Multifamily Acquisition of 216 Units

3 Replies

Investment Info:

Large multi-family (5+ units) commercial investment investment in Lawton.

Purchase price: $6,170,000
Cash invested: $1,800,000

Multifamily consisting of 216 units Located in Lawton, Oklahoma

Acquisition:
Purchase Price -- $6,170,000
Capital Improvements -- $1,193,750
Closing Fees & Carrying Costs -- $156,250
All In Cost -- $7,550,000

Stabilized Projections:
Net Operating Income -- $737,659
Cap Rate at Basis -- 9.8%
Stabilized Value -- $10,540,000
Equity Created -- $2,990,000
New Loan Amount -- $7,910,000
Refi Loan Proceeds -- $360,000
Annual Cash Flow -- $213,507

What made you interested in investing in this type of deal?

✅ Purchase Price of $28K per Door
✅ Property Condition Newer Roofs, Well maintained, No Major Foundation or Plumbing Issues
✅ Property Characteristics Individual HVAC & Water Heaters, Great Unit Mix, Large Floorplans, Great Amenities Including Pools, Gym, Sauna & Playgrounds
✅ Cash Flowing from day one
✅ Conservative Underwriting
✅ Cost Segregation

How did you find this deal and how did you negotiate it?

Located the deal by calling building owners off a Costar report.
The owner was a broker and had it listed but was not with one of the major players.
Property consist of 216 units & Located in Lawton, Oklahoma
Purchase Price $28K/Unit - Very Attractive!
Value-Add Project with rents under market and currently no units upgraded & was self managed.
Ask Broker or owner several questions about vacant units, value add, current management, Capex completed, etc… The more questions the better - don't as

How did you finance this deal?

Bridge Loan at 80% of LTC (Loan to Cost) and setup for refinance into long term agency debt.

How did you add value to the deal?

Upgrade all vacant units
Renovate the exteriors and add curb appeal
Upgrade amenities
Raise rents to market

@Jorge Abreu Nice deal! Congrats man!  Couple questions for you, did you use your own cash or syndicate this one? Also, what is the process to buy with a bridge loan and then "setup for refinance into long term agency debt"? I'm looking at larger multifamily deals right now and have heard the "agency debt" phrase before. Is this just large commercial bank loan? Thanks!

@Joseph Firmin Thank you for the feedback and below are the answers to your questions.

Did you use your own cash or syndicate this one? 

  • Used some of my own cash and also syndicated. 

Also, what is the process to buy with a bridge loan and then "setup for refinance into long term agency debt"? 

  • If you are purchasing something that doesn't meet Agency debt criteria you can go in with a bridge loan and get it sized up for agency so you know what numbers you need to meet and then refinance once you hit those numbers.

I'm looking at larger multifamily deals right now and have heard the "agency debt" phrase before. Is this just large commercial bank loan? Thanks!

  • Agency debt is government backed through Fannie Mae or Freddie Mac and usually has the best terms but you need to be 90% occupied and meet some other standards. 

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