117-Unit Value-add in Phoenix Closed Today
Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
117-Unit Value-add in Phoenix Closed Today
Most Popular Reply
Investor · Phoenix, AZ · Member since 2017 · 583 posts · 919 votes
7yTo give you an idea of how conservative we underwrite, even with the $300 increase in rents:
We met with the new manager at the property this morning, and she says our post-renovation rents need to go up another $50 on the 1x1s. We knew that going in, but it provides an additional $700K of upside to help us outperform.
Don't be too aggressive with your underwriting; give yourself some cushion.
109 Replies
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Account Closed:
Originally posted by @Ben Leybovich:
We've been busy!
Nice work, did you do LPV flooring or is that wood look tile.
Vinyl
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Ryan Proffit:
@Ben Leybovich can you recommend any articles on this subject. I just did an 8 plex deals where rents are also close to 300 low. I would like to get a different class of people in and get to market rent.
Ryan, just find me on the blog author page on BP blog. I've written a lot here, and my website.
Thanks!
- Rental Property Investor · Isle Of Wight, VA · Member since 2017 · 22 posts · 8 votes6y
@Ben Leybovich
Congrats!! This post is truly inspiring. Thank you for sharing.
- Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes6y
This is why you don’t take a year+ hiatus from BP, people.... you come back to find that someone did a huge deal in your favorite submarket. I moved to South Mountain in 2005 amidst some serious side-eye from co-workers. We left to be closer to better schools, but have no intention of selling any time soon (save for the primary residence we sold for the substantial Section 121 exclusion). Excited to hear about this great neighborhood on BP, but bummed to have missed out! Congratulations to all involved!
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Dan Schwartz:
This is why you don’t take a year+ hiatus from BP, people.... you come back to find that someone did a huge deal in your favorite submarket. I moved to South Mountain in 2005 amidst some serious side-eye from co-workers. We left to be closer to better schools, but have no intention of selling any time soon (save for the primary residence we sold for the substantial Section 121 exclusion). Excited to hear about this great neighborhood on BP, but bummed to have missed out! Congratulations to all involved!
Dude, I literally don't think anyone could offer me enough to sell. This location is the absolute bomb and improving every month. I am holding for a while...
- Investor · Phoenix, AZ · Member since 2017 · 583 posts · 919 votes6y
Originally posted by @Dan Schwartz:
This is why you don’t take a year+ hiatus from BP, people.... you come back to find that someone did a huge deal in your favorite submarket. I moved to South Mountain in 2005 amidst some serious side-eye from co-workers. We left to be closer to better schools, but have no intention of selling any time soon (save for the primary residence we sold for the substantial Section 121 exclusion). Excited to hear about this great neighborhood on BP, but bummed to have missed out! Congratulations to all involved!
That side-eye reaction was also what I gave to our broker when he brought us this deal off-market. I'm so glad we went down there to check out the area before dismissing it. What a change that area has seen, and it's not stopping any time soon.
Let us know if you want to come check out the property.
- Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes6y
Congratulations 🥳 @Ben Leybovich and @Sam Grooms
Did you guys put a Bridge Loan on this?
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Ola Dantis:
Congratulations 🥳 @Ben Leybovich and @Sam Grooms
Did you guys put a Bridge Loan on this?
Capped bridge, yes.
- Real Estate Investor · Tempe, AZ · Member since 2012 · 874 posts · 648 votes6y
@Sam Grooms might just take you up on that in Feb when I have some time! Would love to see it!
- Member since 2020 · 40 posts · 31 votes6y
Congrats! South Phoenix is the next 24th st & camelback in my opinion. Proximity is key as the Phoenix metro continues to explode.
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Bryce Deeney:
Congrats! South Phoenix is the next 24th st & camelback in my opinion. Proximity is key as the Phoenix metro continues to explode.
Agreed. Just this morning I received notice from our broker that an asset sold (same street little ways down) for close to $200,000 per door - unrenovated. Our all-in basis on this deal is about $112,000. To double our investment we would need an exit at $160,000 per door.
Our investors are making money!
- Banker · Bowie, MD · Member since 2015 · 57 posts · 16 votes6y
Congrats @Ben Leybovich on what sounds like a grand slam. How far are you into the rehab at this point?
Two more questions:
What is the meaning of the last deal metric in your original post? “In-place LTL to reno Bump Ratio: About 65/35”
Also, to the extent you're comfortable, could you talk a bit more about your financing for this deal? Perhaps, the type of lender and pricing/term?
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Timothy Lewis:
Congrats @Ben Leybovich on what sounds like a grand slam. How far are you into the rehab at this point?
Two more questions:
What is the meaning of the last deal metric in your original post? “In-place LTL to reno Bump Ratio: About 65/35”
Also, to the extent you're comfortable, could you talk a bit more about your financing for this deal? Perhaps, the type of lender and pricing/term?
