How Allan Smith Went from Yellow Letters to Nashville Developer | Real Estate Investing Strategy

@InvestorAllan (00:00)

Yeah, I mean there wasn’t a lot of the no and low money down messaging yet, but I don’t even know where I got the idea. just. I would just get a contract and go well. I don’t really have the money for this, so let me figure this out. So my game like the whole strategy that got me out of the gate was talking to friends and family and just. I mean, I remember going to just a Christmas party type thing back in my hometown and.

I just mentioned it to a couple of high school buddies and they were like, well, we, we have some money to deploy somewhere. So it kind of went from step to step and I would pick up these rentals with the, my partners covering the down payment and also co-signing the loan. And then I would basically pitch to them, this is a passive investment and here’s all the advantages of good, strong Nashville real estate that is backing your investment. And I’ll do all the groundwork. I’ll do everything. I’ll just send you a return.

Dylan Silver (02:26)

Hey folks, welcome back to the show. Today’s guest, Allan Smith is a builder and investor in Nashville, Tennessee with Skyline Development. You can find him online at skydev.llc. Allan, thanks for taking the time today.

@InvestorAllan (02:41)

Yeah, thanks for having me on.

Dylan Silver (02:43)

Now, when we talk specifically about Nashville, I think this is a market which has been hot for 20 years, but we’re now seeing more people, at least I’m seeing more people get into Nashville and interested in the surrounding areas of Nashville. So I’d like to talk about what good looks like if you’re investing in the greater Nashville area. First, I’ll ask you, how long have you been investing in the greater Nashville area?

@InvestorAllan (03:10)

Oh, I bought a house in about 2013 and started renting out the room. So I did the house hacking thing and then started getting more serious a few years after that. So, you know, 10, 12 years, something like that.

Dylan Silver (03:12)

you

Now if we go back to 2013, different market, you know, pretty much everywhere you were in the country, what was it like at that point in time? What was the price points of a single family home in Nashville? Where were you finding those deals?

@InvestorAllan (03:27)

Hmm.

man, it was so different. Well, I was doing the yellow letter thing back then real early on. was handwriting in red ink, yellow letters, sending them out and people would call. I mean, like, you know, my response rate was 10, 20 % of people just, what’s this? You want to buy my house? And I would go and look at their house. And yeah, I mean, most of the offers I was making was definitely under 200K. ⁓

I mean, you could just buy houses for such a different price back then. things have been so developed since then, but the competition was a lot less. know, people would call you if you sent out letters or, know, nobody’s really texting or doing anything fancy yet, but it was, was quite the time to be alive back then.

Dylan Silver (04:18)

Now were you primarily, if we’re talking 2013, 2014, 2015 timeframe, were you looking at buying and holding? Were you looking at a quick flip or a rehab and hold on these properties?

@InvestorAllan (04:29)

So I started out with just getting, when I was running out the rooms, I just caught the bug of like how awesome this is to collect rental income that pays my mortgage and a little bit extra. And I own the property, you the whole nine yards with rental. So I got hooked on that and I was sending out yellow letters with the intentions of just buying rentals. That was my main target. Let’s buy some rentals. Let’s get that. In fact, my vision at the time was buy 10, quit my job and just

go service the water heater swaps or whatever myself. So things have evolved since then, but I was sent out those letters just for that. And then for a while I really was just buying rentals and then it evolved as, you pick up a property or a contract here and there, which is not as good of a rental as it is a flip. So then I started dabbling and I would wholesale a couple here and there, but I was never great at cranking out wholesale deals.

Dylan Silver (05:26)

Now, did you grow up in the business? Were you surrounded by real estate growing up or how did you start looking into wholesaling and finding properties off market?

@InvestorAllan (06:25)

Yeah, good point. No, I didn’t really know anybody in real estate or doing any of this stuff. I just had kind of like a life mentor type guy. He was a young professional and he was like, man, well, if you got a job, you know, I wish I’d went and bought a house, you know, and you could even rent out the rooms or something. So I thought that’s ridiculous. What do I need a house for? You know, I’m just totally different mindset. And I thought about it a little bit and decided to go for it. And then, you know, this was still the age of like, it was

It was early, but you could go online and learn about real estate. Like people were offering information out there. There was podcasts. There was not nearly as much information as there is now, but there was resources. So I just kind of tapped into that and tried to invest in myself, you know, learn some stuff. And then I started taking a stab at it. So it can be done, you know, without having

the big network or growing up in it or whatever. just kind of went for, my family thought I was crazy. I was gonna quit my job to go send yellow letters or whatever. And they were like, why, well, why are you, is there gonna be health insurance? Like, no, there’s not health insurance, worked out.

