Two years ago I purchased a 200+ unit apartment complex in Dallas, TX for $6 million that appraised at $7.4 million at closing.

The purchase was 100% off market as I located the deal by doing a targeted direct mail campaign. I sent a series of letters that targeted owners who owned their properties for 15 years with hopefully equity and possibly a landlord who was burned out.

A 79 year old gentleman who owned his property for 21 years contacted me. He recently was recovering from a health challenge and his family members wanted him to sell.

The seller didn’t want to sell, but he knew he had to sell as he couldn’t keep up with the day to day operations. Plus his family members were really pressuring him to sell.

The first outreach between the Seller and I started in 2012 and I didn’t close until 2014. It was a VERY long process to get the property under contract and to eventually close the deal.

Some of the issues:

• The books and records of the seller were terrible.

I mean horrible.

Fortunately for me, I am a CPA and had the privilege of working at some of the top firms in the world. I was able to slice and dice the financial data. More importantly I was able to piece together the financial mess so a lender could see the same upside I saw.

The seller was very frustrating to work with. One day he wanted to sell the next day he didn’t. This also happened after we went under contract. It was almost a weekly occurrence of the seller trying to get out of the contract.

We had issues - or how a good friend of mine says when a deal is a mess, "This deal has some hair on it!!"

• When we were under contract there was a fire – fortunately no damage.
• An insurance claim that pre-dated our contract.
• Roof issue
• And several other issues

So it could have been easy for me to walk away from a seller who was very difficult to work with. But I knew I had a deal where I could work my “magic”.

Studies have shown:

• 2% of closing the sale occurs on the 1st call
• 3% of closing the sale occurs on the 2nd call
• 4% of closing the sale occurs on the 3rd call
• 10% of closing the sale occurs on the 4th call
• 81% of closing the sale occurs on the 5th call

Would you agree that most people give up on the 1st or 2nd call? 

That is why so many real estate investors fail to get off the ground.

Check this out, studies have also shown that:

• 48% of the time people quit following up after the 1st call
• 24% of the time people quit following up after the 2nd call
• 12% of the time people quit following up after the 3rd call
• 6% of the time people quit following up after the 4th call
• 10% of the time people quit following up after the 5th call

We know as real estate investors our best deals are ones where we need to be persistent and can see the big picture.

I kept working the deal as I knew this deal had significant upside. I was frequently calling the seller.

By working an off-market deal directly with the seller, I was able to buy the property significantly below market value.

I acquired the 200+ unit apartment complex for $6 million.

Here is an excerpt from the appraisal where the asset appraised at $7.4 million at purchase:

So going into the deal there was $1+ million of equity.

But the deal gets better.

The property is a cash monster. After paying all expenses, mortgage and reserves, the property chugs out $20k net cash flow a month.

Pretty sweet Right??

Within 15 months of ownership, and working my butt off on this deal by working my magic, I was able to take the occupancy from 86% to 98% and increase rents over a $100 per unit. I spent over $600k in interior and exterior upgrades to add value.

I refinanced the property and the asset appraised at $10.2 million or over $4 million in equity in 15 months.

Here is an excerpt from the appraisal when I refinanced the asset where the property appraised at $10.2 million:

So if you aren’t having immediate success with your real estate investing career, please know that sometimes your best deal might not be on the first call with the prospect. 

I really hope it doesn’t take you 2 years like it did me, but keep working your own magic.

I hope you found the above helpful, here are some other threads you might find useful:

I quit my CPA Job to buy Large Apartment Buildings

BP Podcast 135 - How I Got Started, so far over 70,000 people have listened to the show

Just Closed a 240 unit Apartment Complex

Great deals don’t just fall out of the tree. You must work hard to find and locate killer deals. So continue to follow-up with those prospects!!