Today’s guest is Beth Underhill.
As a real estate investor, Beth has redeveloped over $5mm in single family homes. Lifestyle Equities Group is Co-GP on over 500 multifamily units, 126-bed student housing, and holds equity in a hotel repositioning in Panama along with an RV park in NE Ohio.
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Intro [00:00:00]
Beth’s start in real estate investing [00:00:54]
Beth’s favorite property – The Boulevard [00:02:36]
The strategy of pushing rents [00:12:26]
Opportunity in the hotel business [00:14:12]
Airbnb arbitrage strategy [00:19:33]
The Importance of Reviews and Subscriptions [00:22:48]
Closing [00:22:46]
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Connect with Beth:
Linkedin: https://www.linkedin.com/in/bethjanuzziunderhill/
Instagram: https://www.instagram.com/investingwithbeth/
Facebook: https://www.facebook.com/TheBethUnderhill
Web: http://www.lifestyleequitiesgroup.com
http://www.lifestyleventuresgroup.com
Connect with Sam:
I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.
Facebook: https://www.facebook.com/HowtoscaleCRE/
LinkedIn: https://www.linkedin.com/in/samwilsonhowtoscalecre/
Email me → sam@brickeninvestmentgroup.com
SUBSCRIBE and LEAVE A RATING. Listen to How To Scale Commercial Real Estate Investing with Sam Wilson
Apple Podcasts: https://podcasts.apple.com/us/podcast/how-to-scale-commercial-real-estate/id1539979234
Spotify: https://open.spotify.com/show/4m0NWYzSvznEIjRBFtCgEL?si=e10d8e039b99475f
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Want to read the full show notes of the episode? Check it out below:
Beth Underhill ([00:00:00]) – So most people think of student housing of Animal House, you know, kids, you know, getting drunk, destroying property, etcetera, etcetera. And that’s really just not what it is. And, you know, these these properties, I mean, they’re set up. They’re they’re beautiful. They’re better than, you know, sometimes even people’s own homes.
Sam Wilson ([00:00:19]) – Welcome to the How to scale commercial real estate show. Whether you are an active or passive investor, we’ll teach you how to scale your real estate investing business into something big. Beth Underhill has redeveloped over $5 million in single family homes. She’s also a coach on multifamily student housing and hotels. Beth, welcome to the show.
Beth Underhill ([00:00:42]) – Thank you so much for having me. Glad to be here.
Sam Wilson ([00:00:44]) – Absolutely. Bet the pleasure is mine. There are three questions I ask every guest who comes on the show in 90s or less. Can you tell me where did you start? Where are you now and how did you get there?
Beth Underhill ([00:00:54]) – Certainly so started in 2018, attended a single family fixing flip workshop and that led us to developing or redeveloping, I should say the $5 million of single family homes pivoted in 2021 to commercial real estate, hopped on a ton of Facebook groups, started meeting people, connecting, creating different partnerships.
Beth Underhill ([00:01:17]) – And that has led me to where I am at today with multifamily properties, student housing properties, hotels and um, and yeah, that’s where I’m at today.
Sam Wilson ([00:01:29]) – That’s a lot, a lot of movement in a very short period of time. What have been some of the primary driving motivators for the different assets that you’ve gotten into diversification.
Beth Underhill ([00:01:41]) – Number one. Number two, it’s really through the strategic partnerships I have. I’ve always had an affinity for the hospitality industry. I used to be in it many, many years ago. So hotels and the the opportunity to be able to travel to a variety of different places and and see those places, obviously, you know, if you go visit a multifamily property, great. But you know, why not go visit Panama, Central America and actually vacation at the same time, too. So part of it is has been the partnerships, part of it is just been my affinity for for other types of assets. And some of it’s just, you know, sort of falling into my lap and and I’ve just run with it.
Sam Wilson ([00:02:27]) – So that’s awesome. When you look at your portfolio today, which which of yours is your favorite and why?
