16 Unit Off Market Value Add Multifamily

[Tony Stephan]

Investment Info:

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

Purchase price: $1,340,000
Cash invested: $268,000

16 unit (two 8 plexes) purchased off market through the same broker who sold me the 12 unit off market. Great location just very low NOI and below market rents. We immediately came in and cleaned up the management and turned the rent roll over from $600/mo to $1000/mo. It won't be ready to cash out refinance until the end of 2024 due to it being acquired under a year ago. Great long term hold in our portfolio.

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

Great location and well maintained 16 units. I purchased this from the same broker who sold me the 12 unit off market. It just had very below market rents. The previous owner never kept up with the market as he lived out state.

How did you finance this deal?

80% LTV with local bank, 5 year term, 2 years IO, 25 year AM

How did you add value to the deal?

Increased rents from $650 to $950 with light value add to the units. Decreased maintenance and contractor expenses to boost NOI.

What was the outcome?

Should easily come up with a $1.8-$1.9M valuation based on in-place NOI in 2024 which would either allow me to exit into a 1031 or cash out refinance.

Lessons learned? Challenges?

Brokers are everything. I cold called this broker as I saw him list something on the MLS and he ended up selling me 28 units on pocket listings. And be a CLOSER. No one wants to work with a tire kicker.

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

I represented myself and am 100% owner.