Real Estate Investor / Syndicator · Austin, TX · Member since 2013 · 210 posts · 135 votes
BPers,
Yahoo !! We are happy to announce that Achieve Investment Group has recently completed acquisition of 174 Units Value Add Multifamily Apartment in San Antonio. The property was bought way below market value using our approach of sourcing deals direct from sellers. This is a group of 3 adjacent properties that will be re-branded. The strategy is to buy at 7% cap rate and make it to a 12-13% cap rate in 3-5 years. Currently the property is rented below market value with 63% expense ratio. We are projecting to spend 8-9K per door to rehab the interior and exterior of the property, change the demographic to increase the rents to market, reduce expenses to achieve our investment goals. The property was bought by syndicating capital from sophisticated and accredited investors using SEC rule 506d. Financing of the property was done using loan assumption so that it can be refinance to do a cash out refinance within 2-3 years. Now lets roll the questions !!
My guess is that your deal was done with a 506b not a 506d
Rule 506(d) and “Disqualified Persons”
The new 506(c) rule arrived with a companion 506(d) rule, which prohibits “felons and other ‘bad actors’” from conducting Regulation D private placement offerings that rely on any Rule 506 (i.e., 506(b) and 506(c)) exemptions, where a disqualifying event occurs following the effective date of 506(d).
Finding the deal: We did what every wholesaler in residential and every brokers in commercial industry do. Direct Marketing!!
Due diligence: This is a process by itself. We go through lease file audits, unit inspection. Checks on foundation, plumbing, electrical, roof. To determine the rehab cost. To evaluate market rents, we did market survey by calling and walking the surrounding apartments . There is a lot more to it. ..
Great job James K. $9k/door for rehab is well above average and sounds like a big project! The toughest part is behind you - Best of luck in the reposition.
@Betty Cruz this is at Balcones Heights near Medical Center.
@James Evertson You are right in terms of the market compared to Austin And Dallas.
@Mark Allen it's a tough rehab but that's where the fun and the reward is. Equivalent to the more uglier the house the more reward you reap. Will give everybody an update once we are done rehab. Looking good so far.
@Allen Herbert Financing will vary depending on the type of loan that you are looking for. PM me.
My guess is that your deal was done with a 506b not a 506d
Rule 506(d) and “Disqualified Persons”
The new 506(c) rule arrived with a companion 506(d) rule, which prohibits “felons and other ‘bad actors’” from conducting Regulation D private placement offerings that rely on any Rule 506 (i.e., 506(b) and 506(c)) exemptions, where a disqualifying event occurs following the effective date of 506(d).
@James Kandasamy That's fantastic! 63% expense load..I find it unbelievable that owners just don't care enough to properly look after their investments. Oh well, it makes for a great opportunity !
James, you should consider writing a blog post about your process; I'm sure there's an incredible amount of learning to be taken away from your experience.
@Kenneth Reimer you are right. These are the opportunities , it can be due to owners and it can be due to property management. My experience has been it's more because of bad property management , most owners think they can buy a commercial property and give it to a property management company (this one is one of the biggest in the city) and take ATM money every month.
I try to write blogs as much as possible( see my website). This is a big one so it's really worth it to write after it's all done.
Who is paying for the utilities? All bills paid can get into the 60's. Also check the payroll load. Some PM's give their employees great benefits and you get to pay for it.
This is not an all bills paid property. Tenant pays for all utilities. The high expense ratio are caused by many things including higher than usual property management fee, deferred maintenance , high water bills due to leaks, inefficient monthly advertising cost, inefficient property management software, neglected yearly service contracts, higher than usual insurance cost etc.
This is not all bills paid property. Tenant pays for all utilities. The high expense ratio are caused by many things including higher than usual property management fee, deferred maintenance , high water bills due to leaks, inefficient monthly advertising cost, inefficient property management software, neglected yearly service contracts, higher than usual insurance cost etc.
This is not all bills paid property. Tenant pays for all utilities. The high expense ratio are caused by many things including higher than usual property management fee, deferred maintenance , high water bills due to leaks, inefficient monthly advertising cost, inefficient property management software, neglected yearly service contracts, higher than usual insurance cost etc.
@Taylor L. This is basically where you need to build some credibility before hand. We build our credibility from single family homes rehab and turnarounds track record.
Congratz James K.
Great transformation for $5k. Did you replace the kitchen cabinets or resurface them?
Is this deal completely filled? If not, PM me as I would like to hear more about it.
@Taylor L.Its filled. In fact, it was filled within 3 days. Investors can recognized great deals than than usual deals. I will PM you so stay connected for the future.
@Taylor L. The Kitchen cabinet were just painted on top of them. The deal was filled within 3 days. My Investors knows when a great deal comes in front of them.This deal was closed Nov 16'.