CLOSED on a 98-unit TODAY!

CLOSED on a 98-unit TODAY!

Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes

So, we had another thread going for a couple of weeks here. And this is not yet a success story, since a lot of work needs to be done to make it a success. 

But, today, @Sam Grooms and I closed on this 98-unit in Phoenix.

This is a syndicated private placement acquisition. @Jillian Sidoti and her firm, whom I highly recommend, helped with the PPM-related docs. 

The unit mix includes studio, 1x1, 2x1, and 2x2 lay-outs. The asset was constructed in 1984, and has by and large been un-touched on the interior of the units. However, the bones are very good, the unit sizes are attractive within the sub-market, and the location is experiencing very significant gentrification.

This was a mom-an-pop owned property. Rents are low even for as-is condition. Our Cap Rate on the way in is a bit under 5%. Our expected Cap Rate after the re-positioning in Y3 is 8.3%. Obviously we feel that there is a lot of upside on the rents. 

We have a $1.4M renovation budget, which includes complete reno of the interiors, as well as close to $500,000 in the common areas.

I could talk for hours, but I won't. I have a feeling me talking for hours might happen on the blog :) 

But, feel free to ask questions - I won't tell you everything, but I'll do my best to paint the bug picture.

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Investor · Phoenix, AZ · Member since 2017 · 583 posts · 919 votes
8y
Originally posted by @Anthony Gayden:

it sounds like you found a great deal in one of my favorite markets, Phoenix, AZ.

We were able to get it under contract before the call for offers went out. That helped a lot in preventing the price from getting bid up. 

See this reply in the discussion

248 Replies

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  • Real Estate Broker · Miami, FL · Member since 2016 · 2 posts · 2 votes
    8y

    Nice Congratulations!! What is the partnership structure for a deal like this . 

  • Real Estate Broker · Clearwater, FL · Member since 2018 · 28 posts · 11 votes
    8y

    Wow, congratulations!!

  • Ori SklootPro Member
    Investor · Berkeley, CA · Member since 2016 · 242 posts · 304 votes
    8y

    @Ben Leybovich and @Sam Grooms  Mazal tov guys!  This is an inspirational post for folks such as myself who haven't gotten to the syndication level yet.  I look forward to hearing further stories about how the project unfolds.   Ben, I particularly appreciate your follow-up post where you talk about learning in real-time and changing your mind/strategy about investing.   Keep up the good work!

  • Mesa, AZ · Member since 2018 · 2 posts · 1 vote
    8y

    @Sam Grooms @Ben Leybovich I'm in the Phoenix Metro area. Let me know if there are any meet up / Masterminds to attend locally. Currently sourcing Multi Fam here in PHX and Indianapolis. Congrats on the deal and  Keep rockin!

  • Real Estate Broker · Indianapolis, IN · Member since 2013 · 35 posts · 10 votes
    8y

    Ben, i would like to know how to find these private placement acquisitions, such as this 98-unit multi in phoenix. You mentioned in the comments that you had this under contract before public offerings were released. How did you (more importantly, how do I) locate deals similar to this, or any private placement acquisitions specific to real estate?

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Abiel Ballesteros:

    Nice Congratulations!! What is the partnership structure for a deal like this . 

    Abiel - this was a Reg D. Basically a limited partnership.

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Scott Dawson:

    @Sam Grooms @Ben Leybovich I'm in the Phoenix Metro area. Let me know if there are any meet up / Masterminds to attend locally. Currently sourcing Multi Fam here in PHX and Indianapolis. Congrats on the deal and  Keep rockin!

    Scott - Sam and I are going to be at @Shiloh Lundahl's meet-up in Masa in a few weeks. Connect with him :) 

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Ori Skloot:

    @Ben Leybovich and @Sam Grooms  Mazal tov guys!  This is an inspirational post for folks such as myself who haven't gotten to the syndication level yet.  I look forward to hearing further stories about how the project unfolds.   Ben, I particularly appreciate your follow-up post where you talk about learning in real-time and changing your mind/strategy about investing.   Keep up the good work!

     Ori - Mazal! 

  • Accountant · Saint Louis, MO · Member since 2017 · 409 posts · 362 votes
    8y

    First let me add my congratulations to everyone (mostly everyone) elses to @Sam Grooms and @Ben Leybovich. 

    Second I agree with what @Chris Clothier said, no reason to feed the troll, who appears to have left the site, and given the Mods on here quite a challenge, as there are a ton of "this post has been removed" markers. 

    And finally I hope to be in your shoes one day, or possibly in one of your funds, but I got a long way and a lot of hard work ahead to get there. Keep it up guys. And if you're ever interested in St. Louis let me know please, I'd be honored to do anything I can to help. 

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Jeremy Rotert:

    Ben, i would like to know how to find these private placement acquisitions, such as this 98-unit multi in phoenix. You mentioned in the comments that you had this under contract before public offerings were released. How did you (more importantly, how do I) locate deals similar to this, or any private placement acquisitions specific to real estate?

    Jeremy - I think there might be a little confusion in regards to the "private placement". Private placement refers to the funding, it has nothing to do with sourcing the deal. This was offered publically, but the seller instructed the broker that if possible to get an offer from a valid buyer before the craziness of a call, to do it. Not every seller wants to get tied up in negotiations with 6 parties highest and best.

  • Member since 2018 · 10 posts · 5 votes
    8y

    Congrats !!!!!!!! Happy investing.