Tim, all community amenities are now in place, including a new office, gym, playground, and dog park. Unit renovations will be at 50% in a couple of months. We are a bit ahead of schedule there.
We typically use a 3+1+1 bridge that we cap for 3 years.
- Banker · Bowie, MD · Member since 2015 · 57 posts · 16 votes6y
Thanks, Ben. Congrats on great execution to date.
Also, I’m having a tough time finding an explanation for the LTL/Rent Bump Ratio.
I’m assuming LTL is loss to lease (how under market current rents are) and rent bump would be the increase you plan to use at rollover.
Are the 65/35 metrics you used percentages, so $1000 in place, when market is $1650 (LTL of 65%), and anticipated rent after turnover is $1350 (35%)? Trying to better understand that metric.
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Timothy Lewis:
Thanks, Ben. Congrats on great execution to date.
Also, I’m having a tough time finding an explanation for the LTL/Rent Bump Ratio.
I’m assuming LTL is loss to lease (how under market current rents are) and rent bump would be the increase you plan to use at rollover.
Are the 65/35 metrics you used percentages, so $1000 in place, when market is $1650 (LTL of 65%), and anticipated rent after turnover is $1350 (35%)? Trying to better understand that metric.
Oh, yes, Sorry about that, I think you asked before.
Yes, LTL is loss to lease. However, LTL is a loaded subject. I think I need to write a blog on this topic, but the rent-setting ecosystem consists of the following:
1. In-place Collections - this is what is actually being deposited into the bank.
2. In-place Schedule - this is the current schedule of asking rents.
3. As-Is Market - this is what the current schedule should be in as-is condition.
4. Renovated Market - this is the proposed schedule post-renovation.
When we talk about LTL/GTL it's important to understand which line-items we are comparing. For example:
1. If the unit in as-is condition is being advertised at $825, but there are these units on the RR that are rented for less, then there is LTL.
2. If I come in and note that withot doing much of anything I can hike rents by $100 in as-is condition, and my schedule for this unit will go up to $925, then I book an additional $100 of LTL.
3. Then if I remodel this unit and plan on getting $1,125 for the same unit, that's an additional bump, which is the renovation bump I reference.
Hope this helps
- Banker · Bowie, MD · Member since 2015 · 57 posts · 16 votes6y
@Ben Leybovich Definitely helpful. Thanks for the detailed explanation. This would be a great topic and value-add (no pun intended) for an article.
All the best in executing the remainder of your business plan!
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Timothy Lewis:
@Ben Leybovich Definitely helpful. Thanks for the detailed explanation. This would be a great topic and value-add (no pun intended) for an article.
All the best in executing the remainder of your business plan!
I stopped writing on elevated topics on BP as of about a year ago.I'd write an article about Rich Dad, and I'd get 300 comments - as if this is the defining knowledge in this universe. But, I write a technical piece, and - nothin'...
I suppose if you are paying attention, there must be others. I'' try again.
But, if @Scott Trench is reading this - perhaps we can have a subsection of the blog aimed at higher-level content? Perhaps it can be paid subscription, even. Scott, I stopped writing for the most part because the energy in writing is a 2-way street, and when none is coming back it's difficult to convince yourself to write. With the average intellectual worth on BP being what it is, higher-level content simply gets lost on the blog. Anything we can do?
- 6yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
@Ben Leybovich - I think that one of the issues here is the size of the market for content. There are very few people in the market for content on how to structure a 117 unit, $15M purchase. To even begin to be able to understand what "good" looks like in the context of such a deal, one has to speak the language of commercial real estate fluently, and have analyzed a few to get some perspective.
Of course, we have written, currently write, and will continue to produce written, video, podcast, etc. content related to large scale commercial content! And, I see no reason why we wouldn't let one of our most popular and engaging authors write about it (this is a compliment to you, Ben).
But, if you are looking for 300 comments, you'll have to write about something that A) everyone understands and B) everyone reacts strongly to. You know this game, this is why you generate 300 comments on a blog post :)
But, the numbers are the numbers. 2/3 of the people who join BP are newer investors. That's 1M of the 1.6M people on the site. Just 8% are "Accredited investors" ( although we still think that is a LOT of accredited investors - over 130,000 of them!). 90% of people who join this site say that they want to purchase 1-4 unit residential rental property as their long-term goal. Many of them are willing to use a variety of means to get there, but that's a huge stat. The typical person on BP is a "lurker" on the forums and a passive absorber of content. They are looking for "modest financial freedom" or simply the ability to quit a job they hate.
The folks who want your content and to get technical about the details of large multifamily syndication ARE out there, Ben. And a huge number of that population is here on BiggerPockets. But, you will get 1/10th the amount of engagement on such content that you will on attacking Rich Dad, because of the numbers :).
