Just closed: a 12-unit apartment complex

Just closed: a 12-unit apartment complex

Syracuse, NY · Member since 2015 · 100 posts · 87 votes

I got interested in real estate last summer and joined BiggerPockets. My goal at the time was to own a 5-unit apartment complex "one day," but it came sooner than I expected. We closed on a 12-unit last Friday!

I learned I will be moving to Rochester (NY) this fall, back in February. I was excited about the new position at the University of Rochester, but even more about the prospect of growing our real-estate business. Our first deal was a rehab in Norfolk, VA, but I wanted to get into the rental property/multifamily space. I started analyzing properties, reaching out to brokers, and in the process found the 12-unit on which we eventually closed.

We bought a recently-rehabbed building, all studios. Our investors put down the out-of-pocket costs, while we secured the mortgage. Purchase Price was $353000, with $3000 as credit towards a new boiler. CAP rate, 11.5%. The property appraised for the purchase price.

I am very excited about this, and would like to thank all those whose stories inspired and encouraged us to move forward. It was a parachute jump, in faith. I also want to thank those who answered my questions and made recommendations along the way - your time spent on the forums produced results!

My goal is to own "200 units by the end of 2017...or its equivalent in flips." So far we're 2 deals down, 13 doors - only by the grace of God. 

41Reply
136 views

Most Popular Reply

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

@Chiagozie Fawole, I am so proud of you, way to take action!!!

I buy 100 to 400 unit deals and now that you have a 12 unit under your belt, you will most likely want to go bigger - FASTER!! 

Your goal of 200 units by 12/31/17 is reasonable. What you need to do now is use this 12 unit as massive leverage with your brokers. Call as many as you can and share with them your good news. 

When you now say you own product, brokers will really listen to you as you are proven. Be ready for when the broker asks you "What types of deals are you looking for?"

Have a clear and concise answer ready to go...

Big High Five coming your way!!

See this reply in the discussion

83 Replies

Jump to latestLatest
  • Banke AyanlekePro Member
    Real Estate Agent · Jacksonville, FL · Member since 2016 · 2 posts · 0 votes
    10y

    @Chiagozie Fawole.That is definitely an amazing accomplishment. Congratulations!!

    Please send updates of your journey as you go on to achieving your next goal.

  • Cumberland Gap, VA · Member since 2015 · 38 posts · 25 votes
    10y

    Great news. Now you should begin to immediately plan for the removal of your financial partners. Scrap and save every dollar you make and stash it away and plan to sell this building soon.  Save your cash flow and take the equity you get when you sell and put into something you own completely like a smaller 3-8 unit property and put as much as you can down thats closest to 100%. Then that becomes your true foundation. You own it and its all yours and ALL the profits and equity are yours. Dont ever give build your portfolio beholden to someone else even if it slows your growth. 

  • Investor · Rochester, NY · Member since 2016 · 63 posts · 12 votes
    10y

    @Chiagozie Fawole welcome to Rochester!

    I moved here almost 2 years ago, and the real estate market here is amazing. So far I am working on purchasing houses #4 and #5 and it is so much fun.

    a 12-unit? that is my dream. So I tip my hat for your accomplishment. Congrats on your success!

  • Real Estate Broker · Charlotte, NC · Member since 2016 · 569 posts · 351 votes
    10y
  • Syracuse, NY · Member since 2015 · 100 posts · 87 votes
    10y

    thanks everyone 

    @Denise Pauzano my investors were mostly friends/friends of friends/people from church. Whenever anyone came on board I asked if they knew anyone else who might be interested. 

    @John Casmon we retained 16.6% equity (one-sixth, if that number seems random) and gave the investors a total equity of 83.3%. Each individual's portion of the 83.3% was then proportional to their contribution to the out of pocket costs. We were initially going to do 70/30, but when we got our interest rate from the bank we adjusted our equity to keep the investors' returns palatable. I manage the LLC and deal with the property manager, but we have voting rights for major decisions. Votes will be weighted based on equity. The plan is for monthly distributions of cash flow, with quarterly financial statements.

