Highly Distressed Vacant Value Add Multifamily. Worth the Risk?

[Omar Merced]

Hello awesome investors. I'm looking to start taking on highly distressed multifamily assets in the midwest and then expand into other markets. As a flipper in Las Vegas and with my experience as a regional property manager, and in construction I've wanted to take this on for a while and now feel that the time is right and I'm uniquely suited for this niche. I can handle the acquisition, design, construction, and selecting the right team for lease up and management but I'm going to need some team members to handle the accounting and legal side. Who is out there kicking arce in this niche? Who's out there interested in getting involved? I'd love to connect. Like to get some ideas on raising capital, and how to structure the debt or equity splits. Considered the riskiest in this area I understand the challenges that this entails but also understand the upside on these investments. I already have an 18 unit that I've had for awhile that I'm thinking about starting now. 

[Rick Martin]

@Omar Merced high risk/high reward, and it sounds like you are equipped to handle it. 

In terms of debt on a distressed asset, you will need to go bridge debt that you can refi into agency debt within 3 years. 5 years if you go the 3 + 1+ 1 route. Bridge debt is tricky right now, but I've heard it is loosening up.

If you are syndicating, and do a 70% LP / 30% GP, the GP could be split up as follows (these splits can vary).

GP 30% of the deal:

Asset Manager 25%

Money Raiser 30%

Deal Finder 5%

Earnest Money Deposit 5%

Net Worth 7.5%

Liquidity 7.5%

Experience 20%

Like I say, these percentages vary. You could take this GP breakdown and apply it to a JV as well.