Beth Underhill ([00:02:36]) – Um, my current favorite is probably the Boulevard, which is in Milledgeville, and it’s 126 bed student housing property. It’s just an absolutely gorgeous property. Um, cottage style homes in which the students can live in. And interestingly enough, as we started to acquire this particular asset, I sent my daughter off to college for her freshman year. So I was able to to really understand more about, you know, the assets themselves and what they can provide for students either in there. And generally speaking, you’re not an off campus student in your first year. However, with some of these colleges and universities having an overload and not enough student housing, you can be a first year student and be off campus. So it was really important to me to make sure that, you know, we were buying an asset that was going to provide an environment that and I kept thinking in the back of my mind, okay, if this were my daughter and if this was me as a mom paying for this particular, um, room or whatever you want to call it, you know, would I be okay with it? And and absolutely.
Beth Underhill ([00:03:53]) – It’s a newer build. The developer was, you know, just like most developers, they don’t want to be operating property after they’ve developed it. So once you developed it leads to that but held on to it for a few years and then decided to sell it. And that’s where we came in and scooped it up.
Sam Wilson ([00:04:09]) – That’s really fascinating. So Milledgeville, I don’t know many milledgeville’s, but I’m sure I could find it. Where is Milledgeville?
Beth Underhill ([00:04:17]) – It’s in Georgia.
Sam Wilson ([00:04:18]) – Georgia. Okay. Okay. Very, very cool. This deal came to you. How did the deal come to you? Like, how did it present itself?
Beth Underhill ([00:04:26]) – Sure. So I am. I actually am marketing director for a group, MTN Investment Group. And so through that particular alignment, I was I was part of the deal. This came to us off market. Luckily we have on our team someone who he comes from Landmark Properties, which is one of the largest student housing property developers, as well as property management companies. So through some of his pipeline resources and so forth, this deal came to us and that’s how we were able to to acquire it.
Sam Wilson ([00:05:06]) – That’s really cool. Many people are especially, you know, coming on the heels of. The pandemic. We’re afraid of student housing. It’s like, Oh, okay, cool. Well, then three seconds later, your whole building can be vacant and then there’s going to be, you know, abatements on everything. Lisa I’m not the right word, but, you know, income is going to cease. Like, what are some of the risks in student housing? How are you guys overcoming those and or. Yeah, I’ll just start there then.
Beth Underhill ([00:05:36]) – Yeah, absolutely. I think we learned a lot with Covid. Right? And what we did learn is that students can still be in these types of environments. Like for instance, this particular property, it is the cottage houses are 4 or 5 and six bedroom. So it’s just like living in a house, right? So each student can have their own bedroom, their own bathroom. There’s just the common area with the living space, the kitchen and so forth.
Beth Underhill ([00:06:06]) – And what we learned with Covid is that these students can can survive and thrive. Actually, still going to school through Zoom classes may be a hybrid type scenario. I know my daughter, she has some online classes still, and she actually attends the University of Kentucky, so she’s physically there. But some of her classes are online, some of them are hybrid, which is a combination of online and going to to the physical classroom type setting. So I think that, you know, if we were ever to encounter another pandemic like that, we’re more prepared to be able to handle this sort of thing. And I don’t think we would necessarily see that happening. But a lot of the assets that we are purchasing are set up this way. A lot of the assets in student housing, I should say, are set up this way so that the the students themselves have individual rooms. It’s almost like a studio apartment or almost like a one bedroom apartment per se. So they can still live there. They can still function and they can still attend school.
Beth Underhill ([00:07:15]) – So that is one risk that I think has been minimized more. So, you know, one of the things that I love about student housing is that like myself, as soon as my daughter moves off campus, you know, I’m going to be footing the bill for for anything off campus. Right? I’m it’s my credit card that’s on file. It’s my Social Security number. It’s my credit that’s at risk. And and that’s the beautiful thing about student housing. You know, most people think of do you ever remember the the movie Animal House?
Sam Wilson ([00:07:46]) – Yeah, it rings a bell. But I couldn’t tell you to think about it.
Beth Underhill ([00:07:48]) – Okay. So most people think of student housing of Animal House, you know, kids, you know, getting drunk, destroying property, etcetera, etcetera. And that’s really just not what it is. And, you know, these these properties, I mean, they’re set up, they’re they’re beautiful. They’re better than, you know, sometimes even people’s own homes. Um, so from the standpoint of, you know, mom and dad paying for things right now, you know, the markets that we are purchasing them and you know, the the occupancy is 100%.
Beth Underhill ([00:08:20]) – We have waiting lists on some of our properties. So there’s a shortage out there for student housing. And and that’s what we’re finding. And we’re taking advantage of it right now, capitalizing on it.