  • Investor · Rochester, NY · Member since 2016 · 63 posts · 12 votes
    10y

    @Chiagozie Fawole welcome to Rochester!

    I moved here almost 2 years ago, and the real estate market here is amazing. So far I am working on purchasing houses #4 and #5 and it is so much fun.

    a 12-unit? that is my dream. So I tip my hat for your accomplishment. Congrats on your success!

  • Syracuse, NY · Member since 2015 · 100 posts · 87 votes
    10y

    @Thomas D. I'm fine with growing our portfolio with investors. It creates a win-win for all of us :) and we can do more faster. We will build our "personal" portfolio when time, chance, funds and God permit; but for now partnering has provided a way 

  • Syracuse, NY · Member since 2015 · 100 posts · 87 votes
    10y

    @DL Martin the sellers disclosed they had some "issues" with the boiler last year, but the boiler works. I guess you can call it precautionary. We haven't changed it yet (just one week in). Hoping that goes well.

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

    Congratulations again, @Chiagozie Fawole. Please keep us updated on this journey.  What's your operational plan for the property? Also, did you take an acquisition fee and managing fee?

  • Rental Property Investor · Ramapo, NY · Member since 2016 · 243 posts · 108 votes
    10y

    Congrats, much success in the future. I live in NY but lower Hud valley. How do you folks deal w/all that snow? ;)

  • Investor · Kapolei, HI · Member since 2016 · 34 posts · 14 votes
    10y

    Chiagozie,

    Very inspirational, Big time congrats. love your story, I'm currently seeking knowledge on MF properties and your jouney helps out a lot, thanks for sharing. hey, 2017 is just around the corner, keep the drive going and keep the goal alive. God blees

  • Rental Property Investor · Mount Vernon, NY · Member since 2016 · 89 posts · 125 votes
    10y

    Congratulations! This is very inspiring!! Just to clarify you had investors come and assist you with the down payment and then financed the rest?

  • Kent, OH · Member since 2015 · 63 posts · 7 votes
    10y
    Originally posted by @Account Closed:
    Originally posted by :

    Right now my answer is: 50-unit properties in B neighborhoods. CAP rate at least 12%.

    What is your strategy for investing in a low demand area to be profitable?

     @Account Closed

    I am also considering investments like this. So I'll take a stab at this question.

    1) buy at a good price, at market or below (and only at market if you think it will be going in the right direction)

    2) have a plan to add some value

    3) be able to hold for long periods of time and weather any storm that comes your way

    Also, congrats your new purchase! I hope to follow you into the game as well.

  • Rental Property Investor · Concord, CA · Member since 2016 · 499 posts · 219 votes
    10y

    @Chiagozie Fawole Congrats!!! I have a few questions as I will be in the market for similar property soon. 

    What kind of due diligence did you do prior to buying the property?

    Did you do the inspection yourself? How much did the inspection cost? 

    How did you find the management company? 

    Was securing the mortgage difficult?

    Did you buy this at the asking price or did you negotiate? Any insights into your negotiation. 

    If you want, you can pm me the answers to these.

  • Investor · Honolulu, HI · Member since 2013 · 3k+ posts · 1k+ votes
    10y
    Originally posted by @Joe Ebanks:
    Originally posted by @Account Closed:
    Originally posted by :

    Right now my answer is: 50-unit properties in B neighborhoods. CAP rate at least 12%.

    What is your strategy for investing in a low demand area to be profitable?

     @Account Closed

    I am also considering investments like this. So I'll take a stab at this question.

    1) buy at a good price, at market or below (and only at market if you think it will be going in the right direction)

    2) have a plan to add some value

    3) be able to hold for long periods of time and weather any storm that comes your way

    Also, congrats your new purchase! I hope to follow you into the game as well.

