Ep 84 – What Housing Shortage??? Cash Flowing New Construction and Turnkey Rehabs in the Path of Progress

The word across the country is that we’re in an inventory shortage and people can’t find homes. It’s what has driven up home prices and helped push rents (and investor returns) up considerably over the last few years.But at Rent to Retirement, inventory is NOT a problem.Adam Schroeder and Zach Lemaster go over some of the properties that are available today for investors to buy, and there’s no shortage.

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Transcript:

Hey, rent to retires it’s Adam Schroeder here with Zach Lemaster. And we have got a show today where we want to talk about what is going on in the marketplace. Because we have got I don’t know if you’ve looked at the website lately, people, but if you haven’t, it’s time to look, because there are a lot more markets a lot more properties. You know, you hear about the housing crisis, the housing inventory shortage, well, at rent to retirement.com, you will not find a shortage. I think that’s safe to say, wouldn’t you say, Zach?

Zach 00:36

Absolutely. This is something we’ve a lot of people have kind of been battling with over the
past really two years, at least, and still relevant today is having a hard time finding inventory in markets that we want to be in and actually cashflow. And of course, our job as we’re personally investors, we’re finding the best locations and maximize cash flow appreciation and equity, looking for areas that are going to set you up in the path of progress to invest alongside of us in these areas that we’ve been successful and build excellent teams. And we’re very excited to talk about some of the new areas. These are areas we’ve been investing in for a while now working on making sure we’re refining, refining the process, making sure we have the adequate teams in place to produce a solid inventory along with a great team to ensure people are gonna be set up for success. And these are excellent areas. We are really excited to talk about some of the new construction as well as the rehab stuff. So let’s get into it, Adam.

Adam 01:28

Yeah. So first off, I want to talk there are two things that people talk to us about all the time. One of them is Texas, and the other one is wanting two to four doors on a property. So what we have here is we have some new construction going on, in Denison, Texas, which is up north of Dallas close to the Oklahoma border, which I forgive him for being near Oklahoma, at least it’s

on the Texas side. And these are new construction duplexes from one of the builders, I think you’ve known him for a little while, is that right? Zach? They hadn’t been bringing us properties lately. But you know,

Zach 02:04

yeah, this, this developer, Steve is someone we’ve worked with, and I’ve worked with personally for many years. So usually, Steve is keeping a lot of his duplexes internally. And these are some that he’s decided to allow us. So we only have a handful of these. But excellent area to get into multifamily. And into Texas where you hear are having high appreciation and high rental demand.

Adam 02:27

So we got these, the the price point is $475,000. So a little bit pricey, but break it down for two homes and you’re looking at, you know, 235 240 per per sign that rents for $3,400. It is a six bed six bath duplex. So you got a three, three on each side. And it is two weeks from completion. So one of the things that people always complain about with new construction is delay, delay, delay, you know, timeline is so long, what we’re focusing on is making sure the timelines aren’t so long. And we’ve got that going on right here. Anything you want to touch on was that with that? Yeah, perfect

Zach 03:02

for 1031. As you can see from the photos, these are high end finishes, these are not low grade rentals. These are high be in a class areas that are going to have high tenant demographics, high quality tenants and have strong appreciation potential. So yes, higher price point, we have some other stuff we’ll talk about at lower price points here in a bit. But an excellent opportunity for someone to get into property right now, with all of the supply chain issues and delays in construction, permitting, health inspection, so on and so forth. It’s hard to get it’s hard to find new construction that’s like ready to go right now out of the gates, it’s still cashflows in a good area. So this is definitely something I consider or would ask someone to consider looking at if they like multifamily new construction in the market that has the highest population growth of Texas.

Adam 03:47

Yeah, and if you’re listening to this on the audio podcast, like a lot of you mostly are, then you want to go to our YouTube channel, you can see all the pictures of this. So just know you can go see the pictures, they are like Zack said, looking really good. So let’s look at the actual numbers. So with the adjustable rate mortgage that we’ve been talking with our lenders about, we’re looking at about $870 a month in positive cash flow with an 8.44% cash on cash, and a 12.7% total return on investment. If you go the 30 year fixed rate route, you’re looking at about $435 a month cash flow 4.25% cash on cash, and 8.55% Total Return on Investment. Year one. Now keep in mind people, this is year one. Most importantly what I tell people is I love new

construction, and I especially love positive cash flow in new construction. Because even if it’s a low cash flow, you’re one you’re set up for great success if you can make it work starting in year one.

