Tag Archives: return on investment

case study on 6104 Walnut Hills Small Group Investment / Syndication

A case study on 6104 Walnut Hills Small Group Investment / Syndication

This was a small group investment also known as a syndication that I completed in 2004/2005.   It was a duplex needed major repairs so I put together a small group to participate with me in the completion of the purchase, rehab and ultimate selling of the property.   Despite several surprises we ultimately sold the property and made a tidy profit for both the money investors and for myself.   

Please see the attached PDF’s the first of which was my prospectus to the Investors some of whom are members in the REICA group and I hope they felt good about the returns they received ((at least I think that they did))   Maybe one of them will come out and testify about this investment opportunity for the good of the group.   (You know who you are!))  

The final outcome came to a 46% return on investment for the money investors and a pretty good return for me as well!   Check out my budget and how the money was spent to see some of the details of what it should look like when you get started in one of these rehab/syndication deals.

To summarize this one I bought it for 33K and got my money partners to put up 40K and went to the bank and got another 40K to rehab it and we sold it for 140K.   We had some budget overruns (small ones) and almost got sued over it ((that’s another story)), but it turned out great for everyone involved! 

This was the last of my small group investments / syndications!   Now I will only do bigger syndications for bigger properties but it was a great stepping stone in my learning and growth as an investor.   If you want to know why I am against small group investments please send me a private email or post it to the REICA group and I will respond to you.  

I hope that this inspires some of you to go out and begin to put together small groups to help you further your investment goals.


Post your questions to the REICA board and I will answer some of them if any or send me a private email at Ron@theseaygroup.com.

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case study on 4800 Spring Meadow Cove, Austin TX 78744

A case study on 4800 Spring Meadow Cove, Austin TX 78744

                        The Spring Meadow Cove property was purchased on April 22, 2003 from HUD for $54,603.   The property was built in 1984.   The house was a 3 bedroom, 2 bathroom, 2 living areas, a dining area, and a 2 car garage.   The house was immediately rehabbed and listed for sale at $115,000.   It was sold for sale for $116,000.   The repairs were complete by Remar Ministries.   It required approximately $7,500 in repairs.   The list of repairs included:  

  Drywall repair, Paint entire interior of house, Carpet, Rebuilding the kitchen countertops, rebuilding the master bathroom tub surround, new window screens, new ceiling fans, new garage door, new door knobs, and new rain gutters.

 The repairs took approximately 2.5 weeks to complete.   The tax appraisal on the home before the repairs was approximately $94,748.   The after repair value per the appraisal dated April 19, 2003 was $113,000.   The initial loan to value, based upon the appraisal value, was 56% (65K/113K).   Below is a financial break down of the transaction.   There were $2,612 in closing costs associated with the purchase of this property.   Also there were holding costs of $975 per month for 5 months.   The  house was purchased using a “hard money” loan.   The interest rate was 18% the total amount borrowed was $65,000


.The Maximum purchase price was determined by using the formula previously outlined   The contingency factor should be added to the profit for this transaction because it is for emergencies or unforeseen repairs.  


            $Maximum Retail Value $                     $115,000

            (subtract the following) 


            – Purchase Costs                      -$1,000

            – Rehab Costs                          -$7,500

            – Holding Costs                        -$5,000

            – Sales Costs                            -$6,500

            – Contingency Factor                -$5,000

            – Profit                                     -$35,000

            $Maximum Purchase Price   =  $55,000



If the house was going to be held as a rental then it would need to be refinanced.   If an 80% loan to value loan was used after closing costs and escrows TSG would have received a check for approximately $20,000 after paying off the hard money loan and closing costs.   This property would probably be held for 5 – 7 years and then sold.   If the market appreciates 3% – 5% per year (very reasonable appreciation rates) then this property will be worth between 132,000 to 144,000.


If this house were put on the Fast Sell Strategy track instead of the Rehab Strategy track it could have been sold to a rehab investor for $5,000 to $10,000 and the rehab investor would have used a similar formula to determine their profit potential.


Pictures before repairs:















 Pictures after the repairs





 We sold the house for 115K to an owner occupant with a 1st and a 2nd to us for 20K.   They ended up losing the house in foreclosure on the 1st and my 20K second was wiped out!   ((That SUCKS)).   We made good profit and learned a good lesson about taking a 2nd behind an institutional 1st.   Don't do it unless the profit that you get from the payoff of the 1st is good and you dont care about the 2nd.   We could have reinstated the 1st but after they were 3k behind then it was not worth our while any longer so we just passed on it and moved on to bigger and better deals.

