Just Closed a 240 unit Apartment Complex

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Just Closed a 240 unit Apartment Complex

Brian Adams
Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes

I am happy to report that today I closed on a 240 unit apartment complex in Atlanta, GA that I bought for $9.4 million and it appraised for $9.9 million. Capital raise was $3 million and my investors are super excited!!

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Tony SanFilippo
Real Estate Investor · Littleton, CO · Member since 2013 · 197 posts · 77 votes
10y

@Brian Adams

Congratulations!  Would you mind sharing some details, rents, debt service how you put the deal together?  Thanks in advance and great to see you getting deals done.

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  • Michael Upshur
    Investor · Silver Spring, MD · Member since 2016 · 61 posts · 18 votes
    10y

    @Brian Adams Congratulations!  You must be feeling on top of the world and looking for your next deal.

    0Reply
  • Brian Adams
    OP
    Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    @Michael Upshur, yes always looking for the next opportunity and definitely feeling good my friend...

    0Reply
  • Bhuvanandra S KumarPro Member
    Investor · Macomb, MI · Member since 2016 · 36 posts · 13 votes
    10y

    Hi @Brian Adams that is inspiring. Congrats. Would love to learn from you. Thanks for sharing.

    0Reply
  • Brian Adams
    OP
    Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    @Bhuvanandra S Kumar, thanks, I appreciate your message.

    0Reply
  • Account Closed
    Fort Worth, TX · Member since 2016 · 62 posts · 15 votes
    10y

    awesome! 

    0Reply
  • Daryl Askew
    Contractor · Atlanta, GA · Member since 2016 · 104 posts · 22 votes
    10y
    That is awesome I know you are super excited . Congrats
    0Reply
  • Kyle Grimm
    Investor · St. Louis Mo · Member since 2015 · 211 posts · 129 votes
    10y

    Reading this just fires me up! Boy I can't wait to get to your level!

    0Reply
  • John CasmonPro Member
    Cincinnati, OH · Member since 2013 · 1k+ posts · 1k+ votes
    10y

    @Brian Adams Fantastic! This is certainly a great inspiration. How long did the process take from identifying the property to close? 

    0Reply
  • Brian Adams
    OP
    Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    @John Casmon, relationships, relationships.

    I first heard about the deal in October 2015 as the asset was under contract with another buying group. The other buying group couldn't raise the money and they fell out of contact.

    One my contacts and a broker made me aware of the opportunity to acquire the deal. We started doing negotiation at the end of 2015, but with the holiday's, there wasn't much movement on either side.

    The purchase and sales contract was inked on January 7, 2016 with a 60 day close and 1 - 30 day extension.

    My point about relationships, build relationships before you need them. 

    I wouldn't have found this deal or been made aware of the opportunity if I didn't already have a relationship in place. If you are looking to raise a $100k or $3 million make sure you have developed relationships with investors.

    1Reply
  • Lane Kawaoka
    Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
    10y

    In in for the next one! And I'm not a pain to work with ;)

    0Reply
  • Gerald Pratt
    Investor · Charlotte, NC · Member since 2015 · 6 posts · 2 votes
    10y
    Congratulations!
    0Reply
  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    10y

    Hi Brian,

    What was the going in cap rate for this property?

    Was it based off of 10% vacancy, 2% rent growth, 50% opex? Does landlord pay water and sewer? Sometimes 60% all in costs projection is needed.

    I see some other syndicators buying into pro-forma or bubble type projections that are not sustainable over the hold period ( just talking in general ). Historically over decades the numbers have not been what the markets have been showing the last 12 to 18 months.

    Some of these areas in Georgia mentioned tend be spotty areas with a non-desirable tenant base.

    Is this a non-recourse loan or are you on the hook as the sponsor?  

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  • Brian Adams
    OP
    Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    @Joel Owens, the going in cap rate was 6.75. 

    Although the property has been 93 to 95% occupancy, used a 12% vacancy in year 1 numbers and underwriting.

    Based on market data and rent surveys, 2% rent growth was a reasonable assumption.

    OE should be 50 to 55%, however in my underwriting I used 61% in year 1 projections to allow cushion.

    Yes, landlord pays water and sewer. We will be implementing a RUBS. For those that aren't familiar with this term, RUBS equals a Ratio Utility Billing System. Essentially when your property isn't sub-metered for water and the cost to do so is prohibitive, RUBS allocates the water usage based on the actual water bill to each tenant. 

