All Forum Posts by: Ian Cruz

Investment Info:

Large multi-family (5+ units) buy & hold investment in Cincinnati, OH.

We purchased 8-units in Cincinnati, OH via a partnership on Fractional.

The property was fully occupied in 2021 when it was last transacted, but due to poor property management, the property slowly went vacant. We were able to purchase the property near the tax assessed value.

Our partners contributed an additional $150K for our reserves to address CAPEX items. We're expecting this to be a bit of work to get this up to speed, but will be a great property once stabilized.

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

I've buying buying properties in this neighborhood. My network owns other apartments on the same street.

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

MLS and our realtor negotiated >20% off the contract price due to adverse findings

How did you finance this deal?

Local Credit Union

How did you add value to the deal?

We positioned ourselves as the ideal buyer of the property - one that had enough in reserves to fund the capital expenditures needed to reposition the property.
This deal was a tweener - not turn-key, but it also not a perfect BRRR where the margin between our all-in cost and the ARV is high enough to use hard money and pull out ALL of your money in the deal. We used Fractional and our partners funded >$160K in reserves to position ourselves as the ideal buyer to operate the property.

Lessons learned? Challenges?

Relationships are important, and we had several parties (lawyers, contractors, PMs, our realtor, other investors, etc.) help provide guidance along the way. We also had one of the more comprehensive due diligence stages, which will prep us in the future.

A huge challenge is the tightening insurance landscape. Back in December 2022, you could still find high risk insurance for buildings with knob and tube. Now, no carrier will go near it.

Hi Andrew, 

Cincinnati (and the midwest) has stayed hot throughout the past year. Unfortunately, all of the influencers have gotten entry level investors overbidding on old properties that appear to cash flow, and then many realize that they are in way over their head. 

Many properties that I bought here were from sellers of only a few years that could not handle managing the property anymore.

Your highest earning tenants will lean towards single family homes, but there is still demand for rentals.

As far as contacts, it takes time to build your network and team. We can chat separately and I can point you in the right direction.

Separately, I manage a community with the company Fractional that shares deals to partner up on and acquire. For example, we just closed on 8-units there a few weeks ago. I'd be happy to share more if you're interested.

@Matt Cottrill What if you applied to seller credits and then the rest towards an escrow account for repairs?

Congrats on exiting this one! Pending before we could ever get in there haha.

I started with two 6-units - one local and one OOS. Commercial is a different ball game from the financing to the finding dealflow and the state of the property. Sometimes the 5-40 unit range can also tricky to find a good PM.

I did it with the right partner and mentors guiding me throughout the way. There was definitely a big learning curve, despite me reading every book I could get my hands on beforehand. DM me and I'd love to give some more guidance!

Quote from @Doug Spence:

@Ian Cruz Congrats! I have some questions about your deal if you're willing to share the answers:

-Did you purchase this with a team or did you take it down by yourself? What is your role in the team/partnership?

-What was the purchase price? Did you negotiate to get that price?

-How did you fund the deal? 

-Is it a value add or more of a turnkey deal?

-What are federal pacific panels?

 Will shoot you a DM!

Quote from @James Wise:

Quote from @Ian Cruz:

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Commercial multifamily in Cincinnati

Lessons learned? Challenges?

Things were very informal in documentation (agreements, gathering diligence docs, protocol for sending wire instructions, transaction still not posted to MLS months later, etc.).
Went through some expected struggles of insuring an older building with Federal Pacific panels and being an out-of-state buyer. Glad to be building a team with local market knowledge.

 I feel like a lot of transactions are a lot more informal than folks expect them to be. People that own real estate are just regular folks like anyone else.

Haha, I work at a venture capital firm (investing in early stage startups) and every day there are attempts to hack us. We have to be so careful with wire instructions - securely transmitting everything and following up with calls. Nothing has happened to us, but lots of horror stories.

On this deal, I never was told who the escrow officer was, and then and when I got a call from the escrow officer, the phone number didn't match the number on the website or the number on the person's signature. Wire instructions sent outside of the secure portal, by a person who was never introduced, on a # that didn't match anything on the website haha. Just called the main line to get a confirmation - better to be safe than sorry!

Investment Info:

Single-family residence buy & hold investment.

STR in Cincinnati, OH

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Commercial multifamily in Cincinnati

Lessons learned? Challenges?

Things were very informal in documentation (agreements, gathering diligence docs, protocol for sending wire instructions, transaction still not posted to MLS months later, etc.).
Went through some expected struggles of insuring an older building with Federal Pacific panels and being an out-of-state buyer. Glad to be building a team with local market knowledge.

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $1,400,000

Duplex househack in a central part of West San Jose, with furnished housing on the other side.

How did you finance this deal?

First Republic Bank = 3.1%

How did you add value to the deal?

Cosmetic renovations on our unit, remodeled the bathroom of the guest unit.

Lessons learned? Challenges?

Holding time adds up!