104 Unit Apartment Complex

[Omar Ruiz]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $4,900,000
Cash invested: $2,100,000

We purchase a 104 unit apartment complex with other investors by syndication (pooling investors). The majority of investors were repeat participants and involved people in multiple states. Some investors came from a 1031 exchange on a 77 unit apartment complex we sold in the Mid-West.

Our value-add plan is to upgrade the interiors as vacant units become available at $4k-$7k per door (depending on unit size and budget considerations). This has helped increase rents beyond our original projects to $213/unit. At the same time we also did exterior improvements to the driveways, siding and pool that's improved curb appeal.

We hired an experienced local management company with a great team that's been successful at improving the tenant profile and increasing the income.

With this purchase we've maintained a solid relationship with the broker that's shared pocket listings and given us info on properties before coming to market.

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

The cashflow and economies of scale by having more units under less roofs.

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

Created relationship with broker and negotiated a good price after previous buyer failed to perform.

How did you finance this deal?

Agency debt (Freddie Mac) SBL with 4.2% rate; 75% LTV

How did you add value to the deal?

Upgraded interior and exterior and raised rents to market rate. Reduced expenses for trash and landscape by getting competitive bids.

What was the outcome?

Increased rents have improved cashflow to $13k/month. Improved net-operating-income has Increased value of the property. Better tenant profile and improved rent receivables.

Lessons learned? Challenges?

We had to train onsite manager on our methods for tenant qualifications.

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

Doug Solether at CREFCOA was a great loan broker to work with.