Are you a FLIPPER who wants to become a real estate HOLDER? Can you put off the “good life” for years of hard work building cash flow? Can you wait for the reward?
For a nine-page partnership business plan, CLICK HERE. A summary follows:
Bill Syrios started investing in real estate in 1980. He began Stewardship Properties in 1989 in Eugene, OR and has accumulated 500 houses and apt. units, mostly campus rentals around the Univ. of Oregon. He is also a partner in multi-family apt. buildings in Dallas. During 2007-2010, after training 16 interns, Bill led a team that flipped 200 foreclosures and short sales.
Bill partnered with his sons, Andrew and Phillip, to form a branch of Stewardship in Kansas City, Missouri in January 2011 with a buy and hold strategy. Bill has been a full-time real estate investor for 23 years, Andrew for nine and Phillip for three years. The company owns 100+ houses and 50+ units in smaller mult-family: duplexes and apt. buildings and runs its own management company, 333-RENT.
Partnering with Us
We are now looking to form partnerships with experienced real estate investors who want to take their business to the next level with a buy/hold investment strategy.
We are looking for people with rock-solid integrity who are financially stable with modest expenses, very hard-working and have a few years of experience as real estate investors. Ideally, such a person has flipped at least ten properties and has rentals but is looking to build a very large portfolio of properties to keep over the long-term as a vehicle of wealth creation.
RIGHT PLACE: We target locations with the following criteria:
High Rent-to-Cost Ratio: areas of relatively high rents yet comparably modest purchase prices. The map shows an example of three targeted rent-to-cost submarkets–lower (cash flow plays), lower-middle (value plays) and middle (equity plays)–in the KC metro.
Economic Stability: relatively low unemployment, steady population growth and a good outlook for the future.
Sizable Population Base: metro areas of (ideally) at least 150,000 with many viable rent-to-cost submarkets.
Kansas City is a Test Case and Model for Others
The goal is to acquire, rehab and rent properties at least 20% under market value with a minimum of a 1% rent-to-cost ratio in working-class areas that are not too difficult to manage. (Rent-to-cost ratio equals monthly rent divided by the purchase price so, a 100,000 house would rent for $1,000 a month.) This rent-to-cost criteria means that only certain areas of the country will work well as target markets. Equity build-up, appreciation, and tax benefits are “icing on the cake” but positive cash flow is priority number one.
Short-Term Financing on the Front-End
Stewardship purchases properties with private money at 9% (interest-only, no points) on the front-end, before the properties are rented and rehabbed. The company does not use hard money lenders, but instead individuals with reasonable means to lend. Given Stewardship’s longevity of 33 years in real estate and its perfect record of making its loan payments, the company has a large group of enthusiastic private lenders for front-end financing.
Long-Term Financing on the Back-End
After acquisition, rehab and rent up, the company seeks back-end financing by “packaging” 15-30 properties for 1-2,000,000 loans (30 year amortization, approx. 5 1/2%, 1 point).
This short-term/long-term financing strategy allows for properties to be purchased and rehabbed at 100% LTV with relatively inexpensive private money. Then we refinance private lender funds out with 100% LTV (or nearly 100%) conventional loans to lower our long-term cost of funds and raise ROI substantially. This continual cycle of short-term/long-term financing will enable Stewardship to execute the same buy and hold strategy it has done in Kansas City in other target markets around the country.
The Three KEY INGREDIENTS to make this work
1) PURCHASE GREAT DEALS that are 25-30% under market.
2) Keep REHAB in check so renovated properties are still 25-30% under market.
3) Get and keep a solid handle on PROPERTY MANAGEMENT to ensure profitability.
If these three systems are in place and working we will help to:
1) Fully finance properties on the front-end with 9% interest only, no points loans.
2) Provide training support as needed including accounting and property management.
3) Work to refinance properties after a period of time at 5-6% interest, 30 year amortization.
What a would-be partner must understand is that there will likely be very little cash flow for the first few years so they will need to either have very low expenses or a means to funds outside the partnership or both until sufficient cash flow can be generated from the partnership.
For our nine-page partnership business plan, CLICK HERE