What’s a Deal You’d Buy Again Tomorrow?
If you could go back and buy one of your previous multifamily deals again today, which one would it be and why?
Was it because of:
• cash flow?
• appreciation?
• value-add potential?
• location?
• financing terms?
• tenant quality?
• ease of management?
I'm always interested in hearing what characteristics ended up creating the most value over the long run versus what looked attractive at the time of purchase.
Curious what experienced investors consider their "home run" deal and what made it so successful.
Most Popular Reply
@Dalton Mongold My "home run deal" was a 48-unit multifamily property in Sumter, SC. I bought a good asset in a decent area at a great price with great debt. Rents were between $575 and $650 when I first looked at the deal. My basic market research showed that $750 was realistic and achievable. My property manager thought somewhere between $850 and $900 was achievable. It turns out the manager was right. In this case, I was glad to be wrong!
The average rent was in the low $600 range when the property was acquired and was $915 when sold approximately 3.5 years later. Best of all, this increase didn't require costly upgrades, minimizing risk by avoiding a tremendous CapEx budget.
The seller was a family operating a business who never really checked on the asset because it wasn't a high priority for them. They assumed their property management company was generally on top of things. When I toured the property, I met the seller and their property manager. Physical occupancy was around 75% at that time. Within a few minutes, I discovered that the property management company's primary advertising method was the newspaper. Keep in mind this was in 2020, so it's not THAT long ago! By the end of the tour, even the seller seemed surprised to find out how little their property management company was actually doing for them. This allowed me to buy the property at a discounted price.
This deal had the best cash flow of any that I've ever been involved with, value-add potential, great financing terms, a great cost basis, minimal risk execution, and ease of management (almost every dollar we billed out was collected by the end of each month and the property almost always stayed full). I wish I could find 10 more like this one!