Zach 04:49

And just to critique you out and when you say total return. I mean, this is not factoring in debt reduction. And, you know, so there’s that aspect of it, as well as purge exciting future, appreciate it. And so,

Adam 05:01

so the ROI number you’ll see on our website at rent to retirement.com on that active inventory sheet, that’s the ROI you’re gonna see there. That’s what I was going with total ROI be I once you factor in all the other, all the other things as part of it, you’re, you’re looking at a much better return than that. So now I want to get into new construction homes and some of the panhandle of Florida. Sorry, we don’t have a better picture of the front. But you know, as you can see, they’re getting close to completion. So, Zach, anything you want to say about this area first?

Zach 05:33

Yeah, I love this area. This is actually so I think Florida in general is probably the probably the best market right now to invest in balancing all things across the board. It has high strong population growth, landlord friendly legislation, high rental demand, extreme housing shortage, we’re seeing strong appreciation in both rents year after year, as well as appreciation and home prices last year. Overall, we saw 29% appreciation in one year as well as 22% increases in rents. And so these are areas if you want to be in the path of progress, if you like new construction, Florida is a place to be and we have investment opportunities all across Florida, that I would look at this as a greater Pensacola area into Phoenix springs as well as a Milton. These are now we have limited amount of these and they’re going to go rather quickly. These are all 45 to 60 days to completion. And so you can easily use a 1031 exchange and you’re not having to wait for a year for these to be completed. And often, many investors on their appraisals are coming into immediate equity with ease as well as having strong appreciation shortly thereafter. So I mean, anyone that’s not familiar with Pensacola, it’s it’s a hub for military, there’s an extreme housing shortage. The military is offering actually incentives to developers and things like this to go out and create housing opportunities because they just don’t have housing for the military members. And they are excellent tenants as well as just the overall population shift down to this area. This is an area I personally love and would highly consider investing in for anyone that likes new construction in Florida in the path of progress. That’s ready now.

Adam 07:06

Yep, so let’s go into the numbers here. So the price points here are $325,000 going to rent for we expect around 2375 with a three bed two bath and like Zack said 30 to 90 days from completion, which is which is nice to see a lot of the Florida stuff we’ve had recently has been

completion, which is which is nice to see a lot of the Florida stuff we’ve had recently has been

more like, you know, in the six to six month, but 30 to 90 days, like Zack said perfect for, you know, 1031 Exchange or something of that nature. We look into our numbers with the adjustable rate mortgage that we have not $609 A month cash flow, which is 10.45% cash on cash, and a 15.6% cash on cash with depreciation and a fixed rate mortgage, you’re looking around $292 A month cash flow 5.07% cash on cash and 10.31% cash on cash with depreciation. So

Zach 08:04

just to just to remind everyone to when you’re looking at these numbers, these are pro forma numbers that are projected year one. First of all, we’re projecting taxes on new construction, we’re factoring in taxes that are probably actually relevant in year two or three, we want to show what the full taxable amount is. But your your cash flow and return on investment actually you’re wanting to should be significantly greater, because the property on new construction is not fully assessed yet. And so that’s just something to be aware of, we’re not showcasing that because it’s a little bit complicated, we want to show the full estimated tax value years down the road, but your actual year one into return should be significantly higher. And it’s hard to find new construction in a good area in a good market that is actually positive cash flow. That’s something we struggle with all the time, I think and we probably review, you know, hundreds of different markets and build opportunities to find maybe find one where the numbers actually make sense. And this is an area where it does. As you mentioned, these are ready within the you know, reasonable amount of timeframe so you can use a 1031 on them. But this is huge, you guys I mean if these rents even go up 5% per year, which is extremely conservative and way lower than what we’ve historically been seeing in this area, your cash on cash return and cash flows can be significantly greater. So just always want to mention that that look into the future as well as like I mean we have a calculator on our site under tools where you can punch in you know whatever rent appreciation numbers that you want to to kind of project where this is going to be cashflow year 234 down the road. But this is a this is the type of property where people are buying. It makes sense today it’s new construction. You don’t have any maintenance on it because you have the builder warranty that’s comprehensive. You have long term warranties on things like Foundation, and then year 234. These things are over performing from your initial projections just because of the simple rent increases in demand over time. Definitely consider This stuff.

