Off Market 20 Unit Apartment Complex

[Steven Nguyen]

Investment Info:

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

Purchase price: $350,000
Cash invested: $100,000

Off market 20 unit apartment complex in an up and coming area
Located 2 miles away from new stadium
Direct to seller via direct mail
No broker involved
1 burned down unit
5 vacancies
Renovation: 100k
Used a hard money lender

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

Looking to scale my portfolio in Oklahoma
Oklahoma is more focused on cash flow

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

Direct mail campaign
Owner responded via a post-card
Owner wanted tax assessed price
No broker involved

How did you finance this deal?

Hard money lender - 25% down , 9% interest only, term = 12 months + 3 month extension, 100k for renovation (reimbursed after inspections)
Traditional lenders would not finance this deal

How did you add value to the deal?

Renovate burned down unit
Renovate all vacant units to raise to market rents

What was the outcome?

Expect to BRRRR this deal
Appraised at 400k day 1 (50k in equity)
Expected ARV = 750k based on NOI/8CAP and sale comps of 40k/unit
Expected to get initial down payment back, renovation budget, and profit 200k

Lessons learned? Challenges?

Upon taking over the 20 unit, many tenants moved out due to bed bugs
Some tenants stopped paying rent
Renovation of burned down unit is more expensive and taking longer than expected