, next one.
Now, as we progress and incomecame up, we started doing 20
down here, 20 down there, likeso we don't have to move into
these things.
But that was our whole gameplan and where we kind of got
our, our 10.
Um, I want to dive into one ofthem that I feel maybe other
people can learn from, as far aslike rental analysis, why I
(01:46):
chose this and how I helped like15 plus other of my clients
like buy in here and cash flow.
And so this was actually it wasa DR Horton build in
Fayetteville, so a place calledthe element and it's right off
of boils, in between, right offof yeah, it's right between
boils and ruppel road, likeright there.
(02:07):
And I saw this area and I'mlike you know, that's like the I
one, I had to know a coupledifferent things, uh, one of
those being that the universitywas having a housing crisis and
will continue to have a housingcrisis.
There's there's not a lot moreland, and the university doesn't
seem to be doing much aboutlike building multi-family near
(02:29):
there.
Now, there is a lot ofmulti-family near there, but
these freshmen now can move offcampus, uh, and so freshmen,
sophomores, juniors, seniors,post-grad they're all they
probably get.
They get tired of like theon-campus stuff after a certain
point of time the drinking, thepartying, they get tired, they
want their own home and theywant it with some roommates and
(02:49):
they split it, you know.
And so we're seeing anywherefrom $750 to $1,000 per room,
even off campus.
And so what I saw was a radiuswithin about 10 minutes from the
university.
People are paying these prices,um, and so, with my wife, I said
, hey, I like this new buildthat dr horton's doing she was
working for them at the time, sowe got a pretty good deal on it
(03:11):
as good a deal as you can getfor a new construction uh,
fridge, washer, dryer, blinds,gutters, and like a reduction on
price.
Um, and so we got this home for3313,000, which was on the more
expensive end of what we wouldnormally buy at that time.
But it appraised Now this isprobably a BS appraisal, but it
(03:35):
appraised at $405,000 from theget-go.
So I don't think it couldreally go for $405.
I did appraise for 405 when webought it and so I was like oh,
that's sick.
But I knew that my mortgagepayment on it with everything
was like it's like 18 or 1900,which is like okay, rent caps in
(03:55):
northwest Arkansas you'relooking at like that's around
where you can get on rent therenear ceiling.
But I knew that I'm not rentingto a family, I'm renting to a
college student and with thatyou have to know your leasing
cycles.
And so I knew when I had to buyit and when I had to exit, and
so my buying and exiting, allthis was preplanned and so I
(04:16):
bought it, knowing that a yearI'm going to get out of it kind
of early, late winter time togive myself enough runway for
these college students to rentit.
And so I marketed it and mymortgage was like 1850 on it and
marketed it for 2,500 and gotit immediately and so that went.
(04:36):
You know that's a $700 spread ona new construction built North
Arkansas that typically no one,no investors, were looking at
this.
But I kind of did it myself atthe same time while I was
advising people, and so I sawthis niche in the market where I
was like there's no doubt I hadto have all these people trust
me.
I was like trust me, it's there, yes me, it's there.
(04:57):
The data's not there, but yougot to trust me, is this one?
Speaker 3 (04:59):
that you put 15, 20,
25 uh, well, I said five.
Speaker 1 (05:05):
I said five percent.
Oh, I'm sorry, I got tired ofum.
I said five percent, but thatwas a good point because I got
tired of secondary marketlending.
This was my first run-in withgetting tired of secondary
market lending.
They just the people that I wasgoing through is like dhi,
mortgage, which they're um, lovethem, but they're very picky,
(05:27):
yeah, um.
And for investors, they want tosee everything and they're like
oh yeah, this much debt andwhere's your rentals?
And what, where did you live atthis place for this long?
And this.
And I literally sent them apicture of me in a Halloween
costume at a house because theywanted me to prove that I lived
there.
And I was like, there you go,there's me in a hot dog outfit,
like there you go.
(05:48):
So I ended up going with Bake aFayetteville.
On that one, I think I was ableto do like they had some special
going on.
They had buckets of moneythroughout the year where they'd
be like, hey, we're doingprimary homes right now and it's
10% down for a six.5% maybeinterest with 10% down.
I was like, sweet, let's dothat.
So I put like $31,000, $32,000down with a 6 point something
(06:14):
percent rate and what I had toget my investors I have a pool
of them and I was like, hey guys, if you want this, there's $700
spread here and there's notthat anywhere else.
And so I'm telling you you canget this.
And so I had like 15 to 16people trust me, and my wife and
(06:34):
I darn near sold the wholeneighborhood there, and every
home is rented out every singleboth years now that it's been
there for the $25,000 to $3,000a month.
And now they's like a nowthey're building more phases on,
and so I'm kind of projecting.
I can almost like projectfuture, future income now with
like, oh, I can sell this manyof this, many Cause it just
(06:55):
makes sense over and over andover again.
So it's something that I wastelling my investors to do and I
was like, look, if it doesn'twork, I bought one there.
So like I'm gonna be sittingunder with you, um, but I'm
telling you it's gonna work.
Yeah, so I had.
I had a lot of hardconversations, a lot of
stressful conversations withpeople.
Uh, they're like well, there'sno data.
(07:16):
I'm like, well, I mean, there'sno data on other things too.
That made a lot of sense.
So you're gonna have to trustme.
Yeah, so this was just a nichelittle area that um now gets
great college students love itover there.
Yeah, some people go.
Do you enjoy renting to collegestudents?
I don't care, I don't care who Irent to.
I mean, I I do in.
In some aspect I'm a lot morelaid back, I guess as a whole
(07:41):
just because I'm like I got asecurity deposit from these
college students.
They're each one of theirparents signed on them, signed
on there.
I met them in person.
I know that.
