I've never done an apartment syndication deal before but this deal came to market and was simply too good to pass up, I locked it up with an LOI almost as soon as it came to market and worried about how to fund and finance it after it was locked up. After having the property under an LOI I found a strategic parter that has done syndication before and assisted in the legal doc preparation for the syndication and raised some capital along side myself.

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

I own several single family rental properties in this market and we really do not have any multifamily in my market that is not institutional so this deal was a complete anomaly. I have always wanted to get into the multifamily side of the business but really had no idea how to get into it; I figured to just write an LOI and try my best to figure it out as I went along knowing that the worse case scenario was that I voided the LOI.

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

This deal actually came to MLS and was being very poorly marketed by a property manager, it had poor photos, extremely low rent estimates and basically no other marketing aside from it being posted in the MLS. The property management company had been managing for occupancy and really not for performance so this left for quite a bit of unseen and unadvertised upside that I think a majority of the marketplace missed out on.

How did you finance this deal?

My strategic partner and I both raised about $350,000 each and over subscribed the deal by $50,000, we both put in $25,000 and then shopped two local banks for the financing of the acquisition + construction loan. The most important side of this was that my strategic partner had worked with this bank before on other deals and had the experience to get the loan. I noticed that banks don't really care about your single family experience but more so your experience in the specific asset class.

How did you add value to the deal?

I found the deal, and ran the initial proforma on it and realized the value add potential. I also raised half the capital needed to fund the deal and used my construction expertise to advise on the cost of the rehab for all eight units in the building. Essentially, I handled the construction budgeting, brokering and half of the fund raising while my partner handled the bank financing, legal and the other half of the fund raising.

What was the outcome?

We went under contract in April and closed in June, we raised the money in what felt like a matter of days which to me goes back to the old saying that if the deal makes sense then the money will come. We are currently past the project planning side of things and have all of our drawings and plans submitted to the City and should have approval to begin construction in the next 30 days or so. From there we will lease half the building to a corporate rental company and the other half separately.

Acq Price: $1,485,000

Renovation Cost: $650,000

As Complete Apprised Value: $3,947,000

Lessons learned? Challenges?

If the deal makes sense then the money will come. I have zero experience in multifamily syndication, my partner has just enough to get by and we just found a good deal and finding the money was the easiest part. Considering that we did assume half the building occupied we are learning a lot about property management as we go but I'm confident that this deal will pan out in a profitable way considering the price we got it for and the upside it has.

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

I was the broker for this deal, I would recommend myself to anyone looking to get into investing in the Washington DC area, specifically Virginia. We did have an amazing architect do the plans, an incredible lender and my staff assisted throughout the entire process for getting documents prepared, planning inspections etc. Overall it was a very positive transaction and very painless, it seems like the most painless deals are the best deals for everyone.