Closed on a 48 Unit Multifamily - First Syndication

102 Replies

@Yonah Sturmwind I sent out about 500/month. This deal took about 4 months of mailers. Mailer criteria varies, out-of-state owners, mortgages coming due, free and clear, etc. My criteria for deal is: 

Purchase: $2,000,000-$10,000,000

Units: 50+

Cash-on-Cash: 10%+

IRR: 15%+

Value-Add Component (low rents, rehab, bad management, etc)

@Sameer Sharma What the best number to call.

@John Cohen Thanks for the response! I am looking at possibly starting a mailer to look for NJ apartment buildings. Looking for 20+ units. Trying to figure out the best way to do one. Did you get the list through Listsource.com? What type of mailer? 

@Yonah Sturmwind  Listsource.com and propertyshark are 2 great website for lists. I send a bunch of different mailers, no 1 Magic piece 

Originally posted by @John Cohen :

Hey BP!

Just wanted to tell everyone about the first syndication I closed. Yesterday July 31st, I closed on a 48 unit multifamily in Columbus, OH. 

Purchase Price: $1,115,000

Occupancy: 75%

Down Units: 6 

Light Turns: 6

6 - 1 Beds, 34 - 2 Beds, 8 - 3 Bed

Getting $500 for 1's and 600 for 2's (with a $30 dollar water bill back) and $700 for 3's (with a $40 water bill back)

Renovation is going to start on Tuesday and I am excited for the project. It was an off market deal, and worked very closely with the seller to get the deal done. It was a long closing period for many reasons. Some hiccups along the way were, after contract was signed the seller did not send any diligence documents for 21 days. Seller required us use his title company (HUGE MISTAKE) and they were horrible, at the last minute the bank was so frustrated with them they changed the title company. The lender keep throwing last minute requirements at us and my insurance guy flaked out last minute. Thanks to BiggerPockets I was able to find an insurance guy really quick. 

My financing on the property was 5.25%, 6 year term, 25 year amortization, and 75% LTV. I needed to raise about $580,000 for purchase price and renovation. I can say this was a fun process and I look forward to the 2 new projects I have under contract right now.

I am unfamiliar with the terms "Down Units"" and "Light Turns""

I assume the down units refer to apartments requiring complete renovation and Light Turns means simply, clean and paint. Care to clarify?

Originally posted by @John Cohen :

Hey BP!

Just wanted to tell everyone about the first syndication I closed. Yesterday July 31st, I closed on a 48 unit multifamily in Columbus, OH. 

Purchase Price: $1,115,000

Occupancy: 75%

Down Units: 6 

Light Turns: 6

6 - 1 Beds, 34 - 2 Beds, 8 - 3 Bed

Getting $500 for 1's and 600 for 2's (with a $30 dollar water bill back) and $700 for 3's (with a $40 water bill back)

Renovation is going to start on Tuesday and I am excited for the project. It was an off market deal, and worked very closely with the seller to get the deal done. It was a long closing period for many reasons. Some hiccups along the way were, after contract was signed the seller did not send any diligence documents for 21 days. Seller required us use his title company (HUGE MISTAKE) and they were horrible, at the last minute the bank was so frustrated with them they changed the title company. The lender keep throwing last minute requirements at us and my insurance guy flaked out last minute. Thanks to BiggerPockets I was able to find an insurance guy really quick. 

My financing on the property was 5.25%, 6 year term, 25 year amortization, and 75% LTV. I needed to raise about $580,000 for purchase price and renovation. I can say this was a fun process and I look forward to the 2 new projects I have under contract right now.

Nice deal. Good luck with it.

I am unfamiliar with the terms "Down Units"" and "Light Turns""

I assume the down units refer to apartments requiring complete renovation and Light Turns means simply, clean and paint. Care to clarify?

@Fred Frehling your 100% right! Down unit needs a complete rehab and light turns are generally between $500-$2,000.

@John Cohen I would definitely like to meet up soon. I will reach you so we can set a date. Thanks and congrats again.

Hey John,

"I did a 80/20 split with a performance bump at 10% to 60/40." Would you mind sharing the details of what this means?

"I have 12 investors in this deal and no investors had to give a personal guarantee". How were all of your investors able to forgo signing personally?

@Ameer Alexander Basically the 80/20 split means every dollar that comes out of the property .80 cents would go to investors and .20 cents goes to me.

Only the managing member had to sign on the loan (thats all the bank required). Also no investor owned more then 25% of the deal.

Does that help?

Yes, that does help. Thank you.

So, was there only one managing member? 

So there was a total of 13 owners on the deal, and 20% to you and 80% to the other 12?

Congrats John!

I appreciate you sharing this with everyone and taking the time to answer everyone's questions, even those asked more than once or that were previously covered.

@Ameer Alexander There are 2 managing members. Every investor is on a 80/20 split.

@Edward Barnes Thank you!!! Its my pleasure to give back and help investors to the best I can

Hey John, 

I am little perplexed how can every investor be on an 80/20 split if the 20 goes to you? I thought the 12 investors only got 80?

From what I understand, John's the managing member. He's found the deal, put it together, and done all the work. The other investors are strictly passive, so they're only providing equity to make the deal go, that's why their return is smaller. Outside of putting their money at risk, they haven't had to work the deal.

@Ameer Alexander For example lets say there are 2 investors and the the total dollars needed is $150,000. 1 investor invests $100,000 (he owns 66%) and 1 investor invests $50,000 (he owns 33%). If the return is $25,000, the investors get 80% and the sponsor (me) gets 20%. That means $20,000 goes to the investors and $5,000 goes to me. Investor 1 gets $13,333 and investor 2 gets $6,600. Does that help clarify it?

@Edward Barnes correct!

Congratulations on the deal!! Great thread thanks for all the good responses. Defiantly gets my wheels turning 

Thanks @John Cohen all by accident i happen to hear the podcast you did with @joefairless can't deny your work ethic. 

I heard your from Queens, Im originally from Rosedale, not too far off. 

Syndication really has started to interest me, for someone that has not done any deals in RE is it worth trying to put something like this to start off ? Or cut my teeth on something smaller and get a track record going ? 

I would defiantly need to find a mentor to learn some different strategies 

Nice and Congrats!

Yes John, that helped me a lot. Using the real numbers helped bring tremendous clarity, thanks for taking the time to answer that.

@Ameer Alexander You got it!

@Kenneth Picha thank you 

@Ceasar Blackman I'm glad you liked my podcast! Thanks @Joe Fairless for that. The 2 questions you asked are great. It depends on personal preference and what your goals are. If you want to jump on a call, shoot me a PM and we can set something up.

VERY NICE!  Congratulations. Id love to learn more about how you work and how we might be able to work together

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