Why My 44-Unit 55+ Community Is My Best Texas Deal

Original automatic captions. Names, numbers, and punctuation may contain transcription errors.

0:00 We're back in Steamville. Today I'm at
0:01 my 44 unit building. I'm going to be
0:03 sharing a strategy that is massively
0:05 overlooked by real estate investors all
0:06 over the country. This is my highest
0:08 performing property. And on today's
0:09 episode, I'm going to show [music] you
0:10 exactly why. Welcome to Multif Family
0:12 Strategy. If you're new to the channel,
0:14 I'm Christian Osgood, host of Multi
0:15 Family Strategy. I bought hundreds of
0:16 units all over Washington State, where
0:18 I'm originally from, and Texas, where I
0:19 live now. The building behind me is the
0:21 office for the 44 unit complex. Now, I'm
0:24 out here today without my usual camera
0:26 crew. So, welcome to the behind
0:27 thescenes selfie mode of multif family
0:30 strategy. Super excited to share this
0:31 with you, but the strategy that I'm
0:33 going over today is 55 plus and why 55
0:36 plus communities are such an advantage.
0:37 Now, for context, 55 plus does not mean
0:40 assisted living, which this is not, but
0:42 it does mean that you need to have the
0:43 design, the ADA compliance, and the
0:45 amenities to facilitate it. Why is this
0:48 such a great asset? One, almost every
0:50 market I've ever seen, especially in the
0:51 state of Texas, there's not enough
0:53 senior living. Two, the earliest boomers
0:57 are just now turning 80 either this year
0:59 or next year. What does that mean? That
1:01 means that we have a huge influx of
1:04 senior citizens that are moving into
1:06 properties just like this. Now, it's 55
1:08 plus, but a majority of our tenants here
1:10 are going to be in their 70s or early
1:12 80s. We stay at almost 100% occupancy at
1:15 all times. We're actually turning one
1:16 unit, so I'll walk you through the only
1:18 unit that is vacant right here. Uh, we
1:20 haven't cleaned it yet, so keep that in
1:21 mind, but I'll still show you what the
1:22 interiors look like.
1:23 [music]
1:23 But this is really clean real estate,
1:26 excellently landscaped, nice brick
1:28 buildings, excellent location in an
1:30 amazing booming market that really needs
1:32 senior housing. For that reason, no
1:34 matter what happens, we stay fully
1:37 occupied all year round. Best part, the
1:41 price that we got this for, there's so
1:42 few buyers who know about 55 plus
1:45 communities. A lot of people just
1:47 overlook it. They're like, "Ah, it's a
1:48 restriction. I don't know. I want
1:50 something more conventional." You
1:51 basically get the same building but with
1:54 better tenants. Let me take you inside
1:55 and I'll explain.
1:57 [music]
2:00 All right. So, why are the tenants
2:02 actually better at a 55 plus community?
2:05 Well, first of all, they've been tenants
2:07 a lot longer than a lot of your other
2:08 tenants. They've gone through a lot of
2:10 the hardships. They've learned how to
2:11 work a laundry machine correctly. They
2:13 pay their rent on time. They have a long
2:15 rental history. But essentially, they've
2:18 been around a little bit longer. you
2:20 just get rid of a lot of the new renter
2:22 mistakes. They know how to use
2:24 appliances. They know how to do basic
2:26 repairs. For the most part, you almost
2:29 never have delinquencies or non-pays in
2:31 a 55 up community. Also, generally
2:34 speaking, senior citizens are going to
2:35 fall into two categories. Either they
2:38 saved up through their career, they
2:39 bought a house, they may have even paid
2:40 off that house, but a lot of that
2:43 generation owns a whole lot of real
2:45 estate. They have their house. They
2:46 raised their family. They're now retired
2:48 or they've been lifelong renters. If you
2:52 are renting and you're in your 60s7s
2:54 80s, most likely you're used to being a
2:56 renter. You're okay with being a renter
2:58 and you're going to find a nice quiet
2:59 place that you want [music] to be at,
3:00 which is the next way to succeed in
3:02 senior housing. Right now, we're inside
3:04 the central clubhouse. [music]
3:06 You have to have amenities. Now, when we
3:08 started this project, a lot of the prior
3:10 amenities have been shut down. The old
3:11 owner did not run this the way that I
3:13 would run these. So, we reinstituted
3:15 things like bingo nights, Bible studies,
3:17 Thanksgiving dinner in the main room.
