Student Housing Investing, Land Development, & Raising Capital with Beth Underhill

Beth Underhill (00:00)
Once you lease up a student housing ⁓ complex, very similar to an apartment complex, an apartment community, you’re done for a year.

Most people don’t realize that. They think it’s a nine month lease and for three months, you’re either not receiving rent or you have to find a tenant to fill that spot. But the students are actually paying year round.

So the cash flow is there, it’s consistent. And that’s another thing too. Once you are leased up, you know how much revenue you’re generating every single month.

Michelle Kesil (02:07)
Hey everybody, welcome to the Real Estate Pros Podcast. I’m your host, Michelle Kesil and today I’m joined by someone I’m looking forward to chatting with, Beth Underhill, who is a commercial real estate investor. So excited to have you here today, Beth.

Beth Underhill (02:24)
Thanks so much for having me on Michelle. Appreciate it.

Michelle Kesil (02:27)
So let’s dive in. First off, for those not familiar with you and your work yet, can you share what your main focus is?

Beth Underhill (02:34)
Yes, ⁓ currently my main focus is ⁓ land development. ⁓ I have taken a bit of a pivot ⁓ primarily because of interest rates from acquisitions and in particular in the purpose-built student housing market ⁓ and pivoting into ⁓ land development. So we have a few projects that we’re working on, pretty excited to share more ⁓ on them.

Michelle Kesil (03:02)
Awesome.

And what markets do you operate in?

Beth Underhill (03:05)
currently in the Georgia market as well as Tennessee.

Michelle Kesil (03:09)
Cool. And so how do you get started into real estate?

Beth Underhill (03:13)
I started in real estate fixing and flipping single family homes. My husband and I, own and operate an outdoor living space construction company. ⁓ We thought that the transition, or I should say not so much a transition, but the addition of… ⁓

you know, taking homes, flipping them, the interior work and so forth would ⁓ would just be natural and natural progression for us with our outdoor construction company. However, we quickly learned that it was like another job and we already were pretty busy, especially with COVID. When COVID hit and that’s right around the time that we started fixing and flipping our outdoor living space construction company went crazy. And so we thought, you know, instead of overtaxing our

business that we’ve been doing for 20 plus years and we know and we understand it that maybe there was a pivot that ⁓ needed to be made and so that’s when I pivoted into commercial real estate. I met ⁓ up at ⁓ one of many networking events with ⁓ four of my, ⁓ well three I should say, of my five partners and they were looking for someone to handle investor relations, marketing and so forth and I thought

you know, this would be an not an easy pivot but an easy way to actually gain entrance into an area that I’m completely unfamiliar with. But I had just being in customer service all my life, I knew I could handle the investors, take care of them and so forth and have always liked to do the creative piece. So marketing, creating pitch decks, websites and so forth is what I was tasked with.

there that’s how my commercial real estate experience took off and I’ve been just enjoying it ever since.

Michelle Kesil (05:10)
Awesome. And as far as like the pivot into the commercial side, what have been some of the biggest challenges and biggest rewards of this particular asset class?

Beth Underhill (05:25)
⁓

Sure, yeah, the asset classes is rather interesting. Student housing ⁓ is a subset of multifamily and many people don’t realize that and they don’t realize that there’s a lot of perks actually to student housing. Once you lease up a student housing ⁓ complex, very similar to an apartment complex, an apartment community, you’re done for a year. Now, granted, you do start your lease

lease

up as soon as the school year begins. But it’s kind of that one and done, whereas with multifamily, if someone moves out or two or three people move out in September, you have to look for your next tenants and then you have that same thing that can happen in October, November and so forth. Whereas with student housing, once it’s leased up, it’s leased up. Now you might have to backfill depending on where that lease up ends up.

But overall, it’s just an interesting asset class. I know a lot of people don’t want to deal with students. They tend to think that, this is like animal house, you know, that the students are going to get ⁓ kind of rowdy and crazy and they’re going to break things and, you know, there’s going to be holes in walls and whatnot. But the parents themselves are actually signing on the dotted line. So the parents are responsible for any damage that their child does.

So that makes it easier to recoup those costs. Unlike with multi-family, sometimes you can’t always recoup those costs. In addition to that, students sign a, students and parents I should say, they sign a 12 month lease. Most people don’t realize that. They think it’s a nine month lease and for three months, you’re either not receiving rent or you have to find a tenant to fill that spot. But the students are actually paying year round.

So the cash flow is there, it’s consistent. And that’s another thing too. Once you are leased up, you know how much revenue you’re generating every single month.

