How to Scale Commercial Real Estate

Feb 20, 2022

From putting out fires in properties to building properties that make an apartment community.

This has been the unique path to the real estate industry of Seth Teagle, formerly a firefighter and now a Principal of the vertically integrated company, The Stream Group.

His team has over 50 years of combined experience in owning and operating apartment communities, specializing in renovation style construction, property management, and operating at peak efficiency. 

He joins us today to talk about his journey to real estate and share a few pieces of advice for new investors…so they won’t make the same mistakes he did before. 

[00:01 - 05:39] Opening Segment

• Seth Teagle talks about how he educated himself in real estate
• How he realized that multifamily would be his niche

[05:40 - 14:35] From Firefighter to Real Estate Investor

• The early challenges that a new real estate investor will face along the way
• • How Seth overcame all of them
• Here’s Seth’s action plan to complete with institutional investors
• Seth tells us why we should consider focusing on one asset class only
• Seth’s advice for someone planning to go to real estate development

[14:36 - 17:21] Final Four Segment

• A tool or resource you can’t live without
• • His phone
• A real estate mistake you can help our listeners avoid
• • Not knowing what you don’t know
  • It’s important to find somebody that has done what you plan to do
• Your way to make  the world a better place
• • Giving back to a homeless organization in Newark
• Reach out to Seth
• • See links below 
• Final words

Tweetable Quotes

“...if [you were] buying something that was in an unknown market or unknown area, there's just a ton of research and things you got to do really...” - Seth Teagle

“I would definitely go in with somebody that you know, like, and trust for your first deal…because [there are] so many landmines that are out there that you don't even know about.” - Seth Teagle

“Think bigger…think about what that one deal will unlock for you  next year or two years from now or whatever, and how that can snowball.” - Seth Teagle

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Email seth@thestreamgroups.com to connect with Seth or follow him on LinkedIn. Are you interested to do a different way of investing in real estate? Check out The Stream Group now!

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I love helping others place money outside of traditional investments that both diversify a strategy and provide solid predictable returns.  

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Email me → sam@brickeninvestmentgroup.com

Want to read the full show notes of the episode? Check it out below:

Seth Teagle  00:00

I don't want to be a home developer. I don't want to own a neighborhood or do single-family homes. So we'll sell that off. And there's another assisted living component to it that will probably sell that off. And we're hoping that the money that we'll make from the appreciation and just you know, buying raw land and getting all that stuff down, you know, you get all the hard work done, it adds a ton of value. So we'll turn around and then invest in the apartment community that we'll put there. So that's our ultimate goal is to be the ones that own the apartment community.

Intro  00:24

Welcome to the How to Scale Commercial Real Estate Show. Whether you are an active or passive investor, we will teach you how to scale your real estate investing business into something big.

Sam Wilson  00:36

Seth Teagle is a firefighter who transitioned to a vertically integrated multifamily company. They're developing land, taking down deals and kicking butt, and taking names. Seth, welcome to the show.

Seth Teagle  00:47

Hey, thanks for having me. Great to be here.

Sam Wilson  00:49

Hey, man, the pleasure is mine. You know, we got to talk really off air before we really started recording this. You guys are doing a lot of crazy things. And it's not crazy, but amazing things. And I'm absolutely loving what I was hearing. There's three questions I asked every guest that comes on the show. In 90 seconds or less, cn you tell us where did you start? Where are you now? And how did you get there?

Seth Teagle  01:06

I started with nothing, just a simple blue-collar fireman, right, which was a dream of being a big real estate investor. Where am I at? Now we own I own a company that has just a holdings in just over 2000 units. So we've got what 600 here in Central Ohio. And then we've got equity holdings, and over 2000 a lot 1400 across the country. And then we vertically integrated last year. So we've got property management and construction that we are doing all in-house. And where do we see is going? I'm not really sure I don't have a stopping point. I don't have like a unit count or a deal. You know, this is my last deal kind of thing. It's just stuff keeps coming towards us. And we say no to a lot of things. But then, you know, through the pile of nose, there's usually a yes or two in there. So that's what we look for.