3:19 It's the little things that go a long
3:20 way. We provide basic amenities such as
3:24 coffee machines. We do stock food in
3:26 this fridge and there's a fridge over in
3:27 the other kitchen over there. There's
3:29 also a little curig bar. TV is nothing
3:31 super fancy. And I don't want to
3:33 advertise this as like the Ritz. It's
3:36 not. It's entry- level housing, but this
3:38 is when you do entry- level housing
3:39 correctly. It looks [music] something
3:41 like this. nice buildings, clean
3:43 furniture, ultra high ceilings, which is
3:46 a huge bonus in my opinion. And you just
3:49 you put as many community features as
3:52 you possibly can to make it comfortable.
3:53 We also have in-unit hookups if they
3:55 want to bring their own laundry machine
3:56 or they can use our central laundry room
3:59 which is on the other side of this
4:00 building that we're in right now. But
4:02 here's the real trick. There are less
4:03 people overall trying to buy 55 plus.
4:06 It's also in limited supply. To my
4:08 knowledge, there's three other 55 plus
4:10 locations in this city. So, you don't
4:13 have many other options. We're the most
4:14 affordable. We're also the nicest. We
4:17 have the most amenities, the largest
4:19 units, the cleanest floor plans, and
4:21 frankly, the best landscaping. If you
4:23 can create the best place at the lowest
4:25 price, [music]
4:26 you basically never have to deal with
4:27 vacancy, and we are massively profitable
4:30 without having to push rents higher and
4:32 higher from where they're at today. Now,
4:35 the negotiation for this, so this is 44
4:37 units. 11 forplexes with this entire
4:39 central office building. You got paved
4:41 parking. You have laundry facility.
4:42 Everything that we just walked through.
4:43 $1.8
4:45 million.
4:47 This was technically on market. It was
4:49 pre-market. This was with a broker
4:51 relationship that we had built on a
4:52 different transaction. It was listed
4:55 with their firm but not yet posted
4:56 online, which is the sweet spot for
4:58 brokers. If you can build some
4:59 relationships, you can buy onmarket
5:01 deals before they're fully on market and
5:04 public. So, this came up. Anyone with
5:06 any relationship with this brokerage
5:08 could have bought this building. A lot
5:10 of people had already passed on it. I
5:12 was not that broker's first call. But
5:14 when it came up, $1.8 million, 44 units
5:17 of this quality in Texas. This is
5:19 Steamville, Texas, a [music] town with
5:21 booming population growth, massive rent
5:24 growth, and with the expansion of the
5:26 college, a lot of your Stevenville
5:28 locals are starting to get displaced by
5:30 college students, which means real
5:32 estate like this is at a premium. Does
5:34 that mean that we're jacking up the
5:35 prices so they're unaffordable? No. In
5:37 fact, this is designated affordable.
5:39 This is a LITC property. We actually
5:40 have limits on what we can charge on
5:42 rents, which is why we're able to
5:44 [music] negotiate price so aggressively
5:46 today. This is a cash flow monster and
5:48 as long as we keep occupancy up, which
5:50 we do, this will be the best deal I have
5:53 ever purchased in the state of Texas.
5:56 Let's check out the interior of the only
5:57 available unit in this complex.
6:01 All
6:01 [music]
6:03 right, this is our only available unit.
6:04 It hasn't been deep cleaned yet, but
6:06 still, I mean, this is this is about as
6:07 bad as they get here. We already
6:09 pre-leased this, so we have a move in
6:10 coming in in about a week. Uh, so by the
6:13 time you see this video, it's probably
6:15 already has back to 100% occupancy. Uh,
6:18 but this is what I like about entrylevel
6:20 housing and for senior living. You're
6:21 looking for one story. You're looking
6:23 for wide floor plans. You want to be as
6:25 ADA efficient as possible. actually do
6:27 have some actual ADA units here that is
6:30 disability compliant. So, room for
6:32 wheelchairs, walkers. This is a standard
6:34 unit. But even even so, your ability to
6:37 get around in here is pretty fantastic.