So it’s not this like, kind of this up and down that might occur with multifamily with tenants moving in and out. So there’s a lot of benefits to the asset class and I would say that that’s the upside there. Now, finding assets that

are ⁓ fit within our business model, that are close to campus, that are near top tier universities. That’s really where some of the challenge comes into play. We’ve been very fortunate to purchase Class A assets. So they haven’t come with too much of headaches and so forth that maybe a Class B that’s older comes with. And we’ve also just really focused on markets that we are very familiar with.

One of the things that we love about the Georgia market is that the students have available to them through the state what’s called the HOPE Scholarship and that HOPE Scholarship really almost pays, I would say 95 percent of the students, ⁓ you know, tuition. So, you know, you’re talking about students that don’t have then a lot that they have to be looking at affording and for the parents themselves.

themselves too, so they’re more apt to spend dollars on their living expenses and where they’re going to reside, know, through those four or five years, however much it would be. So that makes a big difference. And I would say there’s, you know, really like, I think at one point in time, think 80, 85 % of the students that actually go to colleges within Georgia receive the HOPE Scholarship. So it’s a big benefit.

Michelle Kesil (10:05)
Yeah, absolutely. think that is an amazing way to get into real estate. yeah, like you mentioned, there are those ⁓ protection pieces there that most people probably don’t realize. Awesome. So you mentioned that there’s some exciting projects that you’re working on. Is that something that you’d like to share?

Beth Underhill (10:21)
Mm-hmm.

absolutely. ⁓ You know, right around the time when interest rates started rising, we opted as a partnership to pause acquiring properties. through the grace of God, we ended up ⁓ being presented with two opportunities. Both of them are land development opportunities. One is for a mixed use multifamily ⁓ project just outside of Atlanta.

Georgia. The other one is what we call a small ecosystem in the Cincinnati market that consists of hotels, ⁓ multi-family, single tenant leases, and then also it’s anchored by a field sports facility. So the thought with it is that this field sports facility that would be hosting tournaments primarily, you know, on the weekends, ⁓ April through

October would be driving in quite a bit of traffic and thus the need for the hotels. In addition to that, there is need for ⁓ additional residents, residential units ⁓ in and around the area, so the multifamily. And as we start to build it out with, ⁓ you know, restaurants, ⁓ retail, office space and so forth, you know, it’s going to kind of gain that traction of

small community. So we’re pretty excited about that. We’ve got the backing of the city and we will be receiving TIF funding to ⁓ assist us with the horizontal infrastructure ⁓ and we’ve got a few partnerships already with a variety of hotel or one hotel in particular I should say that ⁓ is interested in building ⁓ and then a group that’s interested in building the multifamily piece of it and now of course we’re just building

out the sports facility, what that’s going to look like, how many fields we will have, and then the partnerships that will come along with that because not only will the field sports facility encompass ⁓ just the tournaments themselves, they will also house other opportunities such as a gymnastics center or a field sports, or fields, or I’m sorry, not a field sports house, but just an indoor kind of

drawing a blank on what I want to call it, what I want to refer to it as, but you know, place where like you can cheerleading tournaments and you know, things along those lines. And then also alignment with, ⁓ you know, hospitals and ⁓ orthopedics and you know, things that will align with if, you know, you’ve got, you know, sports or your athlete’s getting hurt and so forth and physical therapy and whatnot. That’s what I, that’s

I was going with it, my apologies. There’s just so much to this project, there’s a lot going on and we’re just excited to get it off the ground. So we’re working through ⁓ everything related to the zoning and whatnot and just have a few more pieces to put in place and then we’ll be able to close on the deal.

Michelle Kesil (14:25)
Awesome, sounds like such an exciting project and opportunity.

Beth Underhill (14:29)
It is. It is.

Michelle Kesil (14:30)
Yeah, what has been the biggest challenge in this new development?

Beth Underhill (14:35)
that’s a really good question. I think building out the model and just figuring out what…

the alignment should look like. You know, when you think of ecosystems, you want anything that you put on this property to make sense, you know, as in, you know, why would you put X restaurant here when it doesn’t necessarily, it’s not going to serve the purpose of, you know, the families that are coming in for these tournaments and so forth. So I think figuring out that piece of it has been challenging.

