RG 106 – 10 Steps to Closing on 192 Units with Andrew Campbell LIVE!
Nuts and Bolts
Andrew Campbell and Reed Goossens are business partners after they met at a conference over a year ago. They started talking and emailing after the conference for advice etc, and then realized that they could start a partnership rather than just asking for advice, they could share the workload. Andrew is based in Texas and so he’s the boots on the ground for their deals and Reed does the numbers. They have just closed on a deal of 192 units where they raised over $6million. The property is in San Antonio, Texas about an hour away from Andrew’s home, it was a well located deal and based in a thriving area. The property had not been updated in 10 years so had good opportunities for upgrading, but still keeping as a class B property.
Finding the deal wasn’t easy, they had to go through 50 properties to find it. Of that 50 they underwrote on 30 and put in offers on 5. They actually lost the deal at first but then 3 weeks later the broker got in touch and offered the same terms. Andrew says that sometimes you need a bit of luck and discipline keeping to the number you offered initially. When they were raising the money for the deal they realized that having something this large to raise for legitimacies you in the community and the broker will remember you in the future. People around Andrew and Reed becamse more interested because they had an opportunity for them to make some money and so their networks exploded in size which they used as an opportunity to grow their networks for future deals.
Initially they had 2 equity partners to help raise the whole $6million, one group signed up early and committed to $4million. However a few months down the line they hadn’t raised any money and came back with extra terms. Andrew and Reed stuck to their initial terms and had to part ways with this group. Andrew recommends that in times like these you need to be a real estate investing addict to get through the tough times. Once they had raised the $6million they used this money to improve the property, rather than going to the bank and getting leverage to pay for the refurb work. This is because higher leverage means higher risk and the bank puts restrictions on the money that it has to be used within a certain time frame. By raising money form equity partners they can hold onto the cash if something happens which pauses the project, like a market crash.
Reed and Andrew’s next plan is to grow capacity to 1000 units. By aiming for 1000 units, if they fail and only get 500 then that’s still amazing because they’re still pushing themselves. They’re currently not looking at other markets because Dallas, San Antonio and Austin are doing well.