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.

We hired 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?

We like multifamily and large apartment complexes because of the cashflow and economies of scale by having more units under less roofs. In one transaction we increased our portfolio by over 100 units; this would take years buying single family homes.

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

Created a relationship with the broker that gave him the confidence that we were the right buyers. We 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?

Our value-add plan is to upgrade the interiors at $4k-$7k per unit. This helped increase rents beyond our original projects to and additional $213/unit ($682 to $895/mo). At the same time we did exterior improvements to the driveways, siding and pool that's improved curb appeal.

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 the onsite manager on our methods for tenant qualifications in beginning. After auditing tenant files for people that were evicted, we discovered she needed to improve her tenant qualification skills.

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.