Need Any Help - who has a 50+ unit deal under contract?

Question

If you have a 50+ unit deal under contract and not sure how to get it closed, let's connect to see what challenges you are running into.

Brian Adams · Answer

@Michael Ealy, congrats!!

You may want to consider a JV partner who has access to capital.

Are your current investors really "tapped-out"? If you have a good deal and a good investor list, your investors will figure out a way to invest and most likely can help bring other investors in.

Also, how motivated is your seller and do they need to close quick? If you can structure the contract to give you more time, you will find the money.

Good luck!!

Michael Ealy · Answer

Finding deals is not a problem for me. My reputation and track record as an astute apartment operator in Cincinnati have opened broker relationships such that I get these deals before my competitors.

I have a 534 unit portfolio deal under contract. It is comprised of 4 properties in "B" areas. The smallest has 52 units and the largest has 190 units.

Here's my problem.

I just closed on $28.5M of properties this month so I am a little bit short in cash.

Hence, I am thinking of selling the entire thing or selling 1 or a couple of the properties.

Simultaneously, I am raising capital for it.

I already have a buyer lined up for the whole thing but we're still negotiating and I am yet to get the earnest money to lock it in. Until then, there's no buyer and all options are open.

I will close on this deal one way or another.

Anything else you can suggest?

John Cassel · Answer

@Brian Adams thank you so much for the response.  I will definitely keep plugging away with my strategy as I know it is only a matter of time until I land that bigger deal.  I am constantly trying to increase my investor base so when the deal comes I will have more than enough to close and shouldn't have to scramble for funds.  If you are ever back in the Lancaster area to visit family or anything else, please reach out.  I would love to just meetup for lunch, my treat.

Thanks again for everything!

John

Tanya Robson · Answer

Here is my valuation issue on a property in Canada. Area has 5.25% cap rate. Sales comps $175,000-200,000 door.

I found  20 and 40 unit buildings. ALL units need full renovation average $30,000 unit. Hallway rehab and new porch railings needed. landscaping $5,000 range. Total 1.8M renovation. New roof, questionable boiler. B- c+ property in an excellent area. Could have extensive ongoing repair bills. 50% vacancy...YES! 50%

Long buy and hold plan. Is in a city with a historical appreciation rate of 4%. Unfortunately, a volitional vacancy rate which has been max at 7% and as lows os 1%. Normalized 4%. I want to live in it too.

I want to give the owner 2 offer

1)owner carry with 20% down for 2 year interest only then CMHC

2) Bridge then CMHC

I can't figure out how to add such an extensive rehab into any of the valuation models I have. What is each of these units worth? Lots of potential risk and moving parts.

Thanks

Brian Adams · Answer

@John Cassel Awesome and way to action.

Yes - you can get deals by direct mail and as you probably know, it will take you time. It took me 2 years to close a 200+ unit deal...here is that story if you are interested - Bought 200+ Unit Apartment Complex, Increased Value Over $4 Mill

Your best source for deal flow will be from brokers. Think of ways you can strengthen those broker relationships so when a 10-100 unit deal comes available the broker thinks of "John".

Really important, when you get that call, make sure your investors are ready to go. If it is $1, $2 or $10 mill having the investor capital to pull deals down will set you apart from other buyers.

Good luck!!

John Cassel · Answer

@Brian Adams that's great, I have lived in York my whole life to we didnt grow up to far from one another.  See my answers below:

1. I am currently direct mailing to properties 10-100 units in those areas, I have recently narrowed my list down to properties that the current owner has held more than 6-7 years.  I have also been cold calling the properties that I have been able to find phone #s for.  The most recent list I posted on upwork.com for someone to skip trace and find me accurate phone #'s so I am hoping for good results there.  I am also networking with members of BP & constantly touching base with brokers in the area.

2.  I have seen a wide range, anywhere from 6-10 cap depending on the area.  Lancaster usually is on the lower end and there is a wide range of areas in York that can land anywhere on that 6-10 cap scale.

3.  Depending on the size of the deal, I will either partner or syndicate.  If the property is less than $1m it doesn't make sense cost wise to syndicate so it will just depend on the size of the deal.  I have people that are interested in investing but if the deal is $2m or over I will most likely need to pair with a more experienced investor or a capital raiser.

Hope this helps!

Brian Adams · Answer

@John Cassel good to hear from you and I grew up in Lancaster...

So what are you doing right now to have enough product to review to get an asset under contract by 11/15/19?

How much are deals trading at in York, Lancaster & Harrisburg?

How will you get the asset closed?

John Cassel · Answer

@Brian Adams I currently do not have a property under contract but my goal is to have one in the 10-100 unit range under contract in the next 2-3 months and close on one by the end of the year.  I am looking in the areas around York, Lancaster & Harrisburg mostly and would love to link up and discuss.  I am definitely interested in partnering on my first larger deal and want to network with others in the area or in PA that are doing larger deals.

I look forward to hearing from you.

Thanks,

John

Need Any Help - who has a 50+ unit deal under contract?

Most Popular Reply