Sam Wilson  01:47

Yeah, absolutely. I love that. I mean, it's not like you're classically trained in the building a business, vertically integrating it, and doing deals all over the country when you're a firefighter, right? I mean, right, as you're trained to put out fires, how did you educate yourself? And really, you know, build your team around you? What were some things that you did to scale in a meaningful way? 

Seth Teagle  02:09

Yeah. So for me, you know, it all started like six or seven years ago, I have, you know, like said, living life, I've been in the fire service. 21 years, I started when I was 18. I did college. During college, I was in the fire service, and somebody that I knew back then, you know, we've kind of like gone separate ways. And he went into real estate, I went in the fire service. And so I had lost contact with about 10 years. And when I finally reconnected with him, he was investing, he was wholesaling. He was doing hard money landings, and all this crazy stuff I'd never even heard about and, but I was super interested. So he sent me an mp3 via email, a course that he did on house flipping, just to kind of like, hey, you know, because he's he teaches these courses. And he was like, just, I'll just send it to you. Because I know Yeah, take a listen and see what you think. And so I just consumed that I was hooked. I was like, This sounds awesome. And, but I had no idea where to start. So I, you know, and then I didn't know anybody locally that was doing it, you know. And so, you know, I was just kind of like listening to podcasts, I had found out about bigger pockets. So back then I was listening to that it was all single family, or, you know, 90% of the stuff that was on there. And I met a guy that was I met him. He's a contractor I met through a job I had heard before, and he was actively flipping houses. So as soon as I heard that, I was like, Man, I want to talk to this guy. So long story short, we became good friends. I did, I offered to work for him for free for as long as it took me to feel comfortable. So I did project management, and I did property management for him. He had a small portfolio of 20 units or so single families and small multi. And then he was flipping houses as well. So I would do all of the project management for that. And he loved it helped him out because he knew I would, I'm trustworthy. And I knew it was what I was doing. And it was great for me because I could get all the hands-on experience I wanted to I was I had access to him to ask questions and all kinds of and I had no capital at risk. So that was the great part. We did that for about a year. And through that process, I realized that multifamily was my you know, it's kind of my lane. I was trying to figure out how do I scale? How do I grow a business? How do I become financially independent, while continuing to have a career because I still was super passionate about the fire service. I loved everything about it. I spent so much time and schooling and money, you know, like kind of perfecting that craft. And so I was doing both for I've been doing both for a long, long time. And I'd say the first deal I ever went into was a 50-unit. I bought that with one investor, we kind of pulled our money together. I took that down spent a year there pretty much every day that I wasn't the firehouse going over, you know materials, doing some of the work, managing contractors is kind of like earning my stripes on that deal. And I just knew that that deal could go right and go well, then I'd be set you know now I have a story. I have a resume. My wife would believe that this can be successful, you know, all the important things. And so we bought that one, but we did for about 13, 14 months refired did very well on the refi was able to pay back any investor that we had brought in and then just went on to the next one and then we went to the next one and it's just kind of grown to be this big thing and as we've grown, we've brought on other people into the team to, you know, work for us, we employ about 15 people on the management side and about seven or eight guys on the construction side that solely focus on our unit turns and renovations. And then like I said, just networking and meeting other people that either want to get into Columbus or need a KP on a deal are they want me to experience or maybe they're running into the situation that I did, where I went through about six banks before I found one that would believe in me enough to do that first loan, and give me an opportunity to really kind of get it off, get the thing off the ground. So that's kind of how we've gotten to partner with other people is just, you know, kind of being out there and networking and, you know, having a proven track record.

Sam Wilson  05:40

Yeah, man, that's absolutely intriguing. I mean, and I love just kind of natural progression for you. Are there bottlenecks along the way, when you just when you seem to get stuck in a rut? And we're like, Alright, how do I get out of this?