    Some residents can argue that it isn't fair as it isn't billed on their actual consumption but rather on the units square footage and/or the occupancy at a point in time. 

    For these types of opportunities, personally I would never do a deal if it was recourse. So yes the Fannie Mae Loan is non-recourse.

    2Reply
  • Mike Cardona
    Antioch, CA · Member since 2015 · 12 posts · 4 votes
    10y
    That is awesome!
    0Reply
  • Brian Adams
    OP
    Syndicator of Large Apartment Buildings · Glen Mills, PA · Member since 2009 · 1k+ posts · 1k+ votes
    10y

    I wanted to give a 2 week update on where we stand with this deal. 

    As part of takeover on a new asset, I follow a checklist and work with the third party management company to make sure all the various items are being handled such as:

    • Setup bank accounts, order checks
    • Get all the utility accounts transferred
    • Alert vendors of new ownership
    • Communication to tenants
    • Order new signage
    • Setup property website
    • Get phones and internet setup
    • Order marketing materials
    • Any many, many other items

    We took the asset over at 93% occupancy.

    The day after closing, increased rents $20 to $30 on all floor plans for new leases and lease renewals.

    As of 4/22/16, we are 97% pre-leased with the new rents in place.

    I do anticipate and expect occupancy to drop in the next couple months as my approach to running large deals is to be very aggressive with our tenants who are slow-payers or no-payers. So we will clear out the "bad-apples" and bring in tenants that match-up to our ideal resident profile. 

    On 4/25/16 I will be at the asset to work with the management company to discuss and begin executing the game plan for the deal.

    1Reply
  • Indre White
    Real Estate Agent · Miami, FL · Member since 2016 · 26 posts · 10 votes
    10y

    Congrats! Amazing deal!

    0Reply
  • Kirby Vandivort
    Investor · Champaign, IL · Member since 2012 · 22 posts · 0 votes
    10y
    Originally posted by @Account Closed:

    Hi @Brian Adams i was just looking at some multifamily opportunities in Macon, i am totally new to investing in georgia, we should connect. 

    and congrats 

     Hey Paul,

    I was just looking at an off market deal in Macon myself.  Maybe WE should connect.    

    Kirby

    0Reply
  • Rob Neidlinger
    Investor · Carlisle, PA · Member since 2015 · 8 posts · 1 vote
    10y

    my brothers and I have been purchasing properties with private money and then refinancing a year later with a bank.     Is this what you are doing?

    We have 140 units now that we own.   I would love to buy a much larger property as this one.   If anyone has any ideas please let me know ?

    0Reply
  • Tiffany Jones
    Upper Marlboro, MD · Member since 2016 · 30 posts · 1 vote
    10y

    Congrats @Brian Adams

    0Reply
  • John Cozier
    Port-of-Spain, Trinidad · Member since 2016 · 6 posts · 1 vote
    10y

    Congratulations.

    0Reply
  • Troy M.
    Investor · Flower Mound, TX · Member since 2014 · 5 posts · 4 votes
    10y

    Brian,

    Congratulations!  The multi-family market is generally priced to perfection right now (or so I hear) so finding a good deal is very hard and requires a lot of patience. 

    Have all of your syndications thus far been a 506(c) Offering? 

    Regards,

    Troy

    0Reply
  • Earl Louis
    Investor · Albuquerque, NM · Member since 2016 · 108 posts · 7 votes
    10y

    @Brian Adams, You are rocking!! Yes! it is inspirational to hear about your accomplishments and do congratulate you on that! I also and will quit the job and pursue more into REI. Again Congrats on a job well done!

    0Reply
  • Daryl Askew
    Contractor · Atlanta, GA · Member since 2016 · 104 posts · 22 votes
    10y
    Brian , If you need any help fixing any units up let me know ,we are a contractor in the Atlanta area and work with investors . Feel free to contact me would like to help you out
    0Reply
  • Mack Woodward
    Buford, GA · Member since 2016 · 29 posts · 9 votes
    10y
    Great stuff!
    0Reply
  • Mack Woodward
    Buford, GA · Member since 2016 · 29 posts · 9 votes
    10y
    Awesome stuff! Congratulations
    0Reply
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