Adam 10:00
Yeah, absolutely. And remember, you know, if you don’t do it in the next 30 to 90 days, well,

there goes, you know, 8% of your money due to inflation.

Zach 10:09
So that’s right. Yeah, an 8% return and then an 8% compared to an 8% inflation, that is

devaluing your capital, right? That’s really a 16%. Spread. So,

Adam 10:21

and Michael said, I noticed on the pro forma that the downpayment is 20%, is this correct?

and Michael said, I noticed on the pro forma that the downpayment is 20%, is this correct? Absolutely. You can get into these properties with 20% down, if you want to go 25% or above you can, but 20% will get you into an investment property.

Zach 10:35
Yeah, last property was a duplex. So that is 25. Yes. And anytime you have multifamily, 25

Single Family 20%.

Adam 10:41

Yes, yep. So you’re welcome to do more than that. But you can definitely get in for that amount. So the next thing we’re going to talk about is new construction and Ocklawaha, Florida. Now I have to fully admit, I had never heard of this place before. And I was like, Where on earth is this. And then I looked into it, I talked with the local team, and was pretty impressed with what’s going on in this area. I know a little bit more about it than I do some of the other Ford areas because they’re newer to us. And I’m learning about it. Zach knows a lot more about him. But this is an area that is in the Ocala area where, you know, investors have been flocking for several years. And essentially, Ocala is getting to the point where it’s harder to make deals work. And so this is kind of the next step. It has had a whole bunch of distribution centers move into it lately, Amazon move there, which, when Amazon comes that brings FedEx, they have chewies.com, which is an enormous company, they have a distribution center there as well. You’ve got workers from the villages, which is the world’s largest 55 and up community. The workers live, don’t live in the villages, because they’re not 55. So they move over and live in this area. So it’s a lot more impressive than I originally thought, because I was like that’s a strange name. But a strange name good markets, this market, you can get in for 212 Five, so it’ll rent for roughly 1650. It’s a three bedroom, two bath, these permits have been issued on the property. And the construction is beginning so a little bit longer than 30 to 90 days. But the permits have been issued, which if you know anything about Florida real estate, is the big slowdown. So you’ve got a permit issued construction beginning, you just put a down payment down, sit around and wait for the completion to be done. And then you add in the rest of your deposit.

Zach 12:39

I think just a couple of points on this one. So this is a little bit of a different scenario, I would consider this greater Ocala kind of central central Florida area, good old horse country. But this is an area that is growing however, you’re probably going to see a little bit less appreciate. And I say that now just looking at historicals. But but who really knows I’m I’m sure as Florida continues to be built out that all areas are going to have strong appreciation. But compared to what we were just looking at in the panhandle of Pensacola area, this is this is going to be a little bit lower price points. So easier entry point, maybe slightly less appreciation, then you’re going to see there a little bit lower rents are just more affordable cost of living, but also means cheaper, more affordable house prices to to actually enter into with with this type of inventory. This is something that you do have to wait though you put a deposit down, you wait for it to be completed, probably not completed within the next six months, there’s some of these that are in progress. But this is more of a waiting game, just so you’re aware. And with all these these

properties that we’ve talked about so far, and a lot that we’re going to be presenting today, there is limited number of these guys, the whole reason we’re doing this, right now is to showcase the amount of excellent inventory we have right at this point in time. So now is the time to act on this type of stuff. Because we can only we can only build so many houses in these areas with our building partners. Once they’re gone, it’s just a waiting game until the next round of investments become available months down the road. And those those are going to be at higher price points. So I mean, the numbers may not be as attractive in the future. This is why it’s important to act quickly ride that appreciation wave even though interest rates have gone up, the numbers still make sense. And you’re still having rental increases. That’s why you got to run those numbers years in advance, looking at what future projection looks like and get that appreciation. So if you’re if you’re ready to invest, or you’ve been thinking about it for quite some time you like new construction you like these areas, now’s the time to really put action into place and start looking at some of these. This is some of the best inventory I think we’ve ever had as a company over the past 10 plus years. And we’re super excited about it. We’re buying a lot of this stuff ourselves as well.