Sam Wilson ([00:08:30]) – What’s the difference between what you guys are providing? I’m thinking about here, you know, like the University of Memphis, they’re constantly building student housing, dorms, giant facilities, I mean, brand new stuff. How do you compete with that? You know, I mean, I don’t understand this entirely. So I’m assuming that’s that is university owned versus what you guys have obviously privately owned. How do you compete with those things that the university seeming they seem to be in the space pretty heavy. So how do you compete with them?
Beth Underhill ([00:08:58]) – Well, and that’s that’s one thing that you know, you as you are going through your due diligence, that’s one thing that you do have to research and ensure that the university itself is not going to take away from, you know, the actual property that we’re physically buying.
Beth Underhill ([00:09:17]) – But a lot of kids, they want to live off campus. You know, I know sort of the path for my daughter is first year on campus, second year in her sorority, third and fourth year off campus. She already has girlfriends that are living off campus and they’re heading into their sophomore year. And so that’s just the general trend. There’s only so much housing and land that these universities have depending on where they’re at. So they can only go so far with what they can build. But a lot of them are going through renovations because they’re trying to honestly, they’re trying to keep up with what’s being built off campus. Right.
Sam Wilson ([00:09:52]) – Right. Absolutely. How does the return profile compare from student housing to say, I don’t know, A, Class B, multifamily.
Beth Underhill ([00:10:01]) – Uh, actually, it’s pretty competitive. What we’re finding right now with some of our deals, we’re at right around 18% IRR. About six, I’m sorry. 8% cash on cash, A2X equity multiple. And this is with a five year hold.
Beth Underhill ([00:10:20]) – So fairly competitive. The one thing I do love about student housing is that these properties, they’re leased up ahead of time, right, going into the school year. Most of them, you know, they’ve already been leased up. They’re cash flowing from day one. You have to sign a 12 month lease. So parents are paying for 12 months regardless of whether or not, you know, the kids are living there for three months over the summertime, but a lot of them are subletting and so forth. So so they’re able to get a little bit of that money back into their pocket. But but really, you know, we just first quarter after taking over this property in Milledgeville, we actually sent out distributions to our investors already. So and that’s not typical of, you know, a value add play.
Sam Wilson ([00:11:08]) – It’s not. You’re absolutely right. It’s not. Tell me about. I guess once the school year starts, your occupancy is is probably doesn’t change a whole lot throughout that school year. I mean, it doesn’t.
Beth Underhill ([00:11:22]) – Unless, you know, a student, something happens to a student, maybe illness or they drop out of school for whatever reason, something changes. But generally speaking, no. And then we do have a wait list. And unless there’s some extenuating circumstances, you know, the parents are still paying for that lease for the entire year. Right.
Sam Wilson ([00:11:42]) – Oh, that’s really, really cool. Yeah. I love the idea of 100% occupied. I think you said is one of the one of the properties that you got. Are there any concerns on that front? You know, I’ve heard it said and you know, we only own a couple of multifamily assets and I’m not the I’m not the operator on it. So, you know, don’t have direct exposure to it. But commonly been said like, hey, if you’re 100% occupied, it means you’re probably not priced correctly in the sense that. You know, maybe. Maybe, you know, better, better be 94% occupied and, you know, have a higher rent across the whole portfolio or the whole asset than maybe having 100% occupied, but getting less on the rent side of things.
Sam Wilson ([00:12:21]) – Anything? Anything. Does that strike anything on what you guys are working on right now, or am I just completely off?
Beth Underhill ([00:12:26]) – No, no, no. Absolutely. We are going to be pushing rents. We have already started pushing rents. In fact, this property in Murphysboro that I mentioned, which is near, of course, Middle State, Tennessee University. Um, it you know, the the current owner he was not pushing the rent until we came along and said, hey look, here’s our business plan. This is what we plan to do when we take this asset over. So towards the end of his lease up, he started actually pushing the rents to where we want them to be. And he was getting and he was getting the rents, which was proving to us and him that, you know, our business plan is going to work because people were were biting on those rents. And given the fact that we have 63 people right now on a waitlist for that particular property, I think we’re going to be okay.
