My biggest deal - allow me to brag a little bit

[Cody L.]

I don't talk much about my deals specifically but I just closed on my largest one. 360+ unit multifamily in an "A" area of inner loop Houston. Ended up with a 75% LTV loan, 3.8% fixed for 7 years.

Pushed me over the 2000 unit mark.

Pretty proud of this one as closing this size deals as a solo investor without partners / syndication wasn't easy.

[Cody L.]

Originally posted by @Nikolas Engel:

What was the hardest part for you as a solo investor to close on the deal and how did you overcome that challenge?

Hardest part is always (at least on a deal that size) going to be how to pay for it. Obviously there are two parts: Down payment and getting your loan. Down payment came from a sale of another property that had some equity, as well as a refinance of a large batch of property with equity.  Loan was actually easier on this property due to having a lot of larger banks hungry to do the deal.  For example, Wells Fargo has always said they wanted to do something with me but never has.  Because my other deals haven't been a fit.  Yet they were all over this one. I had a large regional bank that I really wanted to use on the deal but their insurance requirements made the deal not work. 

Nothing complex as far as a business model. I'll run it like all my others. I won't likely refi anytime soon as my rate was locked with a swap. So if rates don't go up, it'll be costly to unwind that swap. And if rates DO go up, then that presents another challenge to refi. Ideally the bank will allow me to recapitalize my equity if the value goes up vs a large refi. I'm at 75% now, but the value was a perfect match to purchase price. If I can increase NOI I can increase the value and 75% of a new appraisal might allow me to pull out a few million for the next deal.

The price per door and price relative to income, all based on where it was, made it an easy property for me to decide was a fit.  I've never been one to deep dive on financials -- and didn't feel the need to start just because this property is larger.  Other buyers for something this big will typically focus on the owners in-place financials.  Which were not good (very high cost ratio.  About 70% for them where I average about 45%).  Where as I could toss their financials out the window. Also the sellers were not very accommodating when it came to tours, where as I typically don't even tour.  Which knocked out other buyers.  Finally, my offer might have had extra weight vs. higher priced offers due to a track record of closing each deal I've put under contract and never re-trading.

No need to fix anything on the income side (I proforma a ~5% increase) but there is a lot of cost savings to be had.