History on the property ... back in 2004 this property was ran as a 200 unit apartment complex. The owners sold it to developers who then decided, to convert the apartments into condos. Remember the huge apt. condo conversion craze?

After selling off nearly 112 individual units to individual investors in different states, over a 3 yr period, another group came in 2007 came in and purchased the remaining 88 units.

Fast forward to 2019, we are now acquiring these 88 units from the group, that had acquired them in 2007. This gives us 44% ownership, plus we control all 5 seats on the board of HOA to control the entire community. It's a Class (C) property located in a B+/A- area. Literally no kidding, backs right up to a golf course. Our fitness center literally overlooks the greens and fairways. Tenants patios are on the golf course. We smell a premium there you think?! Yes, definitely primed for reposition. Acquiring at 65K and change a door in a B+/A- area not to bad

Even though this deal is currently a fractured condo deal, current operators run and value the operation based on revenue and expenses. This is how we underwrote the deal as well. The deal is stabilized and cash flows from day one, with the ability to add value.

Effective avg rents are $793. We stayed very conservative with our underwriting at $950. This is what the current market calls for. This is not a premium. In short. The deal hit every metric possible from a conservative standpoint.

Since we knew financing was going to be quite challenging because of it being a fractured condo deal we were prepared to approach the seller with creative financing. Low and behold ...

3.5 weeks later we were able to source the debt. But before I let the cat of the bag, let me tell you the terms we were originally seeking and then share more of the upside to this deal.

Terms we were seeking: Non-recourse, 70/30 LTV, 30 yr am, 10 yr loan term, 36mth IO, 5% int rate locked This allowed us to return 85% of member capital back in yr3. Return 96% in yr 4 and return 100% of principal in yr 5 with cash flow distributions made qtrly.

Terms Secured: Non-Recourse 60/40 LTV (We actually like this it protects our downside more), 10 yr loan term, 10 yr IO, NO amortization, 5.27% int rate locked. We are super stoked over these terms. These terms now allow us to return 100% of member capital in yr2 (We're stoked for our investors), along with a conservative 7 figures in proceeds to walk away with through the refi. So sick dude!!!!

Here's the real upside. We will acquire another 92 units at a conservative 60K a door in the same community by the end of yr5 giving us 90% ownership. We feel we can actually acquire the rest of units at 50K a door but we'' stay conservative. Once we have 90% ownership, we now collapse the HOA and run it as a true multifamily complex. This deal has now turned into a redevelopment deal. The valuation goes through the roof.

We acquire 180 total units by end of yr5 conservatively at 11.27M by end of yr10 this deal will have a valuation north of $32M easily. Financing played a huge factor and the upside of acquiring more units in the same allows us now for an easy exit. Attracting institutional buyers looking to deploy capital in a stabilized asset in a thriving market; Florida at the market going cap rate.

This goes to show that if you can finance right (if not walk away from the deal) you can accomplish some pretty amazing things.

We Just Recieved the Best Terms Ever

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