Full cycle Multifamily syndication in El Paso, TX

[Duc Ong]

Investment Info:

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

Purchase price: $1,656,000
Sale price: $2,450,000

Contributors:
Vince Gethings

This was a 48 unit deal in El Paso. We raised $650K in a syndication to close the deal. We brought up the occupancy from 75% to 100% by the sale.

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

Multifamily has historically performed well in terms of risk adjusted returns.

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

It was on market, and the seller was a mom-and-pop operator.

How did you finance this deal?

Community lender

How did you add value to the deal?

Completed work includes resealed/striped parking lot, replaced many of the water heaters and swamp coolers, added new community signage and monument sign, improved parking lot lighting, upgraded laundry machines, added grill area, and installed water saving devices.
$40k was spent on low maintenance landscaping.
We spent about $231K total in capital improvements.

What was the outcome?

A2 equity multiple was 1.74x, IRR was 31.9% and AAR was 40.6% over 1.8 years.

Lessons learned? Challenges?

This area is tougher than most. We were able to execute despite the challenges. One of the biggest lessons is to be better capitalize coming into the deal, so that we didn't need to use cash flow to cover capital expenses.