If you look at my personal recent content, I've stopped writing the huge opinion pieces that grab attention and generate discussion, and moved towards more high-level ideas. Less engaging, but more practically useful to a smaller proportion of the audience. I won't "win" the blog as the most popular author with some of this, but I do think it's more in tune with what I want to project as a writer, and more helpful to the audience I'm writing to - the full time worker starting with a median to upper-middle-class income, who wants to set a solid financial foundation, spend less than they earn, invest aggressively in stocks and real estate, and over the course of 5-10 years build a position of financial stability that gives them big options in life, investing, and entrepreneurship.
OR, why not do both? Write the technical stuff. We'll publish it, I'm sure, and the smaller audience with the bigger dollars to invest will love it and learn a ton! AND, give us that next big hit piece on why Grant Cardone is a dummy and the mysteries of success, real estate, and IRR are in fact to be found in your blog posts instead ;).
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Scott Trench:
@Ben Leybovich - I think that one of the issues here is the size of the market for content. There are very few people in the market for content on how to structure a 117 unit, $15M purchase. To even begin to be able to understand what "good" looks like in the context of such a deal, one has to speak the language of commercial real estate fluently, and have analyzed a few to get some perspective.
Of course, we have written, currently write, and will continue to produce written, video, podcast, etc. content related to large scale commercial content! And, I see no reason why we wouldn't let one of our most popular and engaging authors write about it (this is a compliment to you, Ben).
But, if you are looking for 300 comments, you'll have to write about something that A) everyone understands and B) everyone reacts strongly to. You know this game, this is why you generate 300 comments on a blog post :)
But, the numbers are the numbers. 2/3 of the people who join BP are newer investors. That's 1M of the 1.6M people on the site. Just 8% are "Accredited investors" ( although we still think that is a LOT of accredited investors - over 130,000 of them!). 90% of people who join this site say that they want to purchase 1-4 unit residential rental property as their long-term goal. Many of them are willing to use a variety of means to get there, but that's a huge stat. The typical person on BP is a "lurker" on the forums and a passive absorber of content. They are looking for "modest financial freedom" or simply the ability to quit a job they hate.
The folks who want your content and to get technical about the details of large multifamily syndication ARE out there, Ben. And a huge number of that population is here on BiggerPockets. But, you will get 1/10th the amount of engagement on such content that you will on attacking Rich Dad, because of the numbers :).
If you look at my personal recent content, I've stopped writing the huge opinion pieces that grab attention and generate discussion, and moved towards more high-level ideas. Less engaging, but more practically useful to a smaller proportion of the audience. I won't "win" the blog as the most popular author with some of this, but I do think it's more in tune with what I want to project as a writer, and more helpful to the audience I'm writing to - the full time worker starting with a median to upper-middle-class income, who wants to set a solid financial foundation, spend less than they earn, invest aggressively in stocks and real estate, and over the course of 5-10 years build a position of financial stability that gives them big options in life, investing, and entrepreneurship.
OR, why not do both? Write the technical stuff. We'll publish it, I'm sure, and the smaller audience with the bigger dollars to invest will love it and learn a ton! AND, give us that next big hit piece on why Grant Cardone is a dummy and the mysteries of success, real estate, and IRR are in fact to be found in your blog posts instead ;).
Hahah Lovely response, Scott! All good points and all makes sense. I am not done with this yet, though...
How about the idea of a higher-level section of the blog? Perhaps an additional fee of $5/mo - $10/mo to access?
As a writer, I need engagement. Just like when I played the violin, I did my best on the large stage instead of the practice room. The value to me is in the energy of the back and forth, and I think that if we were able to get that 1/10th of the BP audience who crave higher-level content in one place, thus making it easier to find said content, I would be able to write the content I want and get the engagement I need.
Scott, this type of content should be considered expert advice, so I think many folks would happily pay a few additional dollars to gain access.
We spend out lives in pursuit of freedom. Money does facilitate it, yes it does. But, money in and of itself is not the joy in life. Spending minutes with and for whom I want is what money buys for me.
In the context of my writing, I want to speak to an audience of like-minded readers/writers, who can appreciate and engage on a different intellectual level. Is there a way to acknowledge that we are indeed here are on BP, though getting lost among the 99%, and make it easier for us to come together in an elevated environment designated for us? I bet we'll pay to have this opportunity.
We could do our own webinars, on-line classes, and our own meetups. And Ben Leybovich could help...
Thoughts?
- Banker · Bowie, MD · Member since 2015 · 57 posts · 16 votes6y
@Ben Leybovich This sounds like a great idea. I would add that commercial real estate is my day job and something I studied in grad school, so this type of content is 100% up my alley.
