26 unit value add greater Sacramento area

[Salvador Puente]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $3,950,000
Cash invested: $900,000

Value add opportunity. The goal is to buy out all the leases in order to quickly reposition the asset and refi for 10 years and hold forever.

What made you interested in investing in this type of deal?

Underpriced, 70s construction of mostly 2br units in as strong CA market in the greater Sacramento area. Proximity to Davis, CA and Sacramento along with strong population and job growth and very little new apartment supply make this a great deal. If I'm successful in my reposition it'll be slightly better than a 1% deal in California which is not easy to pull off.

How did you find this deal and how did you negotiate it?

I did not represent myself (let agent double end the deal) and I simply offered asking price while competing buyers were haggling over $15K (on a $4million deal!??) and I locked it up for 120 days (seller wanted to close in 2022 for tax purposes so quick close not important to him) and I was very aggressive in my inspections. I was able to get a $50,000 price reduction in exchange for removing inspection contingency and was able to close Jan 12th,,, about 50 days before I had to.

How did you finance this deal?

Sold a duplex and a condo for down payment and got a hard money loan for the remainder at 6.25% for 24 months with no pre-payment penalty. I should be able to refi in 6-8 months.

How did you add value to the deal?

add value in progress...

What was the outcome?

we shall see lol

Lessons learned? Challenges?

I made the offer knowing that I needed to close on 2 properties to make it work or I would have to scramble to find investors which I did not want to do.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Marc Andenmatten at Newmark real estate