Adam 14:51

Now you say that appreciation might be lower but whenever I was talking to the Build Team, they’re the next cheapest spec home according to them. For me any of the other builders is 240,000 in the area. So you’re looking at walking into potential equity in the property as well. I mean, obviously, with the $212,000 price point, it’s probably not going to be as high as you could get in some of the other ones. But it is definitely there. So

Zach 15:15

yeah, no doubt, Adam, I mean, that’s a good point. I was kind of comparing, like, you know, Pensacola to this area, and we would think that Pensacola might have a little bit higher appreciation. But, I mean, the reality is, some of these areas are just, you know, that have this hockey stick growth. And it’s still at that affordable price point right now, I think the big caveat with this one is just just a waiting period with it. But that’s a good point, these these appraisals are coming back higher, and people are coming into immediate equity in these. That’s a huge benefit.

Adam 15:41

And so look at the look at the numbers. With the adjustable rate mortgage, we expect about a $411 month cash flow, which is 10.38% cash on cash, and 15.35% cash on cash with depreciation. And with a fixed rate, you’re looking around $203 a month, just 5.24% cash on cash and 10.32% cash on cash with depreciation. So Michael also asked if either of us own in this specific area or Ocala? I have not personally because I am invested in enough other markets that I’m not looking to expand into more markets, but I love it. And so it’s my what as soon as I mentioned this to my wife, her first thought was so do you want to buy there too? And,

Zach 16:27

and and I’m building just I mean, I’m building in all these areas. You know, so absolutely. This is why we go into these areas. I mean, we are investing in these areas heavily in Florida for sure. Yeah.

Adam 16:39
Zacks finds builders because he wants to buy the properties too. Let’s be honest,

Zach 16:44
I’m great at finding the right people out there great in those relationships and negotiating

below market deals. So that’s that’s the benefit of being in our network.

Adam 16:52

So now, we got some, some stuff in Houston. We obviously had some new construction recently, outside of Houston. But now we’re actually getting into the Houston market with the turnkey rehabs. Just so y’all know new construction in Houston is probably not going to work because most stuff there’s you know, $700,000 now for for new construction. But the turnkey rehabs, this is a team that once again, I believe Zack, you’ve known for quite some time, and they’re coming back?

Zach 17:21

Well, yeah, we’ve just done a lot of personal stuff with them. This is the first time we’re actually bringing this to our investor data investor database. Because I’ve been trying to create this for a couple years now like, hey, let’s do some more, let’s scale up and do more and start presenting some of these opportunities to our investor base. And just now they’re coming around to it. But and these guys do excellent rehab, this is an excellent team in house property management, whole nine yards, you guys will see some photos of these. The numbers make sense, it’s pretty hard to get into Houston, on quality properties in good areas that are in that two to 250 range. It’s just kind of a unique price point. And it’s difficult barrier of entry to find this type of stuff. So we’re excited about this.

Adam 18:03

Yeah, absolutely. And someone who lived in Houston for seven years, I can say people who moved to Houston tend to stay there because it’s a great city, I just moved back because of family. So this price point on this particular home is $228,000 rents for around 1650. It’s a four bed, two bath, and it was rehabbed one year ago, if you look at the pictures here, you can see, you know, nice looking kitchen, good hardwood floors, got a whole lot of benefits going on with it. And we expect it to return what the adjustable rate mortgage $321 a month, which is a 7.6% cash on cash, and a 12.61% cash on cash with appreciation. And with the fixed rate, we’re looking at about $98 a month, which is 2.37% cash on cash, and 7.48% cash on cash with

depreciation and a lot of that just comes with Houston and Texas in general has seen a lot of appreciation and rents haven’t had a chance to to keep up but I would expect to see strong, strong rental growth. Knowing what I know about the area that it’s in, I would expect rents to be continually increasing, or do

Zach 19:10

you want to address those numbers real quick out on someone could look at that as a 2.37% cash on cash. And you know, no one gets excited about that. That doesn’t seem like a huge margin of error. But But the deeper kind of evaluation on this, all of these Euston properties that are rehabs are currently rented in the rented under market. So that leaves that leaves a value add that leaves some equity potential and some increase in future rent ability or future income on that. So that’s something just to be aware of, is that we there is upside potential on the rents on on these and we can walk you through these evaluations probably around $100 a month. So that actually with double your cash on cash return and your income on these just releasing these to current market rates. It’s just that these have had excellent tenants that haven’t really increased the rents to market rate. because they have been good tenants. But remember over time, this is what year one projection won’t be the dead horse here, but look, run run the numbers a year 234, even with a 234 percent rental increase, which is well below we’re seeing this has high potential for return on investment, both from an appreciation and increase in income.