For example, I’m working on a reverse 1031 bridge loan, which will be 9-figures at full draw. Prior to getting the OM, I didn’t know reverse 1031s existed. I’m learning a ton and would love to share, but I don’t think the forums is the write avenue. I’m sure I’d need to build more BP credibility to author an article about the experience, but I’d be interested in the feedback and subsequent discourse among those participating in more sophisticated investments.
In the meantime, I’ll keep and eye out for that post.
- Rental Property Investor · Farmington, UT · Member since 2018 · 171 posts · 148 votes6y
@Ben Leybovich completely agree. I think it’s necessary to the evolution of the site. When I first started 8 years ago the majority of the content on the site now would be perfect, now much of it is no longer relevant to me simply because it’s oriented to beginners and small deals. And rightly so. Bottom line is that the site has to do more to curate and centralize info on larger deals and accredited investors. If they don’t it leaves the door open that someone else will, which would cause an exodus of experienced investors and be to the detriment of the site and who it currently caters to.
- Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes6y
Originally posted by @Brent Crosby:
@Ben Leybovich completely agree. I think it’s necessary to the evolution of the site. When I first started 8 years ago the majority of the content on the site now would be perfect, now much of it is no longer relevant to me simply because it’s oriented to beginners and small deals. And rightly so. Bottom line is that the site has to do more to curate and centralize info on larger deals and accredited investors. If they don’t it leaves the door open that someone else will, which would cause an exodus of experienced investors and be to the detriment of the site and who it currently caters to.
Brent, we have to conceive of BP as a business. In business, you do things that are most likely to monetize the most. As @Scott Trench indicated, you and I constitute a tiny minority of the audience on BP, which may not be essential for the overall monetization strategy (no maybe about it). That said, the evolution of the site will do just fine without you and me. We are a casualty of business realities, and BP is fine and dandy with that.
This is why I am asking Scott if there is a way that makes sense. BP can't really allocate human capital to a project that will not monetize much, and I get that. We are a minority, but we are here. So, I am just wondering if there is a more or less painless way to create something like a subscription platform that would attract enough revenue for BP to feel good about having done it...not sure that there is. But, certainly not necessary for the evolution of the business. Just a want.
- Developer · Houston, TX · Member since 2015 · 1k+ posts · 1k+ votes6y
Originally posted by @Ben Leybovich:
Originally posted by @Brent Crosby:
@Ben Leybovich completely agree. I think it’s necessary to the evolution of the site. When I first started 8 years ago the majority of the content on the site now would be perfect, now much of it is no longer relevant to me simply because it’s oriented to beginners and small deals. And rightly so. Bottom line is that the site has to do more to curate and centralize info on larger deals and accredited investors. If they don’t it leaves the door open that someone else will, which would cause an exodus of experienced investors and be to the detriment of the site and who it currently caters to.
Brent, we have to conceive of BP as a business. In business, you do things that are most likely to monetize the most. As @Scott Trench indicated, you and I constitute a tiny minority of the audience on BP, which may not be essential for the overall monetization strategy (no maybe about it). That said, the evolution of the site will do just fine without you and me. We are a casualty of business realities, and BP is fine and dandy with that.
This is why I am asking Scott if there is a way that makes sense. BP can't really allocate human capital to a project that will not monetize much, and I get that. We are a minority, but we are here. So, I am just wondering if there is a more or less painless way to create something like a subscription platform that would attract enough revenue for BP to feel good about having done it...not sure that there is. But, certainly not necessary for the evolution of the business. Just a want.
Ben, on popular streaming platforms out there (Twitch, etc) there are ways for people to show monetary approval of the content provided. Usually it is in the form of a 'subscription' to that specific content provider or a way show more enthusiastic 'thumbs up' or other things. Not all of it translates to a business platform, such as BP, but I think there could some lessons learned from that. Patreon is another service that is popular and allows artists and musicians to make a living based on the donations of donors. It'd be an interesting concept if BP every wants to go down that path. Could entice more people to create content than would otherwise be inclined to without incentive.
- Rental Property Investor · Farmington, UT · Member since 2018 · 171 posts · 148 votes6y
@Ben Leybovich what I am suggesting is that there is a business case in itself to keep more experienced investors on. We’re more likely to engage in forums with the core audience and assist newbies with advice if the site attracts us here more with content that appeals to experienced investors. I think something along the lines of what you are suggesting would be perfect. Happy to be helpful with that process as well.
- 6yScott TrenchPro MemberRental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
@Ben Leybovich it’s not really a monetization thing, honestly. While we do need to make money, the fact of the matter is that fewer people read the stuff for big investors. We still crank out tons of content on that, but the audience is 1/10th the size. You aren’t complaining about not being able to write, and us not promoting it. You write it and we promote it. It’s just that the rich dad article gets 10x the attention.
However, I will noodle on this. There should be some ways to personalize stuff so that all of the people who are interested. I see no reason to charge them for it, though!
Join the conversationCreate a free account to reply, vote on answers and follow this thread.