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Investment Info:
Large multi-family (5+ units) buy & hold investment in Fort Smith.
Purchase price: $1,490,000
Cash invested: $325,000
FIRST DEAL! 62 unit Class C apartment complex with the ability to push rents without too much capex. Plan is to refi in less than 2 years, return capital to the investors and then sit on this as a long term hold.
What made you interested in investing in this type of deal?
I'm actively looking for mid-to-large multifamily properties for my investors and myself. When this deal was brought to me, I ran the numbers and it looked good. The more I looked into the area and this asset, the better it looked.
How did you find this deal and how did you negotiate it?
My property manager brought this directly from seller before widely marketing the deal. He had a goal and I had my return projections that I needed to hit. We met somewhere in the middle from where we started, but that still met my investment criteria.
How did you finance this deal?
85% LTV from a local bank. 6 months i/o. 25 year amortization. 9 year term, with rate adjustments in years 4 and 7.
How did you add value to the deal?
We're pushing rents to market on as-is units. We're also lightly upgrading units as they turn over. Finally, I'm looking to keep a tight budget while not suffocating the property manager from effectively keeping this property very nice and welcoming.
What was the outcome?
It's only been 2 weeks... But we've been able to rent out 3 units at rates considerably higher than the average in-place rent.
Lessons learned? Challenges?
I can handle larger deals.
Also, there were several times throughout the process (including initial evaluation, negotiation, equity raise, loan process, due diligence - everything) where there are things you can do to push things forward or not do and let them fester. It's totally up to you to stay on top of things and be proactive. You either want it or you don't.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Property manager/agent and local lender. I'd highly recommend both. If you're looking in AR or OK, pm me. (As far as property management, she really would need to manage approx 100 units if it's outside of the Fort Smith market.)