5 plex value add with huge loan problems!

[Chris Shepard]

Investment Info:

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

Purchase price: $945,000
Cash invested: $345,000

I 1031ed a single family home that I purchased in college into this 5 plex. My plan is to add value to the property and get a freddie mac small balance loan once I've increased the NOI.

I had a lot of difficulties getting a loan on this property since the loan is less than 1m.

Upon purchase, I immediately sent RUBS notices and raised rents to all 5 units the maximum that was allowed by the city of Portland. Once these increases go into effect the property value will increase by (5 units x $100/m of utilities and 5 units x $95/m of rent increases which amounts to a $11,750 NOI increase) roughly $250,000 at a 4.5% cap rate.

I need to get the property value up to 1.33m so that I can get a 1m loan at 75% ltv so I need to figure out how to do this. Wish me luck!

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

1031 exchange

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

multifamily broker

How did you finance this deal?

credit union, it was a nightmare

How did you add value to the deal?

implement rubs and raise rents

What was the outcome?

it's pending

Lessons learned? Challenges?

going with an unknown lender is always a bad idea... I should have used the guys I knew would close the deal.