Doubling our Investment in 1 Year in Albany

[Wesley Sherow]

Investment Info:

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

Purchase price: $730,000
Cash invested: $360,000

After several months of renovation and rent increases, the building was re-appraised for $1.5 million. Investors earned approximately 144% return on their investment in one year. Afterward, they continue to on the building. A couple of Airbnb‘s help keep cash flow above 10% even after refinance. (although cash flow is technically infinite when there’s no more cash in the deal)

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

After underwriting hundreds of deals and saying no to all of them, I chose this syndicated 10 unit multifamily in upstate New York Albany. This was due to its high potential for rent increases, and growing location.

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

Originally I came in with an all cash offer for significantly under purchase price, after in contract due to a change in circumstances we had to change to a traditional mortgage. The seller worked with us and was able to continue under market value.

How did you finance this deal?

We used a traditional mortgage, though in the future I would probably use a purchase and construction hard money loan.

How did you add value to the deal?

Every project I do is heavily underwritten with financial modeling. I have a strong background in numbers, so I use it to the best of my ability. I consider the before renovation income and expense, as compared to the after renovation income and expense. My goal is always to refinance or sell within one year to see my entire investment return.

What was the outcome?

We refinanced the building at a one. $1.5 million evaluation, turning $300,000 invested into $500,000 in exactly one year.

Lessons learned? Challenges?

The biggest hiccup in this deal was the renovation. Unfortunately finding good contractors in upstate New York can sometimes be a challenge if you’re working on a budget. Heavy oversight was needed to make this work, and even that presented its own challenges. Overall next time I do a deal like this, I would put cameras to all of the construction sites, and stay in more regular contact with the GC.

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

Anton Pasquill is a very talented zoning professional and real estate agent with heavy routes in Albany, as well as Phil Engborg with M&T BANK was great working with our group to secure financing. Of course there is also a group of investors who all contributed individual talents wherever their skill sets could shine.