Value Add Multifamily

[Zane Belden]

Investment Info:

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

Purchase price: $720,000
Cash invested: $275,000

Contributors:
Devin Haertling

24-unit value add apartment complex across 6 buildings. All 2 bed, 1 bath. Plan to renovate 18 of the 24 units, improve exteriors, etc and raise rents. Once this is complete we will cash our refi or possibly look to sell.

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

Value Add, under market rents, poor management.
Cashflow, forced appreciation, market appreciation, depreciation,

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

Agent/PM found it. Negotiated with seller for several months until we made a plan to meet both sides objectives.

How did you finance this deal?

Conventional mortgage. 20% down, 4.75, 5 year ballon, amortized over 20

How did you add value to the deal?

renovating units, raising rents, better tenant placement/management

What was the outcome?

closed on 3/15/19: 7 units renovated. Significantly raised rents on new and old units. gross income increasing every month.

Lessons learned? Challenges?

Building/property stigma! Didn't realize how negative the stigma was. New signage and getting a lot of people in to see newly renovated units and the word of mouth the tame form that helped changed the stigma. But it took a few months to get over the hump.