All Forum Posts by: Craig Markhardt

Investment Info:

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

Purchase price: $3,275,000
Cash invested: $1,185,000

Six story, 47 unit mixed-use historic hotel-conversion property located in heart of downtown Sioux Falls, South Dakota

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

Neighborhood, location, parcel of land, and opportunity for major improvements including constructing an addition on the 20,000+ square foot surface parking on property. This property is also in an Opportunity Zone, of which we created and operate an Qualified Opportunity Fund that will assist in capital raise, improvements, and tax-free gain on future sale.

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

We worked with the seller and his company, beginning in 2019 to purchase following their interior upgrades to the upper levels of the building

How did you finance this deal?

Portfolio bank financing with a 25 year term and 10 year maturity

How did you add value to the deal?

We will be upgrading tenancy in main level and making facade easement improvements to bring back to historical quality and style. Further plans include constructing a multi-story addition to include a courtyard, mixed-use tenancy and interior/underground parking

Lessons learned? Challenges?

Most challenging item was the requirement to close simultaneously with two other properties.

Investment Info:

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

Purchase price: $2,000,000
Cash invested: $695,000

HUD HAP Contract subsidized, 24 unit, two story garden apartment building with virtually 100% occupancy at all times.

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

HUD guaranteed rental income contract

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

Owner offered it as part of two other off-market properties we were negotiating on

How did you finance this deal?

Portfolio bank financing at 75% of purchase price

How did you add value to the deal?

We are evaluating best options for capital improvements, including creating a preventative maintenance schedule and communicating with tenants on a regular basis.

Lessons learned? Challenges?

The most challenging aspect is becoming a HUD approved property owner and manager. The vetting process to get our company (and myself) approved is extensive and paperwork intensive.

Investment Info:

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

Purchase price: $2,500,000
Cash invested: $700,000

Two - 12 unit two story apartment buildings with two - 12 unit single garage stalls originally constructed in 2017

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

Recent construction, simple design, and pet friendly materials as well contractor grade finishes.

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

Off Market through a commercial agent

How did you finance this deal?

Portfolio bank financing with a 25 yr amortization and 10 year maturity feature

How did you add value to the deal?

Bringing rents to market, including creating a preventative maintenance schedule, upgrading exterior lighting, and other exterior amenities such as signage and common space for residents to use during summer months.

What was the outcome?

Rent rate increase was expected to average $85 per month, and we have increased on average in excess of $115 per month the following the first round of lease renewals.

Investment Info:

Other buy & hold investment in Mitchell.

Purchase price: $850,000
Cash invested: $337,500

The Johnson Block is a 52,000 SF, 4 story mixed-use retail/residential property in downtown Mitchell. 19 units, with 16 residential and 3 commercial. Capital improvement plans for up to an additional 3 residential units to be built out within 6-9 months, with an additional community room, updated laundry facilities that will generate an additional 24% increase in gross income upon re-stabilization. Following completion of phase 1 improvements, will update exterior facade and windows.

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

I am very familiar with this type of property with my background and interests in architecture, plumbing and mechanical, banking and finance as well as living in the penthouse condo in downtown Sioux Falls that was a total gut rehab of a 112 year old concrete grain elevator of which I was part of the project.

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

Word of mouth, contacted owner directly and used their real estate agent to put the deal together.

How did you finance this deal?

Traditional bank financing with a 10yr balloon mortgage with a 20 year term

How did you add value to the deal?

Value add will be to complete the renovation of 1 off-line residential unit and add three additional residential units located in unused areas of the building. We will also add a community and exercise room, vending machines and update the laundry facilities.

Investment Info:

Other buy & hold investment in Mitchell.

Purchase price: $850,000
Cash invested: $337,500

The Johnson Block is a 52,000 SF, 4 story mixed-use retail/residential property in downtown Mitchell. 19 units, with 16 residential and 3 commercial. Capital improvement plans for up to an additional 3 residential units to be built out within 6-9 months, with an additional community room, updated laundry facilities that will generate an additional 24% increase in gross income upon re-stabilization. Following completion of phase 1 improvements, will update exterior facade with lighting, new color, signage and windows.

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

I am very familiar with this type of property with my background and interests in architecture, plumbing and mechanical, banking and finance as well as living in the penthouse condo in downtown Sioux Falls that was a total gut rehab of a 112 year old concrete grain elevator of which I was part of the project.

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

Word of mouth, contacted owner directly and used their real estate agent to put the deal together.

How did you finance this deal?

Traditional bank financing with a 10yr balloon mortgage with a 20 year term

How did you add value to the deal?

Value add will be to complete the renovation of 1 off-line residential unit and add three additional residential units located in unused areas of the building. We will also add a community and exercise room, vending machines and update the laundry facilities.

Investment Info:

Single-family residence private money loan investment in Sioux Falls.

Purchase price: $85,000
Cash invested: $75,000
Sale price: $245,000

Redemption property purchased after the sheriff's sale. The 1953 ranch style home with 3 br and 2 ba had 20+ years of deferred maintenance and was in immediate need of attention. Posted for sale on Zillow and found family that to buy it as finished with total gut rehab and adding two bedrooms in lower level for $245,000. Significant repairs are being completed now and buyers have contributed large down payment and I am financing them on contract with a 30yr term loan and no PPP.

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

This property needed a new owner who could put large dollar improvements into it. I had the experience, team, and finances available to put into the deal.

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

I have followed this home since it was Lis Pendens, went to the sheriff's auction but did not buy it at that time due to it getting bid up higher than it was worth. I approached the owner, negotiated, and took out the sheriff's certificate of sale and am using excess funds to make the improvements the former owner had been unable to do.

How did you finance this deal?

$2,500 down payment, obtained deed and then financed for the remainder to pay off the seller's debt and provide additional proceeds through a construction loan.

How did you add value to the deal?

Removed debris and overgrowth on property, new siding, windows, exterior doors, total gut of interior including removing walls and re-engineering structure to support roof trusses and ceiling joists, rebuilt staircase to accommodate new kitchen design, replaced entire block foundation wall that was heaving inward, replaced sewer drains in entire home including underground, drain tiled, and rebuilt both bathrooms and prepared current garage to be remodeled to become master bedroom and bath suite.

What was the outcome?

Buyer is currently on site making significant progress and construction is approximately 50% completed as of 8/10/20.

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

I worked with an experienced real estate and litigation attorney.