Go as Big as you Can as Fast as you Can!

[Stevan Garcia]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Alvin.

Purchase price: $2,150,000
Cash invested: $750,000

40 Unit C-class Garden Style Apartment complex purchased in B/C area with strong economic momentum, operational and physical value add strategies that will realize cash flow and equity growth.

What made you interested in investing in this type of deal?

I wanted to build economies of scale to maximize cash flow and profits with as man doors as possible at one address.

How did you find this deal and how did you negotiate it?

I found this deal by calling commercial real estate brokers who specialize in smaller multifamily deals. I had a strong sponsor who's track record I Ieveraged to impress upon the broker that I can close. We performed due diligence on the property and successfully negotiated a $40K repair credit from the seller. We closed when we said we would 90 days later for a smooth transaction.

How did you finance this deal?

We got a Freddie Mac small balance loan with 25% down, 30 year amortization, 5 year term with 1st year interest only at 4.85%.

How did you add value to the deal?

We took advantage of economic momentum, operational and physical value plays.

What was the outcome?

We are turning those value plays into enhanced net operating income forcing asset appreciation and value upon exit at end of year 5.

Lessons learned? Challenges?

Don't delay value added strategies. Implement value added strategies right away or enhanced net operating income and value will be delayed.

[Matthew McNeil]

Kudos on your investment.  However, I'm not so sure that your “Go as Big as you Can as Fast as you Can!" is an equitable approach to REI especially when there are variables on the other side of the equal sign. Goes pretty much against most of the advice I've read on BP. But good luck!