Seth Teagle  05:52

Yeah, so I mean, like my first deal, I went in undercapitalized, I didn't even you know, again, you don't know what you don't know, I had enough money to close the deal. And what 50,000, less and 50,000 more than that, I thought I'll be set. And then when the first payment came in, and I was about 14 tenants short, or what I thought I was supposed to be out, he got real, real fast, you know, and I called another guy that was a, he was a firefighter up in Strongsville, Ohio, and he'd gotten out of the fire service, was a full-time investor, and I called him and, you know, he'd kind of been like a mentor from a distance. And we talked, and he kind of gave me some things that I could try to do or whatnot. And the big thing that he said was like, No, you better get on it and find some private capital, just do notes for you. So you can, you know, raise some money, and I just went hardcore after it, I was able to raise a couple $100,000 doing that, and we were able to, I said that project was successful in the end, you know, there's a lot of hurdles I jumped through on just that one. And then, you know, other bottlenecks, again, any anybody that has scaled or the, you know, you might want to be an investor, but being a business owner, and being an employer all comes with its own things that you don't even think about. And so just dealing with some of the HR things, we have to worry about some of the, you know, the background checks, just keeping employees happy, you know, working conditions, material ordering logistics, I mean, we did we do last year, we did about 1.5 million, and just materials for our renovations. And so trying to manage a full-time job for somebody that we have here that just manages the logistics of getting material ordered, and getting it from point A to point B. So, you know, all of those things were bottlenecks. And when we realized we were bottlenecking, we were like, we hired somebody, you know, to take it over. So…

Sam Wilson  07:21

That makes a lot of sense. Yeah. When you run into a challenge, and especially once the business starts generating revenue, where you can afford her and people on let sounds like a really neat or smart way to scale, I should say, let's talk about this land deal. I mean, so you guys are not just, I mean, 50 units, it's a value add deal. Okay, you turned it in 14 months. Good job. I mean, that. That's awesome. Yeah. But breaking into developments, a brand new set of skills, talk about this project? And then tell us how did you work up the courage to get into development? I mean, or even how did you get into development? Because that, again, that's a brand new set of skills beyond just a value add apartment complex?

Seth Teagle  07:57

Right. So yeah, so I mean, again, it all goes back to networking. You know, we met a group that we did a couple of deals with here last year that wanted to get into the Columbus market, one of the guys on their team was, he's done a ton of development in ground construction, I had not or have not really done a ton of it, I know kind of like what I need to do and where we want to go and how to get there. But I by no means have the experience to take down a huge deal. But, you know, again, it's all you know, who's in the room. And you know, so we have, he's part of our team, there's three of us on The Stream Group if you looked at our website at all, or anybody else, those are three of us there. And you know, he brings a level of knowledge and experience that we don't know we give you again, by the apartment building, renovate it, do the value, add, refi. Like we've got that down. But we wanted to kind of, you know, this opportunity came front of us. And we were like, Man, this is like, it's just it's in my backyard. You know, it's less than 10 minutes from my house. I know the area very well. I know the demographics, the economics, I know all the very, very well. It's within 25 minutes, 20 minutes of Columbus, which is a phenomenal market right now in the Midwest, tons of growth, huge housing shortage, tons of you know, equity groups and other you know, overseas investors that are coming into our North Central island is buying up the marketplace. And it's very hard for a local guy to compete with institutional buyers or you know, these large equity groups because they're just buying for reasons where I can't compete with that, you know, so we are always doing what we're looking and doing well in some of the tertiary markets. And this happened to be in kind of a secondary, tertiary market to Columbus. But one of the amazing things that has been publicly released in the last few weeks is that Intel's building, they're doing like it's like a $20 billion complex that they're going to do this chip manufacturing plant and the chip manufacturing plant will be between where I live in Columbus, and all the things that I know about the area, you know, the land is pretty much locked up right now between Columbus and Ryan live out here in Granville, Ohio, which is about 20 minutes east of Columbus. You know, the utilities cannot be run there, the townships in the municipalities don't want to run the sewer lines, the electric they don't want to run all the things that need to be there. So that land is just going to continue to sit there for the Next 10 to 15 years. And so we've kind of like where can we go to get a good deal on something that, you know, if we got a skip, well, you know, obviously another buy in that area, right? That's right. That's kind of like everybody would, you know, but this piece of land came up off-market for a broker that we're that I'm friends with my kids go to school with his you know, so it's a great relationship. And he had been putting this thing together for like a year, and came to me and said, “Hey, you guys, we have bought three or four deals from him over the last couple years, believes in what we're doing, we're local, you know, and it's just, it's a great opportunity for us to kind of get our development feet wet locally, again, like we've got a partner that is done it. So we have the guidance there.” Right. But you know, he's not here in Ohio. And he probably, I mean, I doubt he'll ever even come look at it. But he's there, you know, we have the experience, we have the qualifications to get it done. And like I said, I'll be working on that pretty much full-time while we get things underway and get the zoning and entitlements done and all that, then our plan will be to sell off the parts of the land that we like, I don't want to be a home developer, I don't want to own a neighborhood or do single-family homes. So we'll sell that off. And there's another assisted living component to it, that will probably sell that off. And we're hoping that the money that we'll make from the appreciation and just you know, getting all buying raw land and getting all this stuff down, you know, you get all the hard work done, it adds a ton of value. So we'll turn around and then invest in the apartment community that we'll put there. So that's our ultimate goal is to be the ones that own the apartment community.

