How I Just Bought Over 500 Units in a HOT Market
In the last 10 days I have bought over 500 units in Dallas, Texas. It consists of two apartment communities that are across the street from each other. This puts my company's portfolio at $132,000,000.
If you're just now following my journey then feel free to read this previous post which has links to all the other posts I wrote after I closed on a large multifamily property. I learn something new on every deal and post on BP. Here's the link:
https://www.biggerpockets.com/forums/223/topics/39...
The lesson learned from these two deals? If you want to get a deal in a HOT market then you must CREATE THE OPPORTUNITY.
Here's how we created the opportunity.
My biz partner and I got an email from a broker about an on-market deal he was marketing. It was a good one but we knew the price was going to get bid up, and up, and up since it was an on-market deal. So, my partner had the idea to look across the street and offer on the other apt community.
Why?
Because if we could buy both at the same time then we would achieve economies of scale on the management/operations side. A couple specific ways:
- share maintenance team
- share leasing agents
Plus, and this is the kicker, lower advertising costs because the on-market deal is 90% one bedrooms and the off-market deal is primarily two and three bedrooms. Therefore it presented a perfect referral opportunity. (need a 1 bed? Go here. Need a two or three bed? Go across the street.)
We ended up getting the property across the street under contract and that allowed us to pay a more market-rate price for the on-market deal because, together, the entire package is a phenomenal deal.
Moral of the story?
When you see an on-market deal, look at the neighbors and buy in bulk to CREATE an opportunity that nobody else is doing. I guarantee nobody else thought about combining both of those properties and, as a result, we got 500 units in a hot market at a below-market cost.
When you implement this tip I'm confident you get more deals done as well!
