Does this 330+ unit value add look like good? Any advice please!

Question

I am looking to get into syndication with a friend of mine who is a very experienced and successful agent(20plus years in the business) He has done a couple of syndications but it's not his niche. I have never done one. We think we have the ability to raise the money between both of our networks, and are interested in an off market 330+ unit apartment complex in Orlando that has been vacant for 4 years. some serious value add. Rehab estimates at 30k a unit put us at about 10 million cost. We could get this property for about 15 million, so 25 million all in. Does this look like a good deal on the surface? Are there any experienced Florida investors or syndicators that could give their thoughts?

Michael Le · Answer

If you don't know how to underwrite these deals and are not sure if it's a good deal, then I would say that this is NOT a good deal simply because it's too big a deal and too heavy value add for someone new. Beyond that, you provided really no information so no one will be able to get you an answer.

Greg Dickerson · Answer

@Cole Souza you should look at properties that are occupied and have some value add opportunities. Size doesn’t matter if you can raise the money and find a partner to satisfy experience and balance sheet requirements.

A complex that size in Orlando that has been vacant for 4 years will definitely have some serious issues. That’s a very hot and competitive market but also has some rough areas so every one has more than likely passed on that property.

Tyler Gibson · Answer

Orlando is a super hot market right now. There are a ton of new Luxury apartment units being built. I would think that if this property was a good deal it would have been acquired already but stranger things have happened. It really depends on what part of town this is in. If you want to share I could give some insight as to market rents for that area/ class of neighborhood.

Andrew Davis · Answer

@Cole Souza - lots of good feedback here. This is a massive project, even for an experienced syndicator. Most commercial apartment acquisitions are purchases of currently occupied and performing properties, where there's room to add value by smaller upgrades, management/operational improvements, rebranding, etc...

And, as everyone has said, it depends on the zip code. In 32789, that's a killer deal, 32805... not so much.

As for experienced syndicators, a bunch of them have been on the podcast, so that would be a good place to start. Also - a bunch of them have their own podcasts.

A few that come to mind: Ellis Hammond, Omar Khan, Joe Fairless, Dan Handford

Good luck - but I would concur with the group, don't try to go this one alone. 3-5% of a potentially $50mil dollar deal is nothing to balk at.

Tchaka Owen · Answer

@Cole Souza - based on what I've read on BP regarding syndication, yes this is probably too big for you and your agent friend to handle. The wise route is to pull one of the experienced syndicators here into the deal. You will make a smaller share, but so what? You'll learn the proper way and you'll make money. If you go at it alone, you may have potential to make more however your chance of screwing it up could be exponentially higher. What you gain is knowledge to handle the next on your own.

Scott Morongell · Answer

@Cole Souza I would partner up with someone who is local to the market and has a ton of experience already in a heavy lift value add play like this.

Todd Dexheimer · Answer

Maybe, but not for you to do as one of the leads. I would highly suggest looking for a partner that would be interested that has a lot of experience with a project like this

Darren K. · Answer

@Cole Souza rule of thumb from over 20 years of business and real estate experience.  Budget twice the time and twice the cost you think it will take to rehab a project especially when you don’t know it like the back of your hand.  Now I have done more commercial than residential, but if you can’t handle the unknown or do your diligence to find that out, I would pass on the deal.  I syndicated a $10M apt complex that went sideways and you do not want to go back to your relationships to ask for more money,  and then later go back and tell them it’s not worth throwing good money after bad and that they lost most of their money.  Better to have a value add like others have said, gain some knowledge and have a few smaller successes, then pull the trigger on the larger one.  You have thought of the best case scenario now think if you lost everyone’s money, will they give you more on another deal?  Or did you just blow your opportunity to build a portfolio with these people?

Shawn G. · Answer

@Cole Souza replied to your other post but this group here is pretty much saying what I said there.

Anthony Tonsoline · Answer

@Cole Souza I agree with Greg in his above post. It really depends on what area of Orlando the complex is located. It could be a great deal if the property is in the right location and the rent would support the investment.

Does this 330+ unit value add look like good? Any advice please!

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