Obviously this land was zoned farmland so there was the hurdle to get it rezoned in order for it to be zoned according to what we needed it to be. And then educating partnerships and like for instance the hotel brand that we’d like to build. They’re educating them on why this land, why this piece,

make sense. You know, it’s hard for everybody to see your vision as you see it. And then there’s also that bias that comes along with, you know, my partners and myself, you know, our bias towards, wow, we think this is a great opportunity and everyone should see it as we see it, but not everybody does. And so when you are speaking with ⁓ lenders and family offices and

and looking for partnerships from the capital side. You know, they’re gonna poke holes in it. And sometimes those, you know, that those, the poking of those holes end up being, you know, a real reality check of, okay, do we need to make a pivot? Is there something we’re not missing? What are they seeing that we’re not seeing? So yeah, there’s a lot to be doing something on this scale. So we’ve learned quite a few lessons along the way.

Michelle Kesil (17:20)
Yeah, well, that’s exciting to be able to work through those lessons and keep going on creating this project.

Beth Underhill (17:29)
Yep.

Michelle Kesil (17:29)
So what advice would you give to someone that’s looking to get started in real estate investing?

Beth Underhill (17:37)
would say build your social capital first. So that was something that ⁓ I didn’t necessarily do early on, but when we began fixing and flipping ⁓ single family homes, we actually had attended several events and that’s where we met our private money lender lending partners. ⁓ Had we not gone to those events, I’m not sure how we would have gone about funding the

The single-family flips simply because so much of our capital has has and was tied up in ⁓ our other business So I think just making sure that you always know Or are creating those relationships. You’re strengthening those relationships. You’re not just ⁓ meeting people just because you’re looking for funding but But Jen genuinely letting them know like hey, this is what I’m doing. Yes. This is what I’m looking for, but I’m not speaking

to you today just because I know you could be a private money lending partner. I want to get to know you, what your business is all about, what you’re looking for, because maybe we’re not going to be a good fit. And I think too often people will go after the capital thinking that everybody is a fit for what it is that they’re doing, and that’s not necessarily the case. So there’s people that have specific asset classes that they want to fund. ⁓

or they have a specific time frame that they would like to see their monies returned. And so when you have that, you know, it’s like fitting a square peg into a round hole, right? So you just have to make sure that there’s alignment there. But I think the more people that you can meet, the more people you can let know what you’re doing. And even if there’s a private money lender maybe that’s or an investor that doesn’t fit necessarily with what it is that you’re doing, creating that relationship and letting them know

Hey, if you come across anybody that might be interested in investing in something that I’m doing even though you’re you may not be Please keep me in mind. So it’s it’s all about the relationships and you know you you know when your social capital reputation, you know takes a hit because it may be something you ⁓ Did or didn’t do and it went down a negative path, you know, you really have to protect

that reputation so ensuring that whatever you do you’re always doing right by anyone that invests with you.

Michelle Kesil (20:17)
Definitely that’s great advice. And so yeah of course. And so how do people or how do you connect with these people?

Beth Underhill (20:19)
Thank you.

You know, I think there’s so many places, right, that you can connect with people. Real estate events are obviously one of the easiest ways. ⁓ Your local REA groups, your local meetups, ⁓ you you can go online and go to so many different virtual meetup groups, which is easy enough. But I feel like being in person at events is where, you know, you really can create the strongest relationships.

I’ve also found that going to non-real estate related events, you just end up meeting people in so many different circles of life that aren’t kind of your circle. to me, it just exposes you to a new set of individuals, number one. And it just also exposes you to new opportunities. There’s things out there that sometimes you don’t think when you’re

just solely in real estate, like wow, I had no idea that this was a thing. And so for me, over the last few years, I’ve opted to pick certain real estate events that ⁓ I like, that I feel have always been fruitful for me, and then also choose to go to at least two or three non-real estate events where I can meet different people and who are doing different things.

you know, again, not real estate related. ⁓ And I found investors, you know, specifically from doing that.

Michelle Kesil (22:03)
Yeah,

amazing. I love that advice. Thank you for sharing.

Beth Underhill (22:06)
Mm-hmm.

Michelle Kesil (22:07)
So before we wrap up here, if someone wants to reach out, connect and learn more, where can people find you and connect with you?

Beth Underhill (22:14)
Sure, I can be reached at email. It’s beth at investingwithbeth.com. You can also text me, give me a ring at 513-470-1078. LinkedIn, bethjanuzziunderhill and then on Instagram at investingwithbeth.

Michelle Kesil (22:32)
Perfect, well appreciate your time and your story. Thank you for being here.

Beth Underhill (22:36)
Thanks Michelle, appreciate it.

Michelle Kesil (22:38)
Of course. And for those tuning into the show, if you got value, make sure you’ve subscribed. We’ve got more conversations with operators like Beth who are building real businesses and we will see you on the next episode.