Multi-Family Investors what Does a great deal mean to you?

Question

I am a real estates agent and will be releasing my first large Multi-family Apartment Complex for sale to my investors. This Deal is 40+ Doors in South Texas, more then half the the units have been rehabbed and of those 20 units are currently being occupied.

What would make this a GREAT DEAL?

What are some key questions that you would be asking me about the property?

What would peak your interest and make you reach out for more information?

What are your top three deciding factors that makes or breaks a deal (obviously the financials, but what else)?

What do you find frustrating about working with a sales agent for this big of a project?

With COVID has your buying strategy shifted?

Any shareable knowledge or tips welcome.

Ryan Daigle · Answer

Hey @Camille Roland - congratulations on getting this listing! To answer your questions:

* What would make this a GREAT DEAL?

Forced appreciation potential (which it sound like there is with half of units unrehabbed) and a strong path to organic rent growth as well. Any deal that pencils out to 15% IRR with conservative underwriting will catch the eye of most syndicators.

* What are some key questions that you would be asking me about the property?

Seller's reason for selling, property age, sub-market demographics, proximity to employment and retail, condition/deferred maintenance, vacancy history, access to T12 and rent roll...

* What would peak your interest and make you reach out for more information?

Strong market, strong returns - pretty basic :)

* What are your top three deciding factors that makes or breaks a deal (obviously the financials, but what else)?

I start with the big picture and work in. So rough order of preference would be 1) strong metro 2) stable sub-market 3) quality property.

* What do you find frustrating about working with a sales agent for this big of a project?

When they hold the property financials close to the vest or are not forthcoming about the realities of the deal. The agent should be a partner in the deal and should be helping all parties determine if it fits their investment criteria. Withholding info is not supportive of that goal.

* With COVID has your buying strategy shifted?

It has adjusted some of my underwriting factors to be more conservative over the next 1-2 years. Also, it has increased the close time with agency debt now looking at 6+ months to close (something your sellers should be well aware of).

Hope that helps!

Brian Garrett · Answer

A great multifamily deal (5+ unit) is one with substantial value-add ability where I can raise NOI and stabilize the building then refinance all of my money out (or even more) to repeat the process.

Evan Polaski · Answer

@Camille Roland, @Ryan Daigle definitely hits all the major points.

For me, it is be transparent with everything.  It will all come out.  I have seen packages with no management fee in proforma, well below true renovation costs and well above rent premiums for unit renovations, calling a Class B property an A+, etc.  Yes, as an investor I catch these and run my own numbers in my own model, but it hurts your credibility in my eyes. If I find 5 things wrong at first brush of your package, I will automatically be assuming there are another 5 or more things I missed and bid accordingly.

And then as mentioned, the more research you can do for me, the better, understanding I will verify everything in the process. Provide the market and submarket highlights, incomes, population growth, job growth, rent growth, economic diversity, major employers, etc.

Best of luck.

Camille Roland · Answer

@Ryan Daigle I am defiantly going to need to do some homework on IRR. @Colby Fryar Thank you. I think this is a great deal, because we have a lot to offer on this property. All this great information will allow me to navigate through with potential investors.

Brandon Vukelich · Answer

What would make this a GREAT DEAL? - I'm skewed from our West Coast situation but a 6.5% CAP with potential to raise that within 12 months. Positive cashflow of $200+ per door.  The ability to lock a decent financing terms.  Also, is the area up and coming or a seasoned high demand location?  Low crime.  Rents trending upward?

What are some key questions that you would be asking me about the property? - Some of the same q's above. Financials/rent roll, what's the unit mix, how much parking available, walkability, leases or M2M, w/d in units, carports/garages/storage available, self-managed or PM?

What would peak your interest and make you reach out for more information? - Answers to the above.

What are your top three deciding factors that makes or breaks a deal (obviously the financials, but what else)? - Potential net cash flow, deferred maintenance, condition of the local economy.

What do you find frustrating about working with a sales agent for this big of a project? - Their lack of knowledge about the details, history, potential of the property and their unprofessional marketing efforts (in the listing or offering memo).

With COVID has your buying strategy shifted? - Absolutely.  On hold unless a screaming deal pops up that is absolutely too good to pass up.

Colby Fryar · Answer

For out of state investors, I would think the three main deciding factors are: 1.  What is the market, submarket and neighborhood. 2. Is there value-add potential which there seems to be here. 3.  Will it cash flow?

Multi-Family Investors what Does a great deal mean to you?

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