This was the only deal (1st and last deal) that I ever used hard money on and it was a learning experience as well.   There was a tremendous lesson on who hard money really works in doing the transaction!    For those interested please send me an email and I will lay it out for you.

As an aside the agent who I had worked with to buy the house ended up buying the house from the bank and went out and did the same type of transaction as I did!  Funny how we even recycle houses in Austin!

Post your questions to the REICA board and I will answer some of them if any or send me a private email at Ron@theseaygroup.com.

1404 EM Franklin Ave – SOLD

1404 E M Franklin Austin TX 78721

Sales Price $125,000 

Property Description:

    The Property is close to the Mueller redevelopment.   This property is a 2 bedroom 1 bathroom small house with only 632 square feet.   It has been a rental property for the entire time that the current owner has owned it.   The rental amount is $550 per month and the lease expires in Dec 2007.   The house comes with a stove, refrigerator, 2 window A/C's and 1 wall mounted heater.   The house is just a small rental house the value is in the lot.   The lot is 75' X 252' and can be subdivided into two duplex size lots.   The property is not in the 100 year flood plain.   The old survey has a fence that has been moved in 2006.   Please click all of the links and review the attached letters concerning the fence and driveway.

    My original plans included dividing the lot into two separate parcels and building 4-plexes on both of the lots.   Unfortunately; after have discussions with the City of Austin's Development Assistance Center Help Desk, I discovered that the most that I could do easily (administratively without a zoning change and public hearing) was to divide the lots and build duplexes on each lot.  Please contact the Development Assistance Center to verify the information.   Based upon conversations with city staff at the development assistance center a drawing was developed to subdivide the lot into two lots.   One approximately 7,500 square feet and the other 11,250 square feet.   Please click the following link for a New Drawing of Lot Layout.   

   Then I planned on selling the individual units as condo's.   There are currently about 20 townhouse condo's for sale around the corner from the property on 12th street listed for $225K to $250K each.   There are two other duplex size parcels for sale on the same street for $109K and 99K.   Please click the following link for information on those lots.   When subdivided the purchase price for each of the two lots created out of the original parcel would be equal to $62,500 each. 

    In 2006 the lot was cleared and about 3 loads of debris was removed.   The fence was constructed on the property line and about 30 small saplings were cut down.   There are several mature oak trees toward the back of the lot and they would provide a huge amount of shade for the back yard of the rear duplex.       

Please click the following link to see more pictures of the property.    

Please click the link for the Sellers Disclosure form.

Analysis of the potential for this property:

    This property should allow the new owner to build two duplexes or four condo's.   Those properties if they are 3/2 should rent for about $1,250 each unit.  $1,250 X 2 = $2,500.   If the units were sold for a low price of $175K each as condo's then to total gross sales price could equal $700K.   I estimate that the total cost to build the units would equal $82K per unit plus the land cost of $32K per unit for a total of $114K per unit.  The gross profit could equal $61K per unit before any sales expenses and holding costs.   The other condo / town home properties in the neighborhood sell for anywhere from $183K to $250K each.   Please click the following links to see some info on those properties.

   Below are pictures of examples of the style of townhouses that I was thinking about building.  This is a single unit that can be combined in multiple units to form a duplex.

Click the line to see the floor plans.   This same design is in another neighborhood that is both further away from downtown, and further away from the Mueller redevelopment is selling with prices starting in the upper $200's.   This fact points to a conclusion that a price of $175K per unit is easily achievable.

    If the property was held for cash flow as a rental property and a reasonable 80.0% loan was put on the property for about $360K.   The cash on cash return should be about 12% in the first year using a 7.5% vacancy rate and a 6.0% management fee.   The average cash on cash return is 14.0%.   If the property was sold at the end of a 5 year holding period the total return per year would jump to a 32.0% return!   See the attached financial analysis of the property.

   The area is expected to grow tremendously over the next 5 years.   The Mueller redevelopment is within 1 mile of the property, but that growth has not even been factored into the demographics study currently available.    From 2000 to 2006 household in the area have grown at a high rate and the median income of the area has also grown tremendously.   Please click the link to see the Demographic study.   