Adam 20:21

Yeah, a $1,600. And a 1650. Rent in Houston is very cheap, you could easily push this up quite a bit to get back to market. And so like Zack said it would get make your cash on cash a lot higher. And remember, you’re still financing it. So your returns go up five times whenever you’re doing it at 20%. So next up, we have turnkey rehab from a team that we recently brought on in Baltimore, you want to talk a little bit about this team? Zack?

Zach 20:55

Yeah, you know, Baltimore, and this is just a hard area to get into to make the numbers make sense. So a lot of what we’re seeing here, these are townhome structures. And that’s just how the city is kind of built out. So these aren’t standalone, single family. But these are the areas where you want to be if you kind of look up some of these addresses, these are in areas that are going through or have gone through gentrification and revitalization. These are the areas that are being transitioned where 510 years down the road, you’re probably going to see these price points skyrocket over time. So excellent team, again, in house property management with these guys. We’ve just had a great relationship working with and we know they put out a quality project, we’ll look at some of the photos of these two, I highly encourage people to look at this type of stuff. If they’re wanting to be in a new market, that is pretty hard to make the numbers even positive cashflow in a good area but up and coming areas, definitely check it out.

Adam 21:51

Yeah, so we got a price point of this one at $203,000 rents for about $1,500. It is a two bed, two bath, and the rehab just finished up in May of 2022. You can see the the appliances, the finishes all of that. Some nice stuff going on there. So the numbers when we look at it, we expect the adjustable rate to be at $483 a month cash flow 12.7% cash on cash, and 17.65% cash on cash with depreciation and the fixed rate you’re looking at $284 A month 7.65% cash on cash and 12.71% cash on cash with depreciation. So still looking at a strong return there. And like Zack said, up and coming neighborhoods, good place to be nice team that was vetted out. And so we’re excited about this opportunity. It’s always fun to find new markets to go into. Yeah, and it’s

Zach 22:47

hard to beat these numbers. You guys kind of in this area. I mean, this is this is exceptional return when you’re looking at your fixed rate mortgage, I think we’re running between a six to six and a half percent interest rate on that. That’s pretty aggressive. I mean, there’s also ways you can, you can pay points to put that you can put more money down if you want to have a higher cash flow number on some of these. And there are I mean, we’re seeing fluctuation, right. And so we’re putting this out right now live, and then you know, who knows where interest rates are going to be. So this is applicable that we’re at right now probably with that six to six and a half percent interest rate. If you’re paying no points, if you’re putting 20% down, there’s there’s definitely options to increase those cash flow numbers based on the loan structure you’re looking at. So just make sure you’re speaking with your investment strategist at rental retirement to look at all loan options.

Adam 23:34

Absolutely. So the next thing I want to switch to is Zach and I were talking beforehand, and he said, Hey, we need to, we need to show this property. And I said, Well, Zach, that’s not even up on the it’s not even up on the website. How am I supposed to? How are we supposed to do it? And he said, Well, it was just share it now because it’s gonna be up. So need to just show everybody, this next one and it is.

Zach 23:59
Look first look at a property that’s even come out probably.

Adam 24:04
So we are looking here at Port Richey, you want to talk a little bit about this opportunities.

Zach 24:10

Yeah, Greater St. Petersburg and Tampa area in southwest Florida. You guys southwest Florida is an area that you should be no stranger to at this point. If you’ve been following us an area that we’re just super bullish on that I’m personally invested in the most out of all markets that

we focus on, just because it’s such an exceptional market. And this is an area that is in the path of progress, extreme rental demand and under supply of housing. I mean, it’s we’re talking all that we have highlights about all these areas because we’re these are all areas that we’re focused on and excited about. We’re not talking about areas that don’t have exciting things to present to you. But this is an area where you can come into a rehab house in an area that has strong rental demand and is going in the path of progress for future appreciation also, this team, exceptional top tier team rehab manage. I mean, these guys, we’ve had zero complaints ever, from working with these guys, because they always produce a good product. And we’re very excited about this area.