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y

    Thanks, @Donald S. I try to be cordial, even when I tell someone they are stupid. But, I agree, the trolling thing got a bit annoying for a minute...I am glad it looks like we've got it under control.

    There is a lesson to learn here - some people value their time in this life for so little as to engage in this type of a discourse. That, to me, is unbelievable.

    Pay it forward. Do good. Help people. Enjoy sharing the intellectual worth with people. It comes back ten-fold.

    @Chris Clothier and I have disagreed more than we agreed over the years. Perhaps because of this, it was especially nice, Chris, when you were the first to step in...thank you!

  • Rental Property Investor · Tacoma, WA · Member since 2018 · 113 posts · 149 votes
    8y

    Congratulations! I love the look of it both in terms of the open courtyard and swimming pool. Also the apartment you show looks like it's open concept which is fantastic. 

  • Investor · Southern Indiana, IN · Member since 2017 · 178 posts · 95 votes
    8y

    Congrats @Ben Leybovich and @Sam Grooms !

    Very cool to see how the big boys swing.  Well done

  • Rental Property Investor · Tacoma, WA · Member since 2018 · 113 posts · 149 votes
    8y

    @Ben Leybovich You wrote "Jay, statistically it costs on the average about $1,000 per door per annum less to run multifamily in the South-West than Mid-West."

    I'm really intrigued by this. Do you happen to have a study or reference? I'm not doubting it. Up in the Washington and Oregon I get really tired of dealing with mold in apartments. It's difficult to prevent and expensive to fix. It also seems that roofs will last longer in a dry climate. 

    We are thinking of investing with the southwest next go around and would love to know that our costs will go down on these line items.

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Ali Hashemi:

    Congrats @Ben Leybovich and @Sam Grooms !

    Very cool to see how the big boys swing.  Well done

    What you don't see, Ali, are the hard knock and bloody knuckles...just keep that in mind :(

    I am all for the excitement on this thread. And I am all for the motivation we are spreading. I just want to temper that with a pinch of reality...

    What Sam and I are doing today belongs in the big boys' sphere. But, we've eaten a lot of proverbial **** to swing this way :)

    Thank you, indeed!

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Rhonda Wilson:

    @Ben Leybovich You wrote "Jay, statistically it costs on the average about $1,000 per door per annum less to run multifamily in the South-West than Mid-West."

    I'm really intrigued by this. Do you happen to have a study or reference? I'm not doubting it. Up in the Washington and Oregon I get really tired of dealing with mold in apartments. It's difficult to prevent and expensive to fix. It also seems that roofs will last longer in a dry climate. 

    We are thinking of investing with the southwest next go around and would love to know that our costs will go down on these line items.

    Hah yup. IREM report - google it :) Although, on the small scale it won't do you much good because the numbers are different. These are apartment stats.

  • Lender · Los Angeles, CA · Member since 2015 · 278 posts · 78 votes
    8y

    @Ben Leybovich

     This is awesome !

    Congratulations !

    #Goals !

    What was acquisition price ?

    What is projected disposition value ?

    Was 100% of acquisition and improvement costs coming from raised capital?

    Or did you have a lender provide lion's share of costs as debt, then raise the remaining capital as equity ?

  • Real Estate Agent · New York, NY · Member since 2018 · 10 posts · 3 votes
    8y

    @Ben Leybovich Congratulations to you and @Sam Grooms! Officially time for me to book some flights for @Mike Acri and myself to come celebrate in person :)

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Account Closed:

    @Ben Leybovich Congratulations to you and @Sam Grooms! Officially time for me to book some flights for @Mike Acri and myself to come celebrate in person :)

    Absolutely! 

  • Contractor · London, England · Member since 2018 · 4 posts · 2 votes
    8y
    @Ben Leybovich Congratulations that was a great move
  • Investor · Phoenix, AZ · Member since 2017 · 5 posts · 4 votes
    8y

    Congratulations!  I'm a native Phoenician and have been investing here for the last 25 years.  It looks like a great property in an obviously hot market, pardon the pun.  Can I ask what part of town and approx. price per unit?  I have been looking for something similar for a while now. On top of a great looking property you bought from a non institutional owner which is fantastic. 

    Thanks,

    Adam

  • Rental Property Investor · Phoenix/Lima, Arizona/OH · Member since 2012 · 4k+ posts · 4k+ votes
    8y
    Originally posted by @Adam Mauck:

    Congratulations!  I'm a native Phoenician and have been investing here for the last 25 years.  It looks like a great property in an obviously hot market, pardon the pun.  Can I ask what part of town and approx. price per unit?  I have been looking for something similar for a while now. On top of a great looking property you bought from a non institutional owner which is fantastic. 

    Thanks,

    Adam, we paid $8.15 for this. 98 units, so a tad over $83,000 per door. I had to break out my calculator because I realized that I didn't know the per unit price...not really important to me all that much :)

    Interestingly, I am not bothered by the "hotnes", either temperature or Cap Rates. Actually, I am enjoying both :)

  • Member since 2018 · 17 posts · 8 votes
    8y

    Wow! That's a lot..Congratulations.

  • Real Estate Investor · Waldorf, MD · Member since 2014 · 592 posts · 320 votes
    8y
    @Ben Leybovich I would love to see what that “bug picture” looks like!! I hope it’s colorful. Lol!!! Great job!! Just give me some time I’ll be right behind you or beside you.
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