The big daddy 56 unit apartment purchased off market without any outside investors or capital. This deal was the biggest (and hardest) of my career but I was so glad to take it down! Purchased in October 2023 and last sold in 1993! A+ location on a major road with a Starbucks, LA fitness, GM tech center, and military base all within 5 miles. In place NOI was artificially low due to long term ownership. We are in the process of renovating all 56 units and increase the NOI at least $100k.

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

A+ location and last sold in 1993. The previous owners received numerous offers throughout the years. Artificially low NOI due to long term ownership and management inefficiencies. Also, we paid about $4 million less than the replacement cost of this building so it's a total win.

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

I built a relationship with a broker via LinkedIn. We met several times and I told him I wanted to buy a bigger deal. He sent me several deals before landing on this. The deal was NOT for sale but he knew the owner and tried getting him to sell for 20 years. We put an aggressive offer in-front of him with strong terms and were able to make a deal!

How did you finance this deal?

Local credit union. 80% LTV, 25 year AM, 2 years IO, 5 year term.

How did you add value to the deal?

We are in the process of doing so. We are doing unit upgrades and turning the rent roll. I know we can easily add $100k to the NOI. The property appraised at a 6 cap which would yield about $1.6M in appreciation in 1 year.

What was the outcome?

In progress. Plan is to cash out refinance in 2025 and long term hold. Rebranded as "Stephan Manor Apartments."

Lessons learned? Challenges?

Everyone wants big deals but when push comes to shove you have to be willing to put your money where your mouth is. This deal last sold in 1993. I had to come aggressive to get the deal. People will say "overpaying is stupid" and only look at cash flow on Day 1. I don't care about cash flow on Day 1. I care about cash flow, equity, and appreciation 3 years, 5 years, and 30 years from now. I'm a collector of multifamily real estate and a long term holder.

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

A broker represented the seller and I represented myself. I'm 100% owner without partners.