All Forum Posts by: Brandon Lawson

Investment Info:

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

Purchase price: $3,500,000
Cash invested: $1,300,000

32 unit apartment building located in Nanaimo BC's South End built around 1980

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

At the time I was investing in single-family real estate, After many courses and mentors showing me the power of multi-family investing I knew I had to make the switch. Lacking some of the experience I needed to jump into a project of this scale I partnered with a friend/mentor who had a handful of value add projects under his belt.

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

This project was put in front of us through a broker in Vancouver (Dan Schulz - BCapartmentinsider). The negotiation was in-person with the seller as there was a few creative components to discuss.

How did you finance this deal?

This was the first project that we used the extended closing approach. With phase 1 of the value add we negotiated a 1-year closing with access to operate as property management and conduct necessary construction. We then closed on the property with construction loans to complete full renovations to the units/building successfully increasing the operating income once more. Lastly, we refinanced the fully stabilized building with CMHC insure financing at incredible rates and terms.

How did you add value to the deal?

During Phase 1 we were able to increase the operating income by $97,200 annually. This was done by mutual agreements with the tenants to install in-suite laundry along with new doors and windows (also reducing operating expenses). Phase 2 value add was completed by full unit renovations (again, using with mutual agreements).

What was the outcome?

Fantastic outcome! We managed to take a $3.5M building and create a cash flowing stabilized product valued at $6.75M today.

Lessons learned? Challenges?

The main lesson on this project would be to make sure your construction budgets are extremely conservative. A project this size can go over budget very quickly. You can't plan for the unknown, but you can expect the unknown and build a budget to include a large margin for error so make sure the projects allow for a change in plan or increase in budget.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Dan Schulz and Chris Winckers (Realtors). I partnered with Top Down Investments on this project to lean on Guy Bouchards experience. www.topdowninvestments.com

@Dmitriy Fomichenko I will keep you posted!

Thanks @Jim Kittridge it's definitely not a common approach in our markets either! Though a very effective strategy for entering larger projects with minimal capital on the front end.

Investment Info:

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

Purchase price: $8,000,000
Cash invested: $1,000,000

We currently have an accepted offer of 8M for 126 units in Duncan BC with a 2-year closing which will allow us to renovate the building (w/construction loans) and increase the value prior to refinance. We have implemented a unique tenant upgrade package for the existing tenants that have already increased the average rental income substantially. Upon stabilization the average rents are projected to be approximately $1000/month which should achieve a projected after repair value of 18M-20M

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

We have specialized in value-add multi-family over the past few years and have had a lot of success stabilizing underperforming assets. We've always been interested in projects that allow us to use creative strategies that see significant lift in the first 1-2 years of the project.

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

This deal was brought to our attention through an acquaintance who has known the owner for some time. Guy Bouchard (President of Top Down Investments) presented a creative option to the seller that was originally denied. It was about 2 years later that he had approached him for a second time and presented a creative option that would allow us to pay the seller more than the average buyer could in this market and make him some interest on lending extra capital to the project.

How did you finance this deal?

We are using a strategy that we call the TDA (Top Down Approach). This is where we secure the property at todays value with an extended close and the right to purchase at any time within (1-2 years typically). We then proceed with the stabilization of the building (pre-close), which brings us to closing on an already stabilized asset at its new market value.

How did you add value to the deal?

We are using a tenant upgrade plan that allows the existing tenants to pick between multiple options each associated with different levels of new lease amounts. The majority of the lift from this particular building will come from the re-build of 32 units that were damaged in a building fire and an additional 20 units that were sitting vacant.

What was the outcome?

Still in the process and going very well. Tenants are happy with our unit upgrade plan which as allowed us to add approx. 2M in value to date with a lot more lift to come over the next 1.5 years as we stabilize the entire building.

Lessons learned? Challenges?

Will be revealed at the end of the project!

Investment Info:

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

Purchase price: $8,000,000
Cash invested: $1,000,000

We currently have an accepted offer of 8M for 126 units in Duncan BC with a 2-year closing which will allow us to renovate the building (w/construction loans) and increase the value prior to refinance. We have implemented a unique tenant upgrade package for the existing tenants that have already increased the average rental income from $562 /month to approx. $870 /month to date. The vacant units (65) are projected to achieve rents of approx. $1150/month, with occupied units averaging $900 /month. Upon stabilization the average rents are projected to be approximately $1000/month which should achieve a projected after repair value of 18M-20M based on a refinance at a 5% CAP and a 35% OER.

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

We have specialized in value-add multi-family over the past few years and have had a lot of success stabilizing underperforming assets. We've always been interested in projects that allow us to use creative strategies that see significant lift in the first 1-2 years of the project.

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

This deal was brought to our attention through an acquaintance who has known the owner for some time. Guy Bouchard (President of Top Down Investments) presented a creative option to the seller that was originally denied. It was about 2 years later that he had approached him for a second time and presented a creative option that would allow us to pay the seller more than the average buyer could in this market and make him some interest on lending extra capital to the project.

How did you finance this deal?

We are using a strategy that we call the TDA (Top Down Approach). This is where we secure the property at todays value with an extended close and the right to purchase at any time within (1-2 years typically). We then proceed with the stabilization of the building (pre-close), which brings us to closing on an already stabilized asset at its new market value.

How did you add value to the deal?

We are using a tenant upgrade plan that allows the existing tenants to pick between multiple options each associated with different levels of new lease amounts. The majority of the lift from this particular building will come from the re-build of 32 units that were damaged in a building fire and an additional 20 units that were sitting vacant.

What was the outcome?

Still in the process and going very well. Tenants are happy with our unit upgrade plan which as allowed us to add approx. 2M in value to date with a lot more lift to come over the next 1.5 years as we stabilize the entire building.

Lessons learned? Challenges?

Will be revealed at the end of the project!

@Anna Korishch You're definitely correct that there is more potential in larger buildings, although its slowly dwindling in competition with larger investments firms. You almost certainly have to go off-market for large or small buildings to make good sense of them, otherwise it's all too easy to lose in multiple offers! As for win/win approach with tenants, 100% applicable to all markets in my eyes! Unfortunately, not always the case with some landlords/investors.

Hi Anna, we are currently have 185 multi-family units on Vancouver Island (2 stabilized buildings and 1 active project). As I'm sure you are aware with your Vancouver investment, the west coast is seeing some major upswing which has ruled out any significant cash-flow on single-family and multi-family (not to say you can't find the needle in the haystack). You're likely purchasing in and around a 5% CAP (and even lower for smaller entry level buildings due to the amount of competition in that price range). This isn't terrible but definitely not great and can still achieve $100+ cash flow per door with today's lending rates no problem! Being an inflated market that is seeing lots of attention and low vacancy we have realized most of our success through the value add component of these projects with the ability to work with the tenants not against them as BC is largely in favour of the tenants alongside rent increase restrictions.