6:39 Hopping over here, one of the main
6:40 rules. This is this is what happens when
6:42 you do it correctly. It's the little
6:44 things. White appliance, white
6:45 appliance, white appliance back here
6:48 behind me. One of my least favorite
6:49 things when I take over an apartment
6:50 complex is when you have the stainless
6:52 steel microwave, the black oven, and the
6:54 white trench. It looks completely junky.
6:57 Just match them. When you're renovating,
7:00 choose a color. Stick with the color.
7:01 Entry level, don't do stainless steel.
7:04 It gets beat [music] up and it stays
7:05 beat up. White or black, super easy to
7:07 clean and it costs less. Entry level,
7:09 white or black, choose one. If you're B+
7:12 or higher, then go stainless steel.
7:14 That's your rule of thumb. Another thing
7:15 that I really like about this building,
7:17 this is this is the perfect setup.
7:19 Washer and dryer hookups. If you provide
7:22 them their own washers and dryers, they
7:23 will break them. Ask any landlord ever.
7:26 They use too much detergent. They gum up
7:28 the system. It's a nightmare. If you
7:30 give them the option to bring their
7:31 washer and dryer, many people will
7:33 actually bring their own. So, you have
7:34 your own hookup there. And then we have
7:37 a laundry room so that you don't have to
7:39 buy a laundry machine. You just have it
7:41 as an amenity if you want it. Having the
7:43 option is huge. Providing the laundry
7:46 machine in unit is a mistake again until
7:48 you get into class B plus or A. Uh you
7:50 run less risk there. Uh moving on to the
7:53 bedroom. So for senior living, avoid
7:56 studios. They do not want studios. They
7:58 need a little bit of space. They don't
7:59 need to be huge, but you want wide open
8:01 spaces. And you want to have a large
8:03 closet. These are the little things that
8:05 I found for 55 plus will keep you at
8:07 100% occupancy. A decent size walk-in
8:09 closet, a decent size bedroom, a nice
8:13 clean accessible bathroom with
8:16 handrails. You do not want someone
8:18 slipping and falling. remember they're
8:21 not ancient but then you're trying to
8:22 rent to people who are older but that is
8:25 55 plus.
8:30 [music] So in summary, why do we love
8:31 this so much? Because we have increasing
8:34 demand and limited supply. There's not a
8:36 lot of these being built. And I've seen
8:37 markets like this all over the country.
8:39 There's usually 1, 2, or 35 plus
8:42 communities. There's not that many of
8:43 them. And while you might think it's
8:44 limiting you, there's so few of them
8:47 really. you just have increasing supply
8:48 [music]
8:49 with a limit to demand whenever you see
8:51 this in a market. It's usually a signal
8:53 that you should look into it deeper.
8:55 This worked for me in Stevenville,
8:56 Texas. We also did an 80 unit almost
8:59 identical. I couldn't even get interior
9:01 photos because it's 100% occupied. The
9:04 buildings work so well. It works
9:06 amazingly in Texas. I've also seen it
9:08 work in Washington State where I invest.
9:10 So, no matter where you are in the
9:11 country, do not overlook this asset
9:14 class. it is needed and you do deals
9:17 like this where you really do win on
9:18 price where you might not be able to
9:20 have that much of a win or that ease of
9:23 operation in your traditional multif
9:25 family. Again, we purchased this for
9:26 about [music] $1.8 million. It was one
9:29 of the easiest capital raises I've ever
9:31 done. It cash flows from day one [music]
9:33 and stabilized. This is worth more than
9:36 twice what we bought it for. We bought
9:38 it at 80% [music] occupancy. It took us
9:40 less than a year to get to and maintain
9:43 100% occupancy with a short wait list.
9:46 So, when a unit becomes available, we
9:48 usually lease it within the first week.
9:51 I hope you learned a lot on this video.
9:52 I hope you don't overlook these
9:53 opportunities in your market. And if you
9:55 want to learn more, there is a link
9:57 below to a 10-minute video on how
9:59 [music] investors, not just like me, but
10:01 like you in markets like yours all over
10:04 the country, are buying deals exactly
10:06 like this. So, check that video out.
10:08 It's 10 minutes. below. I'll see you on
10:10 the next episode.