88 Units - First Big Deal

[Hayden Bowles]

Hey I just wanted to put this out there to get any advice or experienced opinions! I have built up a small portfolio on my own and am now getting under contract for an 88-unit deal for $8.65m.

I will be raising capital for the first time ($2m of it) and am piecing together the whole structure. It's going to be a standard LLC, not a fund, just for this one deal. Technically all partners will not be limited, but the operating agreement will spell out the specifics and make sure people cannot get voted out.

I would love to hear any advice from anyone who has raised capital! My debt is in place, management is in-place, off-market deal lined up.... it's all ready, now I am just raising the cash from my close inner-circle.

Rents are decent, fairly close to 1% already (I'll hit 1% after raising rents). Simple value add play, very confident I can bring the NOI from $427,000 to $550,000+ in a few years. Should be a nice double on the equity with cashflow along the way, buying it at a 4.9% cap.

Debt is going to be 3-year interest only at 3.5% with 2 separate 1-year options to extend. Then will either exit or place on longer debt with a cash out refi.

I've done this on a small scale many times (never a commercial loan). The deal doesn't scare me at all, this is super solid. But the specifics behind bringing in capital and operating with a larger amount of money just makes me want to be extra cautious since it's not only my money. I have funds out of my own pocket going hard to get the deal under contract.