10 unit Apartment Complex

[Pete Harper]

Investment Info:

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

Purchase price: $1,100,000
Cash invested: $700,000

10 unit stand alone apartment complex. All units are 2 bedroom 1 Bath with washer/dryer hookups, and dishwasher.

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

We were looking for a property for a long term hold property for 1031 exchange. We are long term buy and hold investors looking for cash flow.

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

We looked at a number of MLS and off market deals. This particular property was found on MLS however we looked at and made multiple offers prior to securing this deal. The current market has been super competitive with everything going for over asking price. Nothing was making sense from a cash flow perspective. We liked this property because of recent 2018 remodel and stable growing rent history. Conroe also checked the boxes as a fast growing suburb of Houston.

How did you finance this deal?

From prior deals I had a relationship with a small local bank willing to make portfolio loans. We shopped around other brokers but no one was competitive. Since we had a good loan history with this lender the process was quite painless. No paper chase for tax returns etc. High downpayment helped too.

How did you add value to the deal?

The property is in excellent shape with a 2018 renovation. All the units have been updated with granite counter tops, tile and LVP flooring. The biggest opportunity is going to be in improved property management. Current PM is out of town and it shows. Multiple lease violations; everyone has pets but only one tenant has a pet lease agreement, pit bulls and other large breeds, major fire hazard with BBQ grills under the front porch roof. Multiple complains from tenants on maintenance issues

Lessons learned? Challenges?

I need to do a better job screening agents. We had one of the worst agents I've ever worked with. Very weak in negotiations accepting buyers agents BS as fact, little to no follow through. We got it done but I had to step in and go around my agent on numerous occasions. Her only duties were submitting contracts, that needed numerous corrections and one showing. Didn't even bother to show up for closing.

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

Would not recommend the agent we used.