You know I can tell prettyquick if they're gonna like be
playing beer pong in the houseor if they're respectful kids,
and so I have these parentssignatures on there.
I have their signatures.
I have a three thousand dollardeposit.
(08:02):
So, like I don't't know, punch20 holes in the wall and all the
carpet's going to be bad.
Okay, that's probably around$3,000.
So, like I'm not worried aboutit, I want someone paying that
rent and I can make it rightafter they move out.
Speaker 3 (08:15):
Is this a nine-month
leases typically, or are they 12
months?
They're 12.
Speaker 1 (08:19):
So these college
students are paying for August
to August.
That's all usually and I need,as investors we need those
12-month leases so that the bankcan call I've had college
students come up.
Can you do six months?
Can you do one semester?
I'm like really can't, becauseif I do six months then I'm
going to be kind of screwed forthe rest of the time Because in
(08:40):
six months there's going to beno college students looking to
rent this.
So you have to have that 12month lease for the bank to look
at that $2,500 and be able togive me a credit towards my debt
to income ratio on that andprovide them with that.
So I do look for 12 month leasein the market that others
aren't seeing.
Speaker 3 (08:58):
Number one I mean
that's readily available data
for us that there's a housingcrisis and vacancy is super low
in Fayetteville, but on top ofthat, just yeah, I mean there's
not any data over there that'sreadily available, but you're
(09:19):
seeing the gap and you're takingthe chance on it and I think
that's super important.
There's just so many areas innorthwest Arkansas still and
again, going back to you know wecan make money with.
You can make it's.
There's so many ways to makemoney in real estate that
there's creativity to be hadanywhere.
You just kind of have to see itand have a vision for it.
Speaker 1 (09:40):
What I would
encourage someone listening is
to ask, to ask your investorfriendly agent is to ask your
investor-friendly agent whetherthat's Brandon or I or whoever
where they're seeing the micromarkets in this macro market,
which is where you know, rightnow in this time of year, we're
kind of inching too close tolike the end of leasing season
(10:01):
for the university, so it's gonefrom me putting auto searches
for people for Fayetteville topushing them.
Hey, right now we're looking atBella Vista and around
Centerton because Centerton isclose to the Walmart campus,
South Bella Vista.
They have about a hundredshort-term rental permits left
and so, even if they'relong-term rentals, right now I'm
encouraging my long-term peopleto get this short-term rental
(10:24):
permit just to have it, becausetheir cap is 600.
They're like I believe theyjust hit 500, um, and so we
those things are like almostlike willie wonka's golden
tickets at this point yeah andso I'm saying south to mid-villa
vista, easy access tobentonville, like by.
I'm having people buy in bellvista right now, yep, um, the
(10:45):
future of that?
Now the rent data for long-termrents isn't super there.
But I'm having people have totrust me again with.
I'm seeing this.
I've been here my whole life.
They're doing a bunch of stuffin Bentonville and South Bella
Vista.
We need to buy there, you haveto buy there, or get you
something in far East Centerton,something close enough where
(11:05):
they can drive in.
I think that's going toappreciate well.
I'm even seeing like I thinkthe high fill market will
appreciate pretty well in thecoming years.
So yeah, I think that's that'sbig in the coming years.
Speaker 2 (11:16):
Yeah, yeah, you go
back and listen to our Airbnb
versus long term episode.
That was.
We go into that exactly.
And then we'll actually begoing into the current state of
northwest arkansas market on ournext episode and diving exactly
into some of those sub markets,kind of what we're seeing
across nwa, across some of thesesub markets.
So, yeah, I think, uh, that's a, that's a cool first deal, you
(11:40):
know a cool deal.
Deep dive, you know, havingthat foresight again, niching,
like everyone, you kind of picka niche and you had, okay, we're
going to pick the universityarea.
We're going to look at it alittle differently by looking at
renting out by the room, notjust by these others.
We have a new construction.
It's going to have less, uh,headaches, you know, you got
that.
You have the students.
(12:02):
Yes, there are students andthey come with headaches, but
you can underwrite that.
You make them pay deposits, youmake their parents sign on it.
You know it's a whole different.
You can protect yourself, yeah,so a lot of good takeaways for,
especially for our NWAinvestors.
Yeah.
Speaker 3 (12:18):
Yep, and then, and
just hitting the last point too,
that I think is important, thatdata is so important when
you're kind of looking atpotential investments for you
but at the same time there's notalways, like you're saying,
there's not always data for forwhat you know, the creativity
that you can do and and uh, sounderstanding kind of the micro
environment in the micro, um,you know, economy is super
(12:42):
important.
Even thinking about my firstdeal there, still to this day
there's not a rental that's gonefor over 1900 a month and we're
at 2500 and get it leased up ina week every time, yeah, and so
there's not.
Again, there's not always datato prove, uh, prove it.
And so understanding the market, understanding vacancy rates
and, uh, who's going to berenting the properties and at
(13:04):
what timing they're going to berenting those properties, is
unbelievably important.
Speaker 1 (13:08):
That first data point
had to come from somewhere, so
man they're coming from thin air, like someone had to believe in
it, so we were just the firstdata points there.
So that's awesome, quick littledeep dive there.
Speaker 3 (13:19):
Yep, well, thanks.
Thanks for sharing that, zach,and we'll do more of these in
the future and talk throughother deals that we've done.
Brian had some great ones.
Two episodes ago I had someinteresting ones and Zach's had
an awesome one here.
All three very different andall three work, and so I think
finding that niche and learn alittle bit about what we've done
is super helpful.
Thanks for listening, and we'regoing to have our guest here
(13:42):
coming soon and then talkthrough some things happening in
the market, and so tune intothose and we'll see you next
time.
All right, see you next week.
Speaker 1 (13:50):
See ya Again.
Thank you guys for tuning in.
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