Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
The real thanks goes to my team and our partners! Without quality people I'd still be managing a hundred houses by myself instead of 1250 units with my sites on 2,000 and beyond! Great deals are tough to find but persistence pays off!
Here's the low down:
250 Units, Evansville, IN | Class C+/B- Asset
Acquisition and Assumption of Existing Debt (35yr Amort at 2.93%) + Mezzanine Note + Equity of about ~23%
Equity Raise: ~3.1 Million (our own cash + limited investors as well).
Plan: achieve cash on cash returns in the mid teens (going in 8.55%), IRR of 15%+ and 2.25x over a 7 year hold.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
9y
@Ivan Barratt congrats. If you don't mind, I am sure many would like to know. What are your value add component on this property? How much cap ex will you need to put in? If raising rents is part of your value add, how much do you expect to raise them.
We are looking for value add properties of this size, and will continue to pursue them. In the meantime we have been working on some under 75 unit flips.
@Jeff Greenberg it's a very light value add. most of the heavy lifting had already been done. for this deal it's more about getting a solid, low risk income stream for the investor. in short we'll make cosmetic upgrades to units when they turn in order to keep growing rents 2% to 3% average per year. The project has 500k in replacement reserves so we'll use some of that as well as operating cash flows. We also have some deals in the pipeline with more extensive rehab in the biz plan and we're currently renovating around 500 units at various projects.
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
9y
Thank you @Bob Razler . My team gets most of the credit. I'm fortunate, almost all I do now is raise the equity. Well, and spend time finding great people and then getting out of their way! :)
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
9y
Thanks @Andrew Campbell. Technically off market however a broker brought it to us because of our track record with HUD debt assumption acquisitions. Seller wanted a quiet transaction if terms could be met. The deal never hit the open market. Further; the financing structure helped drive net returns to the investor.
Investor · Provo, UT · Member since 2017 · 97 posts · 50 votes
9y
Congrats @Ivan Barratt. Nice work. How do the numbers look for a condo conversion? We've had lots of success with those in the past. I love Indianapolis and the Fort Wayne area. Lots of good deals.
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
9y
@Mike Watson it's not ever going to be condos. It's a nice place however we focus on workforce housing. Further, Indy isn't quite ready yet for condo conversions again. The financing isn't there.
Developer · Philadelphia, PA · Member since 2015 · 2k+ posts · 904 votes
9y
Congrats Ivan Barratt !
What was the cap rate and what is the projected cap rate at sale?
Have been investing in the North East and South East but interested in expanding to other markets.
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
9y
@Percy N. going in cap in the low 7's and exit at 7.25%. Before you get on me about reversion cap rates know that we used some fairly low rent growth projections AND this same product type just traded in mid 6's. All in all we think it's a conservative approach. :)
@Levi T. the LP raise was 2.1 million. My sponsor group put 1 million of our own cash.
Investor · Indianapolis, IN · Member since 2015 · 764 posts · 953 votes
9y
@Percy N. ha!! I'm getting to used to people complaining about reversion cap rates when we simply use a different variable to get the same result! And, yes; we only do good deals! :)
Rental Property Investor · Redwood City, CA · Member since 2017 · 50 posts · 22 votes
9y
@Ivan Barratt congrats Ivan! Awesome deal indeed. My goal is to be doing exactly what you are doing (deal size, multi-unit size, raising capital, etc.).
You're definitely motivating me to find my next 40-50 unit property here in CA.