Sam Wilson ([00:13:16]) – Yeah, absolutely. Yeah, that’s a strategy I’ve heard before that I really like, which is to make. And it was a it was a mobile home park operator that came on the show maybe a year ago and talked about that, how they would in their contracts, all their contracts, they require the current seller to start raising rents ahead of clothes and they make him the bad guy, like, hey, all right, well, they raised rents and then when they come in, they’ve already got even more property, already more stabilized than it was when they went under contract, which is which is really, really cool. I love that. Okay, cool. So you see awesome opportunity in student housing. We talked about that. Murfreesboro, you’ve got a property down in Georgia and then we haven’t really talked about hotels. I know we talked about this slightly there in the intro recently, like hotels, you like being able to go where you are, vacation in places that you already own. Tell me tell me about the hotel business and kind of where you see opportunity on that front.
Beth Underhill ([00:14:12]) – Absolutely. So, you know, obviously, Covid presented a fairly significant opportunity for people to come in and and kind of swoop in to some of these hotel assets. There were a lot of tired owners, particularly in the Caribbean, and that’s where we have been looking quite a bit. And this is with a different partnership than what I was speaking of previously with the student housing properties. But but these owners are tired. They weathered the storm. They got through it, and now they’re they’re like, okay, it’s time for us to retire. It’s time for us to move on from these properties. And so that’s where people like ourselves come in. And we’ve been talking to some of these owners and been able to successfully take on some of these properties that are in the Caribbean. So I’m part of a deal that’s in Panama, Central America. We have a master lease agreement on that. We’re looking to actually end that master lease sooner than five years. It was a five year master lease. We’re looking to end that sooner than five years and actually just finance the owners out of it and be able to take on the property.
Beth Underhill ([00:15:25]) – Sometimes what happens with the mass release is that you are you still have to you know, you’re still in a partnership, so to speak, with the current owners, and you have to get permission to do certain things. And when you’re not necessarily aligned, it makes for a difficult situation. So the sooner we can get them out, the better, right? So that’s what’s going on there. We have another property in Antigua that we are working to solidify. And the this particular property at 75 keys, cash flowing, it’s it’s crazy cash flowing. They’re running occupancies as high as 80, 85%. And they closed down four months out of the year. So it’s nuts. Absolutely nuts. And they’re one of the few properties that closes for months out of the year. Generally speaking, you’re going to find in the Caribbean maybe properties that will close down like 1 or 2 months. The the the two most dangerous months, let’s just say, when it comes to the hurricane season. But they’ve chosen to do four months because they’re actually from Italy and they like to go back to Italy to take a break from just running the hotel.
Beth Underhill ([00:16:33]) – So they the owners there are a couple and their in their 80s and they’re like, you know what? We just we just want to be done. We want to continue to travel the world, go back to Italy whenever we want to. And so that those are, you know, the owners that, you know, we are we are looking more for. And the beautiful thing about it is that their properties are paid off. So they’re more open to seller financing. They understand that, you know, to to be able to obtain financing actually in. In the Caribbean is going to be challenging. So therefore, they’re willing to carry the paper. It just might mean that you have to come to the table with a larger chunk of money that you might want to. However, to be able to and I’ll just know this is an example on a $5 Million property, maybe you come to the table with, you know, 1 million and they carry the paper for 24 to 36 months. But on a cash flowing asset, you can easily pay that back and and kind of have them out of there at least, you know, maybe two years.
Beth Underhill ([00:17:41]) – So. Wow.
Sam Wilson ([00:17:42]) – Wow. That’s really cool. What’s I mean, what are some of the challenges I’m thinking both from an international investment standpoint, from staffing, internationally, employment. I mean, there’s just a lot of hurdles to get over. You know, I’m I’m projecting here, but I’m thinking, okay, 70, 75 keys, I think is what you called it.
Beth Underhill ([00:18:01]) – Keys.
Sam Wilson ([00:18:01]) – Yeah, 75 keys. So it’s so what’s what are some of the challenges you faced operationally on a hotel like that?
Beth Underhill ([00:18:09]) – Um, operationally, I would say probably the biggest challenge is just getting supplies, especially if you want to do any kind of renovations. You know, you’re relying, you know, down in the Caribbean, they’re relying heavily on places like the United States to actually, you know, for material shipments, etcetera. So I think that’s more of the challenge. You know, a lot of these operators have very loyal staff that has been in place for a long period of time. They like their jobs sometimes.
