244 Units, starting contract negotiations!

[Kent Leach]

I have an accepted NOI and just signed the engagement letter for attorney to start putting together PA to purchase 2 properties in Lawton Oklahoma totaling 244 units. I've enjoyed reading the posts of many of you as you take down deals and decided to try and document as much of the process as I'm able to for the benefit of others who are trying to accomplish the same goals.

We have a purchase price of $7.65 M and will be raising 3.25M from verified accredited investors through a 506c.  I'm sure it will be a long, tiring process with sleepless nights and long days.  I hope to bring some value to the board during this process and look forward to many conversations.

[Kent Leach]

@David Acosta  Sure.  This was an off market deal sourced through a property management company.  The properties are family owned and managed.  There is a an 11% combined vacancy issue.  Rents are 20-25% below what we could ask once the units receive a $2,000 refresh.  Total capex is $3,450 per door.  RUBS will be implemented as well over a 3 year period.  We will implement a 10% rent raise year 2 from $563 to $619 leaving us still conservatively below market rent. The PM company has implemented this exact plan in similar secondary markets

So the business plan includes everything above with exterior upgrades as well, filling vacancies, improved management and enforcement of policies. This 5 year plan drives the NOI from 472k Trailing to 811k by year 5.

Average annual COC is 9%. IRR 16.75% and average annual return 19.44% at a cap rate 1 point higher than current.