Dylan Silver (07:31)

That was

what I was just gonna ask you, what was the reception like? When people are going through that change, that’s one of the biggest factors is, well, what’s gonna happen? You mentioned health insurance, so there’s no health insurance when you’re doing this on your own. Now, you were buying and holding these deals. Was there something specific about the buy and hold strategy? Were you thinking in your head, hey, I have a goal to get to, I wanna get to this number of doors?

Because it was early back then, but I’m imagining there was some messaging going on out there for, know, invest in real estate or get started, no money down. But you stuck with, you know, I think a good strategy that has stood the test of time, which is, you know, buying old.

@InvestorAllan (08:09)

Yeah, I mean there wasn’t a lot of the no and low money down messaging yet, but I don’t even know where I got the idea. just. I would just get a contract and go well. I don’t really have the money for this, so let me figure this out. So my game like the whole strategy that got me out of the gate was talking to friends and family and just. I mean, I remember going to just a Christmas party type thing back in my hometown and.

I just mentioned it to a couple of high school buddies and they were like, well, we, we have some money to deploy somewhere. So it kind of went from step to step and I would pick up these rentals with the, ⁓ my partners covering the down payment and also co-signing the loan. And then I would basically pitch to them, this is a passive investment and here’s all the advantages of good, strong Nashville real estate that is backing your investment. And I’ll do all the groundwork. I’ll do everything. I’ll just send you a return.

And that was kind of the pitch. So they wanted to get in on that. that’s what was able to get me through level one, if you can call it that. I was just borrowing, just bringing friends and family. And we would get a bank loan too. They would do 80 % or whatever. And that was what made the thing start. And I’ve just held on to them ever since. I don’t want to part with you. You don’t want to sell the golden goose. But sometimes you got to look at your IRR and your equity and stuff.

Dylan Silver (09:28)

Yeah.

Now, when did the focus start to move towards being a builder? There’s a lot, that’s a different space. It is sometimes gate-kept and a lot of people stay away from that space because there is a barrier to entry, especially when you’re doing ground-up construction. How’d you get into that side of the game?

@InvestorAllan (10:26)

man, I think I would just send out yellow letters and someone would say, I want to sell some land and I don’t even remember. I think it all started. bought a rental package of like four units and he’s like, you can just have this lot. It was like an $8,000 lot. You can just have it. And then I thought, well, heck, what can we do with this? Ransom numbers kind of looked into things a little bit to see what the options were. And we, hired a builder to build a rental and I was shocked by how

Well, it went like the numbers were good. The build popped up and was pretty cheap. And so then we did a few more of those and then tried some in some other towns. And by then I was starting to notice Nashville was, and that was kind like on the perimeter of Nashville. But now I was noticing the core of Nashville was there’s a lot of guys doing builds and just new builds everywhere. And the flips were getting more and more competitive and

I hired a GC or two that was just extremely disappointing to put it respectfully. And I thought, heck, mean, I can’t be any worse than that. I’ll just go get my license and try this out. So then that did become the new core focus for me about four years ago. I said, all right, yeah, that’s right about when it was. I think I got my license at the end of 21.

Dylan Silver (11:40)

was in 2021-22. ⁓

@InvestorAllan (11:49)

So my focus since then has mostly been buying land or flips. And I have a small team to operate the construction and the admin and everything. And that’s been our focus. It’s a different kind of game, but yeah, we can get more into that.

Dylan Silver (12:06)

Yeah. mean,

the ability to pivot is really a hallmark of an effective real estate operator because I got in.

to real estate around 2023. So I was seeing like peak, it’s hard to be a flipper right now type of energy happening in real estate. So you saw it happening, you know, right at kind of where property values were either at the peak or maybe coming down off the top of the peak. And certainly, you know, it’s harder to be a flipper, you know, during the last couple of years than it was pre 2020. What, you know, in Nashville specifically,

At that point in time, were you seeing, we’re talking 2020, 2021, were you seeing lots of flips happening and then also, you know, lots of ground up construction to where it’s harder to be a flipper just because there’s new builds that are, you know, sometimes cheaper than a flip.

