All Forum Posts by: Lucas Miles

@Allen L. did you end up going forward with this deal? Looking to connect with other investors in the Section8 HAP asset class. 

@Brad McCoy did you end up going through with this deal? We just closed on our first Section8 deal with HAP contract and are looking to connect with other investors in the same asset class. 

Investment Info:

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

Purchase price: $814,000

37-Unit - HUD Section8 HAP Multifamily

Overall the project was situated decently well at closing, occupancy was mid ~85%, and overall the property was in very nice condition. Little to no rehab/capex spending was needed. Current ownership was not local, and didn't have a presence anymore. Expenses at the property were were getting out of hand, and needed to be corrected.

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

This was found off market, we have developed a process to find off market deals.

How did you finance this deal?

Lending was another challenge, lending restrictions were starting to tighten up, and we had to get a bit creative with our lenders to get the financing we needed to close. We used one of our existing local lenders to provide the majority of the purchase, and the rest was provided from our investors.

How did you add value to the deal?

To decrease expenses, we are 1. Bringing in different management 2. Installing thermostats with regulated heat control (we pay heat) 3. Removing some of the on-site staffing that is not needed 4. Renegotiating some utility contracts (garbage and removing some on site office paid internet/phone bills) 5. Change all lighting to LED

To increase revenue: 1. Turn one of the units that is an office back into an apartment. 2. Increase occupancy 3. RCS (Rent Comparability Study) to increase rents

What was the outcome?

The property appraised for 1.4M the day of closing. We will quickly correct the excess spending, and fill the vacant units with quality residents. Our investors benefit from immediate equity creation, and long term predictable cash flow, overall a great investment for us!

Lessons learned? Challenges?

Being a Section8 HUD building, there was an immense amount of paperwork and due diligence that was required. HUD performed extensive due diligence on us, and had to approve us as buyer's and our management company and mangers. Approval process took about 4 months. We learned a lot about project based Section8 buildings, but are now actively pursing more projects like this.

Investment Info:

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

Purchase price: $814,000

37-Unit Multifamily - Section8 Building with a HUD HAP Contract
This is an off market opportunity that we closed December 2023, and our first deal in the affordable realm of multifamily.

Being a Section8 HUD building, there was an immense amount of paperwork and due diligence that was required. HUD performed extensive due diligence on us, and had to approve us as buyer's and our management company and mangers. Approval process took about 4 months. We learned a lot about project based Section8 buildings, but are now actively pursing more projects like this.

Overall the project was situated decently well at closing, occupancy was mid ~85%, and overall the property was in very nice condition. Little to no rehab/capex spending was needed. Current ownership was not local, and didn't have a presence anymore. Expenses at the property were were getting out of hand, and needed to be corrected.

Lending was another challenge, lending restrictions were starting to tighten up, and we had to get a bit creative with our lenders to get the financing we needed to close.

We raised 175K from investors to close the deal, and will be providing them with a quality return.

The property appraised for 1.4M the day of closing. We will quickly correct the excess spending, and fill the vacant units with quality residents. Our investors benefit from immediate equity creation, and long term predictable cash flow, overall a great investment for us!

@Phil B. did you end up closing on this property? We just purchased our first Section8 building with a HAP contract, love to hear about your experiences if you did end up closing on this one. 

@Rex Li I would first if you are able pull up the vinyl flooring, install a dehumidifier/fan to start drying out everything. Mold/mildew can start to form quickly if you don't get it dried out. 

Then I would call a local "wet basement specialist" and have them take a look, could be a variety of different things if its related to the rains, then should be able to point you in the right direction and give you a couple options. 
 

Hello, looking for a recommendation for a commercial insurance agent for a 24-unit apartment building in Osceola IA. Thanks in advance! 

Thanks for the info @Darson Grantham smaller towns absolutely are harder to find quality management! We still self manage some units, but are getting away from this side of the business to focus on new deals, asset management, raising capital, etc. Good manager will make/break the deal, no doubt! 

Appreciate all the info!
 

@Darson Grantham specifically in Osceola is what we are looking for at the moment!

Starting back up this thread, looking for a recommendation PMs that have experience running affordable multifamily buildings in rural Des Moines area.