031: The Great Value of Partnerships

SHOW NOTES FOR EPISODE 031 WITH CARL WITHERS –  THE GREAT VALUE OF PARTNERSHIPS

In this episode, Carl Withers, founder of Carlyle Properties Management & Acquisitions and Withers & associates, LLC, shares how he started real estate investing later in life, after a corporate lay-off, and how he grew his real estate investments to over 2,000 units with a 92% occupancy in all of properties. He also shares how finding a great partner was a significant factor in his success.

What You Will Learn

• How you can start real estate investing late in life and succeed
• The value of finding a good partner when you are starting out
• Always do your own due diligence
• Finding under-valued properties can be very profitable
• How to find a “diamond in the rough” property to yield big profits

About our Guest

Carl Withers

Carl has been buying, managing and rehabbing multi-family properties since 2003 through his company Carlyle Properties Management and Acquisitions and Withers & Associates, LLC.  Carlyle Properties currently is partnered with others in the operations and management of over 2,000 units in North Carolina, South Carolina, Georgia, Florida and Texas. The average occupancy rate of all properties is 92.4%. Carl also owns Carlyle Properties of Aiken that owns over 100 units of single-family homes and other multi-family complexes in Aiken, South Carolina.  2 Years ago, he established a new company, Bedrock Property Solutions, that manages all of his current properties.  Also handles all his asset re-positioning, building and contracting.  Carl’s multi-family education was gained through a nationally recognized apartment investor who controls over 8,000 apartments throughout the United States. Carl also has a B.S. Degree in Business from Lander University.

More About Carl

Was a manager for Consolidated Freightways.  Had a good background in sales and operations that later helped him in real estate. In 2002, the economy fell off and his company had to close its doors.  Started doing brokerage on the side and reading books on real estate.  Years before, he saw an infomercial by Carlton Sheets on late night TV and bought his course but just looked at it once and put on the shelf.  With his job gone, he brought out the Carlton Sheets materials and set his mind on doing real estate as a profession.  He set the goal of buying 5 houses.  He did an equity line of credit on his personal home to start and would buy the houses at $10,000 below their appraised value.  Interest rates were low and is was a good time to buy.  Went on to buy 10 houses in one month.  Surpassed 20 houses.  Things were going well until the crash of 2007 and the rules changed with the banks.  He bought a book, Commercial Real Estate 101, written by David Lindahl with Donald Trump and thought that maybe commercial real estate would be a better way to go.  One day, he called David Lindahl’s office, got invited to a boot camp and eventually ended up working with Lindahl as his mentor.

In 2011, Carl bought his first apartments; in fact, he bought two apartment complexes, a 130-unit apartment and a 151-unit apartment.  Had to raise money with investors.  After a few years, he sold the apartments and made a good profit for himself and his investors.  With his success, he continued to attract more investors and purchase more apartment communities.  Today he has over 2,000.

Taking on a partner

• Carl eventually took on a partner who was actually one of his first investors.
• When he invested with Carl, he doubled his money on 2 deals
• The partner had strengths he didn’t have and he had strengths the partner didn’t have. It was a good fit.

A Few Valuable Tips

• Do your own due diligence, do not hire it out
• He has his own team to do due diligence
• Due diligence questions you ask and things to look for:
  • Look for code violations
  • Go through their maintenance logs
  • Do they have aluminum wiring? (His insurance company caught this after they closed and told them to fix the problem. Costed him $60,000 to fix. If he knew before closing, the seller would have paid.)
  • Look through all leases
  • Look through all contracts with outside companies
  • All business side of apartment
  • Look for mold – very expensive to fix

His Biggest Mistake

• Early on, they hired a property inspector firm that they did not carefully vet
• Unfortunately, the company was not qualified ad missed a number of critical things that ended up cost him quite a bit

His Biggest Success

• It was with one of his first properties
• 131-unit apartment
• When he bought the property, a new shopping center with high-end stores was being built near the property
• It was a “C” class property in an “A” area – a “Diamond in the rough”
• He bought the property at a 10 CAP rate and sold it at 4.5 CAP rate
• Purchased it for $1.1 million. Did $400,000 in rehab.  Sold it for $3.5 million 3 years later.  Usually holds properties for 5 years but he was approached by many interested potential buyers.
• Found the deal through a commercial broker “fishing buddy”

Advice for Real Estate Investing Newbies

• If you are starting out, find a partner that knows the business. It is a great way to start and can save you a lot of grief and money
• Carefully vet your partner
• Know who you are dealing with
• Check references
• Make sure they know the real estate investing business

Future Plans for his Business

• Goal to acquire 5,000 units
• He is expanding into managing other people’s properties in multiple states with his new property management firm

Rap-it-Up

• Favorite real estate book – Emerging Real Estate Markets by David Lindahl
• Favorite business book – The Negotiating Game by Chester L. Karrass
• Favorite websites – Each target city’s economic development websites. He uses the websites to find out
  • Competition
  • Occupancy rates
  • How many new developments planned
  • City’s growth regions
  • Jobs picture
• If you lost everything except $1,000 in the bank and had to start all over, knowing what you know, what would you do to try to rebuild your real estate investing business?– He would find someone who is already investing.  Then, utilizing existing contacts, he would offer to help this person to find good deals for a cut of the deal.

 How People Can Reach Carl

•  By phone or text: 803-640-3519
• carlyleproperties@gmail.com

Until our next podcast, keep moving forward and God bless!

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