Syndication Potential

   An analysis was also completed to evaluate the syndication potential of the property.   If The Seay Group were to act as the syndicate sponsor we would raise $100K in equity to fund the purchase, construction, and holding period of the property.   The desired plan would be essentially the same as outlined above.   Build condo's and then sell them individually.   The time line would probably be condensed and this project should be completed within 1.5 to 2.5 years.

   The overall returns to the syndicate equity investors would be slightly lower to compensate for the management of the syndicate.    The average cash on cash return would most likely go down to 10% and the total return would likely be reduced to 24% if held for a full five years.     The primary reason for the reduced returns is the reduced management risk, construction risk, and liability risk.   Those risks would be reduced because as the sponsor The Seay Group would take those risk in exchange for its 25% equity share.    

   The equity investors would receive a preferred return of 10% per year and would first in line to receive any equity distribution until they have received their initial capital back.   After their initial capital has been returned they would also receive 75% of any remaining  cash and the sponsor will receive 25%.   The debt structure would initially only be $25K for the land loan at 8%.   This loan would be paid off with the proceeds of the initial draw on the construction loan.   The construction loan total loan amount would go up to a maximum of $360K.   

   If the property was built on budget and on time then the sales proceeds of $700K would be reduced by the $360K loan, $40K in sales costs, $100K initial investment, $20K preferred return to equity investors,  leaving $180K % before taxes to be distributed according to the 75% / 25% split.   $135k to equity $45K to the sponsor.   The exit timing is of utmost importance!   If the property could be sold in under 2.5 years the annual returns skyrocket upward.    If the market turns softer and more time is needed for the property to sell then the annual returns drop down to the one's outlined above.   The total returns change very little but the timing of those returns could make the difference between a 24% annual return and a 70% annual return!

 For more information and examples of other syndications please visit www.theseaygroup.com .

Fence Issue 

   When the property was originally purchased the neighbor's had erected a fence that enclosed part of the property.   This is shown as a fence on the original survey.  Click the link for the Old Survey of the property.   To address this issue a letter was written to the owner of the fence asking them to move the fence or participate with us to facilitate the moving of the fence.   Unfortunately the fence was not moved and the owner "Cameron Smith" passed away and her heirs now live in the property.

    In 2006 they were asked to get a new survey of their property to conclusively resolve any issues about where the fence should be but unfortunately they did not.   After several attempts to resolve the issue with them we were not able to reach any type of resolution so using the original survey the fence was moved to the property line.   The reason that I believe that no resolution could be reached was because they knew that the fence was in the wrong place and did not want to remove any of their things and did not want to lose access to the back yard by moving the fence.   

   The property is now fenced completely.   The neighbors have a gate installed from their back yard to access the driveway.   The arrangement that has been agreed to is that at any time that there becomes a problem access across my property can be cut off,  additionally the new buyer is not bound by my past agreement with them to allow them to access their property across my property.   

   Please click the link for the second Letter #2  about the fence shown on the old survey, and click the link for the third Letter #3 about the fence shown on the old survey before I moved the fence.   Since the new fence was erected in September of 2006 we have not had any more problems from the neighbors concerning the use of the driveway and the access to the back yard.   The new fence goes from the front all the way to the back of the property about 252 feet.   As they say, "Good fences make good neighbors!"


If you have any questions about the property please email me at Ron@theseaygroup.com.

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10502 Cherry Hollow Xing – SOLD

Picture of the front of property

Sale Price $30,000

 More Pictures of the property

Property description

 This property is a major fixer upper.   It needs everything!   Well just about everything.    A/C work, Doors, Electrical, Flooring, Landscaping, painting Plumbing roof patching, trash removal, tree trimming, Windows.   I am talking A-Z on the list of repairs.    Lots of the jobs appear to be small jobs that someone who has moderate rehab skills could tackle.   But make no mistake about it this is not for the faint at heart!   This is a rehab!!

 The value is in the lot.     The property has the lowest list price in the neighborhood.   Take a look at some of the other properties on the market.   This property could easily be cleaned up and turned into a small rent house or replaced with a home in better condition.    It is on a culdesac so there is no thru traffic and sits at the top of the hill with good views of the surrounding area.   There are beautiful houses going in just off 1431 and the growth is moving toward this property.   The area has been growing tremendously over the past few years.   Please click the following link for a demographics study.

 If the property was closer to my other investments I would consider turning it into a small rent house and renting it out for $500 per month to $650 per month and holding it for a couple of years while the growth continues then selling it for $75K or so.


