113: Real Estate Investing in Tennessee

SHOW NOTES FOR EPISODE 113: REAL ESTATE INVESTING IN TENNESSEE

Dave Childers bought his first multifamily property at age 25.  Since then, he has flipped properties, done condo conversions, expanded his multifamily personal holdings and created a successful real estate brokerage firm specializing in finding small to medium sized multifamily properties for investors. In this episode, Dave shares his expertise in the Tennessee area as well as his unique approach to multifamily investing and landlording.

What You Will Learn

• How you can find a mentor in some not so obvious places
• How he survived the 2008 crash
• How to do undo an apartment condo conversion
• What Dave did, (in a hurry), to fill his first 114 unit apartment building with 50% vacancies
• Why he prefers a long term multifamily buy and hold wealth-building strategy as opposed to a 3-7 year flip
• Why Tennessee, especially the western region, is still one of the best places to invest

About our Guest

Dave Childers

David Childers is a Managing Broker of Residential Investment Advisors and has over 12 years of experience in real estate investing in Middle Tennessee. He was 25 years old the first time he partnered and purchased his first multifamily rental property.  At 27, he formed another partnership and secured University Lofts, a 114 unit property in Murfreesboro TN, which allowed him to learn the business in al l aspects.  Six (6) years ago, David saw the need for a brokerage firm that focused on small multi-family properties and investors.  Since then, David has built Residential Investment Advisors into a successful commercial brokerage firm.  David has brokered over a 200 smaller MF properties in Middle TN and Northern Alabama.  In the past two years, David has continued to grow his personal portfolio by acquiring District 14 Flats, a 14 unit complex in downtown Nashville, TN and has more than doubled its value in 18 months.  Another, Lawrence Landing, a 56 unit property in Lawrenceburg, TN and his most recent purchase, was Hilburn Apartments, a 86 unit complex located in Pensacola, FL.

More About Dave

• Was enrolled in university in Boone, NC
• Decided to quit school, moved to Nashville and went on the road with a Christian rock band.
• Met a youth pastor in California who was “living the good life” and he couldn’t understand how he was doing so good on a pastor’s salary. He said he was actually a real estate investor and volunteered for his position as pastor
• The pastor offered to help Dave get started and Dave’s business took off and the pastor is still his business partner today
• Was featured on TLC’s Flip That House in 2006
• Lost a lot in 2007-2008

First Multifamily Property

• In 2008, bought 114-unit apartment complex in Murfreesboro, TN, near Middle Tennessee State University, and converted it into condos with the idea to sell to parents
• The crash happened
• Had to convert the condos back to apartments
• Was concerned that the value of the condos was much more than as an apartment and the taxes would he higher too
• He had to learn the landlord business

Starting a Brokerage Firm

• Wanted to use his experience and talent
• Started Residential Investment Advisors in Nashville
• Specializes in 2-50 units, “C” class units
• Brokered 60 properties in one year
• Some bought duplexes for $60K that are worth $300K
• 3% vacancy

Biggest Mistake

• Regrets not buying more properties in the down-turn
• But, there was no bank financing so a person needed cash
• Didn’t have the confidence

Biggest Success

• Bought 14-unit in downtown Nashville during recovery for $235K
• 50% occupancy
• Had to be creative to attract new tenants
• Handed out breakfast biscuits at the local university
• Pro-rated rent incentives
• Referral incentives for existing tenants
• Appraised year and a half ago for over $1 million

Advice for Old Dawgs Looking to Get into Real Estate Investing

• Passive investing is a good option
• He sells a lot of $150-200K duplexes, which is a good place to start
• As you get comfortable, you can increase the number of units

Long Term Buy and Hold

• He likes to hold on to his good properties
• Pays down the mortgages

Future Business Plans

• Has sold off smaller properties
• Wants to be less active
• Partnered up with local property management firm
• Raising private equity

Good Things Happening in Tennessee

• Good job growth
• No income tax
• Landlord friendly state
• LG Building large production facility in Clarksville
• There are more jobs than they can fill in much of Tennessee

Market Research Tip

• Get a hold of Offering Memorandum’s for properties in areas you are interested in
• Read the market research information and you will collect great data

Rap-It-Up

• Favorite real estate book: Rich Dad Poor Dad by Robert Kiyosaki
• Favorite business book: Good to Great by Jim Collins, The E-Myth by Michael E. Gerber, Crush-It! By Gary Vaynerchuk
• Most valuable web site for success (other than your own): BiggerPockets.com, Craigslist.org
• Favorite app: Karl’s Mortgage Calculator
• Favorite quote: The Golden Rule: “Do unto others as you would have them do unto you.”
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? He would use the money for cups of coffee, lunches and dinners with potential investors who could help him rebuild his business.

How to Reach Dave

• Email: dave@ria-inc.com
• Cell Phone: 615-479-8737

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