     Joe my comment was more to the requirement of buying in a 12% or higher market.  I can't imagine where this would be except in some dying rust belt city.  Now money could be made anywhere but it is going to be a lot harder in low demand area.  I was wondering if the person had a strategy or if they were just buying cheap properties.  Buying cheap does not guarantee profitability.

  • Investor · Maryville, IL · Member since 2016 · 129 posts · 81 votes
    10y

    @Chiagozie Fawole - as a seasoned SFH investor, my wife and I just closed on our first duplex, and I'm very "feverish" to get more. I can see that the SFH routine has been a great experience for us and we're still happy with our tenants and the progress we've made.

    We've recently decided to alter our course now...we're going to regroup for about 6 months and then attack the multifamily units exclusively. Any SFH purchases in the future will be flips (in a higher price range, too).

    It's great to hear a testimony like your's.  I thought I was over the "nerves" of buying, but I still have the butterflies when I think about a bigger property like that.  Thank you for sharing your bold account, and I hope you do accomplish that goal of 700 units.

  • Wholesaler · Bloomfield, NJ · Member since 2016 · 104 posts · 16 votes
    10y

    @Chiagozie Fawole Hey congrats on your new success I wanted to know if you are interested in New Jersey Properties I will like to send you a list of what I currently have

  • Investor · Fort Lauderdale, FL · Member since 2015 · 172 posts · 30 votes
    10y

    @Chiagozie Fawole congratulations! It is good to see the ACTION taken come to fruition... Keep up the great work, looking forward to reading your next post about your 50 or more unit building you acquire. 

    With GodEverything is possible! Happy hunting...

  • Syracuse, NY · Member since 2015 · 100 posts · 87 votes
    10y

    @Michael Enriquez yes, we financed the rest of it.

    @Account Closed I understand your question better now. 12% is not a stretch in Rochester. This property was purchased at a CAP rate of 11.5%. For other markets I'll adjust my criteria.

    @Kurt Gardner great plan of action! I wish you all the best. @Michael Blank has a great website with helpful resources; as well as a podcast specific to multifamily investing. One book I found helpful, breaking it all down to nuts and bolts was "Wheelbarrow Profits" by Jake and Gino (I believe they're also on BiggerPockets)

  • Investor · Maryville, IL · Member since 2016 · 129 posts · 81 votes
    10y

    @Chiagozie Fawole

    You demonstrate a level of mastery, confidence, and consideration in this realm I find rare and refreshing.

    Thank you for the follow-up and blessings to you and yours!

  • Investor · Carnegie, PA · Member since 2014 · 259 posts · 144 votes
    10y

    Awesome story! Congratulations! 

  • Sarasota, FL · Member since 2015 · 7 posts · 2 votes
    10y

    @Chiagozie Fawole As a newcomer to this arena and itching to get my first property, it's encouraging to read about success stories like yours! I do have one question...you said your group formed an LLC, did you have any difficulties in dealing with the banks as an LLC when it came to getting financed?

  • Bakersfield, CA · Member since 2016 · 49 posts · 3 votes
    10y

    wonderful, so glad people dreams are actually coming true and biggerpockets is a huge factor because so many people help each other out. Keep up the great work! Stay blessed.

  • Investor · Auburn, WA · Member since 2016 · 8 posts · 3 votes
    10y
    Congrats !! That's exciting
  • Syracuse, NY · Member since 2015 · 100 posts · 87 votes
    10y

    @Raphael Thomas sure send them to me.

    @Avi Garg I compared rates of managers in the area and ended up going with one recommended by someone on biggerpockets. 

    @Moshe H. I haven't moved yet - still in Brooklyn. I'm about to find out :) 

    @John Casmon I didn't take an acquisition or management fee on this deal. For the same reason that I dropped our equity portion. I think our equity in the deal is enough for now. On bigger purchases I likely will. 

Join the conversationCreate a free account to reply, vote on answers and follow this thread.