Property History

 The property was purchased as a foreclosure by the current owner and has been sold and repo’d several times and has never received the property attention that it needed to make it a wonderful home.   Now the owners have bigger and better projects to work on and want to find the right person who can love this property back to health and productivity.  

 In the past it has gotten people who have occupied it but never loved it the way it needs and consequently the lack of love has shown!

 If you are the right person and want to make a cash offer the owners are willing to consider taking a discount on the property in order for you to be able to make it work.   Just submit your cash offer and it can be considered!   We are investors and will not be offended by a low offer.

 If you need owner financing we are looking for someone who can put down at least about 10% and who can afford payments of at least $250 per month with a 10% interest loan.   That sounds easy enough but doing the 10% down and 250 a month is the easy part it is the fixing of the property that will require hard work and money to get it done.


Repair Analysis

 Our back of the envelope analysis included:

A/C work





















roof patching



trash removal



tree trimming


















These figures are only estimates and you should hire a professional to fully investigate.


Many of the figures are very rough and include paying professionals to do some if not all of the work.   It may be possible to get the numbers lower but you would need to investigate that possibility on your own.



Rental Analysis


If the property were purchased and repaired and turned into a rental my analysis indicates that the property would generate a 21% average annual cash on cash return and a 30% total return if held for 5 years and sold for $75K.   The rental rate that was used was on $650 per month.   For a three bedroom two bath house that is cheap, but the property is far out and that has to be taken into consideration when factoring the rental amount.   If the sales price could be achieved before the 5 year term the return would rocket skyward!


To see the analysis please click for link for the property analysis.


Flip Analysis


If the property was flipped quickly without doing any repairs just remarketing the property the price could probably be bumped up by $15K for a total of $45K.   If the new seller owner financed the property for $1K and payments of $350 per month and a 15% interest rate then the return on investment would be $1,200/$1,000 = 120% per year!  



But for analysis purposes lets assume that the initial investment is $3K and then the underlying payment on the first note is $250.   The cash flow generated would be $100 per month or $1,200 per year.   The return on investment would equal $1,200/$3,000 = 40% return per year!



If the property was given a cleaning and trash removal then the flip price could easily be pushed upward as the property would appeal to a wider range of potential buyers.  



Owner Financing

If you would like to purchase the property with owner financing I have attached the following documents for you to fill out to submit your information to us as part of the contract.   


I have also attached some examples of the note and deed of trust and other documents that will be a part of the financing package.    If you have any questions about them please don't hesitate to ask, but note that in no way, form, or fashion should any information be construed as legal advise.   If you need legal advise please consult your attorney.

Please click the link for a copy of the sellers disclosure notice

Please click the link for a copy of the Survey


If you have any questions about the property please email me at Ron@theseaygroup.com.


  Please join our linkedin Network at Linkedin.com www.linkedin.com/in/ronseay

9903 Hansford Dr, Austin TX – SOLD

9903 Hansford Dr, Austin TX






















More pirctures of before the property was repaired are below

This property is a rental and the current rent is $1059 which is probably low by about 150 per month.

The pictures before the property was repaired

Pictures before repairs:












Pictures of the old roof before it was replace in 2006

After the hail storm that destroyed the outside

A case study on 4800 Spring Meadow Cove, Austin TX 78744

case studyA case study on 4800 Spring Meadow Cove, Austin TX 78744

The Spring Meadow Cove property was purchased on April 22, 2003 from HUD for $54,603.   The property was built in 1984.   The house was a 3 bedroom, 2 bathroom, 2 living areas, a dining area, and a 2 car garage.   The house was immediately rehabbed and listed for sale at $115,000.   It was sold for sale for $116,000.   The repairs were complete by Remar Ministries.   It required approximately $7,500 in repairs.   The list of repairs included:

Continue reading A case study on 4800 Spring Meadow Cove, Austin TX 78744

property tax protests in austin tx travis county

Every year I protest my property tax valuations and almost every year it is time well spent. It allows me to learn something new about how my property is valued and what other property is valued at surrounding my property and is a general adventure in dealing with people.    Continue reading property tax protests in austin tx travis county

how are your returns?

Why Many Investors Keep Fooling Themselves
by Jason Zweig
Tuesday, January 19, 2010 of the wall street journal penned a great article about How high most investors returns are. You can check it out at http://finance.yahoo.com/retirement/article/108608/why-many-investors-keep-fooling-themselves?mod=retire-planning

To summarize the article says that most investors cant earn over 5% or so on thier investments.

Continue reading how are your returns?