Adam 25:16

Yeah, and if you know anything about Florida and you hear St. Pete, you know, oh, wow, I can actually afford a home in that area. It’s, it’s a nice, nice area. So we’re looking at a price point of $214,990 going to run out for 1850. It’s a three bed, one bath, the rehab is completed, and they’re just waiting on the purchase to place that tenant. You can see some pictures here of the finishes that are going on, mostly wood flooring throughout. Really nice looking bathrooms. And the expected return down here with the adjustable rate, we’re looking at a $497 month cash flow with 12.44% cash on cash and a 17.41% cash on cash with depreciation. And for the fixed rate, we have it estimated at $287 a month, which is 7.34% cash on cash and 12.42% cash on cash with depreciation. So really solid numbers, especially getting into that area, which is a nice place to be. So

Zach 26:24

we chose one of these we do have other properties becoming available. But these things will go extremely quickly. As we see a lot of our inventory moving quickly. So I would say three to five months is what we’re looking at here.

Adam 26:35

Yeah, and I mean, a $214,000. Home in southwest Florida is, is pretty, pretty impressive. So let’s see, we wanted to highlight a few of our other markets and some rehabs that we have, because we know that we’re still seeing we don’t want to forget it markets that we’ve been in for for a while and that we like a whole lot. And so there were like two more. One of them is in Kansas City. And we’ll get to that this is a team that has been giving us a lot of inventory lately. Seeing some great rehabs them, you know, the inspection reports you see, come back from them are very clean, you know, just little things here and there that, you know, like I like to say, home inspectors job is to make sure nobody ever buys a home.

Zach 27:19

Yeah, these are some guys that we’ve been partnered with personally, right. So we’re a little bit more intricately involved in this this type of stuff. So we’re kind of making this transition we everything we talked about so far is pretty much se you know, we’re a little bit higher price points, probably strong. I mean appreciation compared to what we’re going to be looking at

now is Midwest and mid Midwest bread and butter rentals. Out of all the markets we’ve been investing in personally, Casey is the longest one, I’ve been investing in Casey for probably 15 years now, still on property there and done quite well, in case he’s just a solid market that has a little bit lower price point. Still, we’re seeing rents and appreciation there. But it’s just your slow and steady, predictable market that allows you to get into properties at a lower price point and probably cashflow a little bit more in the immediate timeframe. So that’s kind of the comparison to the Midwest. And we love Kansas City. It’s an exceptional market.

Adam 28:10

And we want to make sure also when we talk about new construction a lot and it is fantastic. But we also talked about diversification a lot here because diversification is important. And whenever you diversify geographically, you have to look at the market and see what is realistic here. And as you go into these markets, a lot of times the turnkey rehabs make way more sense than new construction in the area. And you can get a good solid cash flowing property. I mean, the vast majority of my rental portfolio is turnkey rehabs so don’t think that we’re, you know, Pooh poohing the the turnkey rehabs because you can make some really good money in turnkey rehabs. I mean, I know I have. Zack obviously has as well. So this price point is $149,000. it rents for 1250. That’s a three bed one bath built in 1954. But the rehab is scheduled to be completed at the end of June here in 2022. With the adjustable rate mortgage, we’re estimating you’re going to cashflow $392 a month, which is a 13 point 3.52% cash on cash with 18.28% cash on cash with depreciation and with the fixed rate we’re estimating $247 A month which is 8.75% cash on cash and 13.65% cash on cash with depreciation. So you’ll notice these numbers a little bit higher because turnkey rehabs tend to have you know a little bit higher price point and with the slower appreciation, rents don’t have to don’t fall behind as much and so you’re able to get in and get a higher return. So

Zach 29:50

yeah, and if you these price points mid mid $100,000 You know one to $200,000 price points that are double digit cash on cash return in and teens, I mean that this is a place you want to be. And we didn’t have any finished photos because that house is still under rehab right now. But they look exceptional, just like the stuff you’ve already seen. Beautiful rehab and quality job there.

