Multifamily Acquisition Success

[Cassidy Burns]

Investment Info:

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

Purchase price: $1,625,000
Cash invested: $358,000

-17 Unit Mixed Used Multifamily Asset
-15 Rental Apartments ranging from studios to 2 bedroom flats
-2 Commercial Storefront both on mid term leases to 2026 (Flower shop & American Indian Cafe)
Value add opportunity by raising rents over time with slight renovations. All residential apartments $175-$225/month below market rate rent.
Current Rents: $12,375/month
Projected Rents: $16,100/month
-We will also be converting a storage closet into another 1 bed/ 1 bath unit which will drive $800/monthly rent.
Amazing location, within walking distance to James Madison University (JMU) and located in downtown Harrisonburg, VA.
Long term buy and hold for us.

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

We are actively buying mid to large size multifamily in the Harrisonburg / Shenandoah Valley markets.

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

Brought to me off market by a broker. Original price was $1,700,000. We agreed to terms at $1,625,000

How did you finance this deal?

Commercial financing.
Terms:
25 Year Ammorization
20% Down ($325,000)
5.975% interest rate

How did you add value to the deal?

We will add 1 unit, converting to a 18 unit building, and then getting all residential units to market rent. Currently under rented by ~$175-$225/unit

What was the outcome?

Just acquired.

Lessons learned? Challenges?

Insurance is getting more expensive! Pro Tip: during underwriting, make sure you are underwriting for the tax bill to increase at year 2 following acquisition.