@InvestorAllan (12:59)

Hmm. Yeah, it things had evolved. There was there’s more builders out there. The flip prices were going crazy. You know, things have softened now, but just to buy a flip, you were outbidding. I mean, I’ll never forget. I forget what year was, but a wholesaler sent out a deal and I thought, that’s that’s pretty close to a numbers that makes sense. Let me go look at it and see what the repairs would be. And they did kind of an open house type thing.

my gosh, there must have been 30 people at this thing. Just a regular vacant ugly house in Nashville, not even on the market. And I thought this, this is insane. I can’t even, what are we supposed to do here? So the flips were, and you know, and then the guy buys it and just pays like this absurd price, you know, more than everybody else. And I just thought, okay, we gotta, we gotta stay on our toes. So I agree with you. gotta, you gotta pivot. gotta keep, keep moving as things evolve. And I think that every,

real estate cycle has opportunity, but you gotta like choose to go find it. So now that I’m doing developments, like I’m doing them differently, sure they sell a little bit more difficult and the land hasn’t, the land prices have stabilized, but they haven’t really come down. So there’s a few levers to pull to kind of optimize things as good as you can.

Dylan Silver (14:18)

Now, I’d like to talk specifically about areas of Nashville and for folks who may be looking at getting into investing in the greater Nashville area or in the urban sprawl of Nashville. Do you have any geographic portions of Nashville that you’re particularly bullish on or that you like investing, whether it’s as a single family ground up or a fix and flip?

@InvestorAllan (15:22)

I, I’ll say this like around was it 2017 2018 there were pockets that were blowing up. you know, Elizabeth park, Germantown, the nations is real famous. You know, that was people are tearing down one house building two and it was starting to ramp up. I personally, this could be totally inaccurate. I personally don’t feel like there’s that big of a difference anymore. I mean,

Now the neighborhoods are pretty simple. Like, is that a desirable area to live in? Then okay, your build will sell well. And that’s what I’ve experienced. The builds in good neighborhoods, they sell in three or four weeks in this market. But then I’ve built some more on the fringe and like Old Hickory and Madison. And it’s just not as desirable of an area. There’s industrial nearby, there’s train tracks, know, crime’s probably a little bit higher too. And I have found that houses sell more difficult there, but…

It’s not like there’s this. I don’t sense a huge variation throughout the county itself. It’s kind of like, is it a decently desirable area? can tell by just driving through it once and then, or is it not? But back in the day there was hot pockets that were blowing up.

Dylan Silver (16:30)

Do you see, I also see a contingency of investors looking for infill lots. This seems to be such a big thing that if you’re a wholesaler with an infill lot, you’re sitting on a golden goose. Are you seeing more interest from investors and developers like yourself in infill lots?

@InvestorAllan (16:36)

Mm-hmm.

Infiltrots have been the thing for a while now. And I think it’s just basically a law of geography, really. That’s all that’s left in cities. You can either go outside the city a little bit, like you’ll see this in Antioch or White House, Tennessee, some of the areas that are pushing out more towards the edge where there’s still flat, buildable land. You’ll see somebody just take a couple acres and go through the zoning process and turn it into something buildable.

Believe it or not, there’s people with like horse farms just all over the place still. So you can do the whole project and break it out into parcels, sell it to a builder or do it yourself or whatever. But in the city and in these developed neighborhoods, there’s fewer and fewer, just a lot laying there waiting to be built. So the infill is the way to go. And most of the time it involves a tear down. Nashville’s had a lot of tear downs and the zoning

Dylan Silver (17:34)

Right.

@InvestorAllan (17:43)

Typically, a lot of the zoning’s allow two houses to be built. It’s called an HPR. It’s a pretty famous term here, but I think it confuses people in other areas.

Dylan Silver (17:51)

The infill lots are definitely like you mentioned just because there’s fewer spaces, right? So if you’re looking for

building in a city or doing any type of real estate investing with big value add in the single family space, you’re either going to be looking at buying a heavily distressed property, which could be close to a tear down anyhow, or you’re looking at in many cases, an infill lot or something that is going to be a tear down. And so I’ve been seeing a lot of that. We are coming up on time here though, Allan, any new projects that you’re working on and then as well, what’s the best way for folks to get in contact with your team?

@InvestorAllan (18:26)

Well, this year we’re working on scaling up the construction. We’re going to be doing more projects for other folks and then we’re doing more flips and builds for us and nothing too out of the ordinary. Just kind of keep that trajectory going of growing bit by bit. And then probably the best way for folks to reach me is just on Instagram. My handle is investor Allan, A-L-L-A-N and

Get a hold of me there. We have the website which you mentioned at the beginning, skydev.llc.com. You can get a hold of me there too. And yeah, happy to help. If anybody has questions or needs anything, I’m here as a resource.

Dylan Silver (19:02)

Allan, thanks so much for coming on the show. Thanks for your time today.

@InvestorAllan (19:06)

Thanks for having me.