$5.9M gain in 13 months

[Jonathan Bombaci]

Investment Info:

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

Purchase price: $20,000,000
Cash invested: $4,700,000
Sale price: $25,900,000

Contributors:
Nathan Gianino, Matthew Perimian, Todd Wheatley

This was our first syndication. We purchased a 132 unit apartment building in a great part of Lowell MA with 45 investors. Half were accredited and the other half sophisticated (non-accredited) investors. We locked this up under contract during the height of covid in 2020 and closed on it with 20% down, non-recourse, assumable, agency financing at sub 4% interest rate. This was an incredible project and the money was definitely made on the buy. We sold it about 1 year later with a $5.9M profit by adding professional management to the property and running it like a business.

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

It was a mile from our office and the rents were 30% below market. We bought it at a strong 6 cap and knew there was huge upside out of the gate.

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

This was the worst kept secret in Lowell. Everyone knew it was for sale but the seller was very difficult to deal with. We powered through the transaction and just by closing on it did what others before us failed to do

How did you finance this deal?

Agency financing through Fannie. 20% down 3.6% financing, interest only for 2 years. It was a good loan and learned a lot by going through this product.

How did you add value to the deal?

We increased rents across the board and renovated about 10% of the units at the property

What was the outcome?

We received an unsolicited offer for our target sale price in 5-7 years and we’re put in a situation where we decided to take the win

Lessons learned? Challenges?

Too many to try to put here. Could probably do a hour podcast on this deal alone…

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

Yea we have a full service team in MA and NH and everyone was involved in this one.