Finding Investors and Mentors for $13 Million Apartment complex

[Dan Tessman]

To start out I am doing this as a personal exercise to learn how to do these types of deals for the future, currently I have not yet done a deal of this size. Please help me improve.

Unit Mix Information

Units: 

1+1 : 59

Avg. Rent/Mo: Negotiable 

Sq. Ft. : 720

 2+1: 6 

Avg. Rent/Mo: Negotiable

Sq. Ft. : 1,008

2+2: 31

Avg. Rent/Mo Negotiable

Sq. Ft. : 1,008 - 1,010

Unit Amenities

• Balcony
• Refrigerator
• Washer/Dryer
• Oven
• Heating
• Range
• Kitchen
• Tub/Shower

Site Amenities

• Clubhouse
• Community-Wide WiFi
• Fitness Center
• Public Transportation
• Media Center/Movie Theatre

Financial Summary (Pro forma - 2018)

Gross Rental Income      Annual     Annual Per SF

                                       $1,294,718        16.81

Effective Gross Income   $1,294,718   16.81

Avg Household income 

43%: $100k+

15%:  $75k-$100k

28%: $35k - $75k

14%: 0k - $35k

Total Population

1 Mile: 4,029

3 Miles: 29,950

5 Miles: 69,572

The Property:  

Price $13,000,000

No. Units 96

Property Type: Multifamily

Property Sub-type: Apartments

Apartment Style: Low Rise

Building Class: 4A

Lot Size 3.68 AC

Building Size 77,000 SF

Average Occupancy 97%

No. Stories 3

Year Built 2016

Highlights

Shuttle service

Sound proofing between suites

Underground heated parking

Buyer-favorable loan to be assumed

Description

Property offers the best of a great location and quiet neighborhood with ease of commute to downtown, both through its ease of access to Highway and the on-site shuttle service. Amenities offered include site-wide WiFi, workout room, lounge and game-room. Since it opened its doors property has had strong occupancy and is one of urban city's nicest new apartment complexes.

State:MN

First Half taxes: $71,610

Second Half taxes: $71,610

Property Tax from county statement total due for 2019:  $143,220.00

My initial ideas on purchasing and increasing value:

1.  Acquire investors (1-3) to put down 30% or more of the total price to secure a loan with a bank.
2. Purchase property using loan through a C corporation for tax incentives and liability protections.
3. If property is not currently being managed by a professional company, locate up to 3 professional management companies and determine best one to run day to day operations.
4. Lease out Fitness center to a National fitness company, IE Snap fitness etc under contract, allowing them to renovate and update the space. Currently its a few cardio machines and 2 tv's in a plain white room with a separate room for lifting.  Update to 1 open area with changing rooms and possibly a sauna as well etc.
5. Lease out club room, currently a room with a couch and a tv to a Juice bar or coffee company.
6. Update Game room to more than a pool table and TV, place furniture from club room into game room. or update to a business center with public use PC's, Printer/ Copy/ Fax machines.
7. Reevaluate Property value with bank to pay back initial invested amount with a previously agreed amount of interest and % ownership
8. Profit?

Thank you for reading this any notes are appreciated.

I have been studying smaller (SF) property investment for 2 years, and have yet to get "skin in the game" at any level so far.

I am planning on starting this year, either big or small though preferably bigger like this property.

PM's are accepted.