My multi-million dollar first deal at 20 years old

[Nick West]

Yesterday, I closed on my first commercial deal. It is a $2.3 million student housing deal in Oxford Ohio. I have been taught how to evaluate commercial deals from Jeff Greenberg (who was on BP #115). I am also learning to syndicate commercial deals, which is how me and Jeff closed on this property. If you are going to get started in real estate, make sure you have a mentor. I would consider Jeff my mentor. All you have to do is go to a Real Estate Investment Club and find out what you want to do and learn from someone in that field. 

I see real estate as a way to have cashflow to reach financial freedom and retirement. I am 20 years old and I am going to college currently. I have time for compound interest to work on my side. 

I see this deal as a start to get the ball rolling. I want to do many more deals and build up my passive income and assets. I see syndication as a good way to acquire larger properties and achieve passive income. 

Have a good day. 

Nick 

[Nick West]

Originally posted by @Justin Fernandez:

We must all know now! Like right meow. But definitely want to hear the details. Early success stories are what keep me on BP!

 I started about a year ago learning to underwrite deals for Jeff. I learned what to look for in a property. We did have one under contract in Houston, but that deal fell through. It didnt have enough cashflow for a good deal as we thought. Shortly after, I found a property on loopnet that worked, the one in Oxford that we closed on. 

At first we thought that this portfolio would be just a steady cashflow deal with organic rent growth gradually raising the NOI and the value of the properties. When Jeff went to inspect the property, he noticed that their were two sister buildings but one building has a 4 studio apartments per floor while the other one has a nice common area with 4 bedrooms (3 floors per building). The common area units rent for much more than the 4 studio apartments. If we convert the units, we will get better rent, increase the NOI on the property and thus the value of the property. We expect about a quarter million value add with the conversions. An additional benefit is the units with a common area rent much sooner with the studio apartments. We already have the nicer units with the common area rented for the 2016-2017 school year. Finding this value add, made the deal that much better.

The properties are all in a nice college town, at least B class. The demand for the rentals are strong and hasn't seen a vacancy in years. Rental increases are 5% or 6% a year. For student housing, you want to make sure your properties are in walking distance of the school. In Oxford, the "College Mile', all properties within a mile of the university are full. Their is a property in Oxford, a few miles from the campus, that is at 50% occupancy and has gone through bankruptcies. If I were them, I would arrange some shuttle service to the property. 

After finding the property and putting in an offer, the due diligence started. I learned how to do insurance, surveys, and all the other parts of due diligence. It can be quite a pain trying to organize financing and comparing all the loans but the process necessary. Jeff did most of the fundraising of equity and getting the PPM (private placement memorandum, needed for syndication). It took a little longer than we thought, but we managed  to close and now the fun part of managing the property is just beginning.