Sam Wilson  11:19

That's intriguing. Yeah, so you guys don't want to do the ground up in the assisted living, you don't want to do the ground up in the single-family homes, you want to build the apartment complex, sell off the rest of it once it's entitled, and then use that. 

Seth Teagle  11:31

I mean, that's the plan as it sits today, right? I mean, you know, who knows what will happen, you know, between now and then, you know, I've always liked assisted living, but again, you know, I'm very, I believe in staying in your lane, right? I know guys have been real estate investors, they're like, I'm gonna go open a restaurant, and then that implodes on them, and they lose all kinds of money or whatever. And I know, apartments, I know multifamily. You know, I know the market. I know, you just I know, that's my space and my lane. So for us, you know, I just don't know that I didn't want to get into a building single-family homes and all that. And there's plenty of other developers around Columbus that would love it. So if we can sell the land to them and make a profit, and they can turn around and development make a profit there. Everybody wins. 

Sam Wilson  12:08

How do you model that out? Like, how do you project with the future resale value of the home development side? Or the assisted living project? How do you value that into your model?

Seth Teagle  12:19

So right now, we're doing everything on our own. So we have the capital, that we're taking it down, just the three of us. And then we're working closely with the broker that has the deal with plus, you know, just again, our local knowledge of the market and what raw land or Shinsei what raw land is selling for, but what is land selling? What are home parcels selling for once all the entitlements have been done, and all the streets are done and the, you know, all that work is done, what are they selling for right now. And as long as we you know, if we, let's say we buy the, we're paying, I don't know, $14,000 per parcel, and then we put 20,000, in rolling for 34,000, we can turn around and sell it to a developer for 55,000. And then he might sell to the general public for 75,000, you know, or whatnot. But, you know, when there's 250 to 300 of those parcels, it gets to add up pretty quickly at 15,000 or pop. So right, that's kind of what we're doing, I guess it's, it's obviously going to be pro forma out, you know, but we're doing as much details as we can now we're looking at everything and kind of, you know, understanding, you know, doing full economic research and making sure that everything checks up, but there's a few different subdivisions going in and around this area. So we're really just, you know, taking data from, what they're doing and what they're selling for, and all that kind of stuff and kind of modeling those numbers into what we're looking at.