Adam 30:12

Yep. And so I’m gonna go to the next, the next home here, which is actually in the Akron, Ohio area. And this property, again, pre rehab photos, because it’s still on the process and waiting to be completed. So this one is a price point of 144,000 going to rent out for $1,150, it’s a four bed, two bath home, will be completed, as I said in the beginning of July of 2022. And we expect this one to cash flow $338 a month with the adjustable rate, which is 12% cash on cash, and 16.73% cash on cash with depreciation and $197 at a fixed rate, which is 7.21%, cash on cash, and 12.09% cash on cash with appreciation. And again, this is another team that we’ve worked with for a long time very easy to work with, doesn’t house property management. I

haven’t heard a complaint from them. And the whole time I’ve been here, you know, people who buy them. I mean, I’ve had one client recently who bought from them, and came back and said, anytime this guy gets another property, let me know, I want to buy another one from

Zach 31:24

the same good results, and you get on the phone with them. You know what I mean? So these are teams that we, you know, we want to partner with, we’ve seen good track record with, because we have standards, right with with everything with all of these local rehab and management teams, we personally vet and use them. And if they’re not providing quality inventory and in good service to our clientele and our network, then they can’t be a part of our network. It’s it’s that vetting process that is extremely important. That doesn’t mean every single property operates 100% Exactly like you anticipate you’ll never have tenant issues. But we know that we have teams to you know, stand behind. But I think the kind of the point to summarize in all this, Adam is there’s still inventory out there that you can make cash flow right now. And there’s still some very exciting investment opportunities. So even though we have some volatility in the interest rates, you can still make vital investments. That’s just a metric right now in time. And the some of this stuff, like if, if you don’t take action now and you let inflation eat away at, you know, three or four years down the road, you’re going to be looking back saying I wish I would have I mean, everyone has that hindsight, you know, but it’s important to just take action now. Lots of excellent investment opportunities. Adam, what do you think?

Adam 32:35

Yeah, I mean, I agree completely, it just makes me think of you shared a bigger pockets message that you got with me over the weekend where the guy said, I’m ready to invest with you. I missed out on a lot of money over the last two years. So I

Zach 32:49

love you guys, I love having the conversation with people three, four years down down the road, and they’ve just yet you know, had a decent rental they bought in the Midwest or wherever and we’ve kept in touch and they’ve continued to invest. But then when we actually dive in a few years later and look at their investment because I found a lot of people and this is fine with passive investing turnkey investing, you just don’t really evaluate those numbers every single year and that’s okay. But it’s sometimes you need to look back at it and we look at market comps and how rents have increased over that time and then actually run a return on investment for someone just bought a bread and butter three to Midwestern house that has you know, the the looking at the depreciation they took in the tax benefits looking how the loan has been paid down with principal payments by the tenant appreciation and rental increases. Everyone is having extremely high return on investment, sometimes in the like 100% range. It’s just awesome or sometimes much greater. And then at that point, you can say okay, you want to do a cash out refi do you take a HELOC out? Do you sell that property 1031 and grow your portfolio? My point here is just buying rental real estate and letting it do what it does over time. Don’t be out there looking for this unicorn investment. It’s like okay, I want to have a 20% cash on cash return that probably doesn’t exist if you’re still in a good area. Or if the house doesn’t

have something detrimentally wrong with it. So just buying modest real estate in good areas with good teams. That’s how you build foundational wealth both now and for generations to follow.

Adam 34:17

Absolutely. So head on over to rent to retirement.com. You can see this inventory. Well, eventually you’ll be able to see the Port Richey, but you saw it here today. So if you want to schedule a call with us at rent to retirement.com, we can give you the inside Pro Forma again before it gets put up there. But you can see the active inventory there on the website, schedule a call with one of the investment strategists. We’re happy to walk you through where you want to go with your journey and how to get you there. Leave us a review on a podcast platform just head on over there. And leave the review for us. We’d really appreciate it. If you have any questions that you want us to answer on future live streams, future podcasts, anything, you
can email it to podcasts and rent to retirement.com really appreciate y’all joining us today. I will talk to you on the next episode

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