Beth Underhill ([00:18:41]) – These are the only available jobs in and around these areas. So they’re going to keep them right. And if if new ownership comes in and treats these individuals exactly like they’ve been treated all along, the chances of them going anywhere are are usually very small relative to what we see up here in the United States. It’s it’s not where in the United States sometimes it’s start a job. You know, you’re there for three weeks, you don’t like it and then you quit. You know, they need those jobs there. And it’s you know, they’re such small communities. Work can get around that much quicker than it can, you know, up here. So.
Sam Wilson ([00:19:22]) – Oh, that’s very cool. I love that. I love that. So you see opportunity in hotels, student housing. What else do we talk about there? There was something else we talked about that.
Beth Underhill ([00:19:33]) – Um, we talked about some multifamily, but I also have an Airbnb. It’s an Airbnb arbitrage. So and this is in Fort Lauderdale.
Beth Underhill ([00:19:42]) – We just came back there. We just came from there actually visiting our own Airbnb arbitrage. We wanted to do some things to it, add some, um, add some items to the Airbnb that we thought maybe from an amenity standpoint would be necessary. But it was nice to actually be in our own environment and, and know that, okay, this is what we’re providing to other people. This is great. How can we improve it and so forth. But again, it’s in an area that we like to frequent. We like going to Florida. I live in Cincinnati, Ohio, So, you know, not a bad option to be able to head down. I mean, you know, it’s so funny because, you know, you kind of think to yourself, oh, we don’t have to pay for hotel room. We’re we’re paying, you know, this is kind of free, but it’s really not free, right? I mean, when we arbitrage something, I mean, we’re actually paying to rent the property and the owner is allowing us to turn around and Airbnb this out.
Beth Underhill ([00:20:40]) – So that’s a.
Sam Wilson ([00:20:41]) – Pretty unique strategy. I like I like that strategy. But it seems like you have to find the right owner that doesn’t want to Airbnb and or manage and or even hire a third party management company to do it themselves in order for that to work. How do you go about locating an owner of an Airbnb that is open to the arbitrage strategy?
Beth Underhill ([00:21:02]) – Um, you talked to a lot of owners, to be honest with you, because not all of them that are renting their properties out are going to be open to to that. However, you know, when you look at the Florida market, it is it’s a busy market and places like Miami were becoming very saturated with Airbnb. Um, if you look at kind of that Southeast, you’ve got Miami, Fort Lauderdale up to Boca Raton. Boca doesn’t even allow Airbnbs at all. So, so Fort Lauderdale, you know, falls in the middle. Um, and you know, when we went down there, let’s see, I think it was towards the end of January, we visited numerous locations and talked to plenty of owners and finally found one that said, You know what, Yeah, I’m totally open to it.
Beth Underhill ([00:21:48]) – But, you know, the contract, of course, is going to make you all reliable or responsible, I should say, for anything that happens to this. And we have I think we have a very fair contract. He’s making money. We’re making money. It works out for everybody.
Sam Wilson ([00:22:04]) – So that’s that’s great. I love it. I love all the things you’re in or that you’re investing in. I love the diversification, the the commitment to each one for their own unique reasons. That’s really, really cool. Certainly appreciate you taking the time to come on the show here today. Beth, it’s been a pleasure having you on. If our listeners want to get in touch with you and learn more about you, what is the best way to do that?
Beth Underhill ([00:22:24]) – They can email me. Beth at Lifestyle Equities group.com or they can follow me on Instagram at investing with Beth on TikTok same handle at investing with that or you can text me (513) 470-1078.
Sam Wilson ([00:22:40]) – Awesome. We’ll make sure we include all of that there in the show notes that.
Sam Wilson ([00:22:43]) – Thank you again for coming on today. I do appreciate it.
Beth Underhill ([00:22:46]) – You’re welcome. Thank you.
Sam Wilson ([00:22:48]) – Hey, thanks for listening to the How to Scale Commercial Real Estate podcast. If you can do me a favor and subscribe and leave us a review on Apple Podcasts, Spotify, Google Podcasts, whatever platform it is you use to listen. If you can do that for us, that would be a fantastic help to the show. It helps us both attract new listeners as well as rank higher on those directories. So appreciate you listening. Thanks so much and hope to catch you on the next episode.