Sam Wilson  13:26

Right? That's absolutely intriguing. Love that. Yeah. Was there any I mean, other than bringing on a partner, like you guys have done to that has the industry expertise? Is there any other advice you would give to somebody that's looking to get into development?

Seth Teagle  13:39

Into development? I would just say, do your research, you know, there's so many things that, you know, I'm uncomfortable with it, because I know the area I live, like I said, so close to it. But if I was buying something that was in an unknown market, or unknown area, there's just a ton of research and things you got to do really, before, you know, anything goes hard. And in for us on this, you know, we have any contract, but our runway is 120 plus days, you know, so we've got a ton of time to do all of our due diligence to do all of our research, you know, it's really the way the contract was written is if the zoning gets, you know, if everything goes the way that we believe it will, and the way that the seller has, you know, like the way that they kind of get the ball rolling, and as long as it rolls the way that they say will roll, we're going to be good. But if it doesn't, then we have contingencies within the contract where we can then back away Sure. And I think it's like, I think we have half of our money that we put down going hard after like six months or eight months. So like I said, you know, in six months, we'll know way more than we do today. And as long as we continue to, every box continues to get checked, then our money will go hard and we're gonna be good to go.

Sam Wilson  14:36

That's intriguing. I love that. Thanks for taking the time to break that down. That, let's jump here into the final four questions. The first one is this: What is one tool or resource you find you can't live without?

Seth Teagle  14:46

Ooh, probably my phone. So I do all my scheduling through that I do everything you know, but I mean, it used to be just kind of like a novelty but now it's like, I'm on the road so much or going to different, you know, meetings and whatnot that may have I didn't have that thing. You know, it would be, life would stop pretty quickly.

Sam Wilson  15:01

Right? Yeah, absolutely. The second question is, if you could help the listeners avoid just one mistake in real estate, what would it be? And how would you avoid it?

Seth Teagle  15:08

I kind of mentioned it earlier, I would definitely go in with somebody that you know, like, and trust for your first deal, you know, or if you're changing asset classes, going with somebody that has done it has experience on your first deal to kind of cut your teeth because there's so many landmines that are out there that you don't even know about. And I mean, like you said, if you can learn from somebody else's mistakes, why recreate them? So, you know, you man, like, when I did my first apartment deal, I gave him 50% to somebody that did hardly anything, they never, they set foot on the property like twice, but you know, he got me into the next 5,6,7,8 deals, you know, so that's the thing is, that's one of my big thing is not to be so, I don't want to say small-minded but don't be like so like, like, think bigger, you know what I mean? Like, don't think just that first, that one deal, you're thinking today, think about what that one deal will unlock for you, you know, next year or two years from now or whatever, and how that can snowball.

Sam Wilson  15:56

Right. I love tha0t. When it comes to investing in the world, what's one thing you're doing right now, to make the world a better place?

Seth Teagle  16:01

We are giving back through a homeless organization here in Newark, there's a lot I mean, there's just always people in need. And so rather than I'm not a big fan of like, giving somebody that's panhandling on the side of the street money, right? There's tons of organizations that are out there that can verify what you're doing and making sure that getting to the, to the right people that need it. And so we try to help some fund one here that's local for me, and help them whenever they have needs, they let us know. And we kind of help guide that and work with them. So…

Sam Wilson  16:26

that's fantastic. I love it. Seth, if our listeners want to get in touch with you or learn more about you and your company? What is the best way to do that?

Seth Teagle  16:32

They can look me up on Facebook, Instagram, or LinkedIn, just check out my name, Seth Teagle or they can go through our website. It's the WWW dot the stream groups it, groups is plural.com. And they can fill out our like information request on there. And then that comes to my email and then I'll usually follow up within a few days and then connect that way.

Sam Wilson  16:52

Sounds great. Thank you so much for your time today. I do appreciate it.

Seth Teagle  16:55

Absolutely. Have a good day. Thank you.

Sam Wilson  16:56

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 I appreciate you listening. Thanks so much and hope to catch you on the next episode