Skip to content
×
PRO
Pro Members Get Full Access!
Get off the sidelines and take action in real estate investing with BiggerPockets Pro. Our comprehensive suite of tools and resources minimize mistakes, support informed decisions, and propel you to success.
Advanced networking features
Market and Deal Finder tools
Property analysis calculators
Landlord Command Center
$0
TODAY
$69.00/month when billed monthly.
$32.50/month when billed annually.
7 day free trial. Cancel anytime
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Real Estate Deal Analysis & Advice
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated about 8 years ago,

User Stats

398
Posts
144
Votes
Jason Mak
  • Rental Property Investor
  • San Marino, CA
144
Votes |
398
Posts

30 month Multifamily Flip in Riverside CA.

Jason Mak
  • Rental Property Investor
  • San Marino, CA
Posted

Hello BP,

Just closed on a two year flip of a multifamily deal in Riverside CA.  I don't usually like to publicize my deals but BP has been a nice resource and I thought I would contribute with my experience and answer a few questions.  

Summarizing the deal (please note, I'm giving approximate numbers and dates):

July 2013 - Purchased an 81 unit apartment bldg in Riverside CA for $3.1mm equity.  At the time of purchase, the building was mismanaged and in bad shape - it was 60% occupied and collecting 30% of rents due.  

Immediately went to work with a large scale transformation including tenant management (evictions), capital improvements including roof, interior/exterior painting, landscaping, elevator, construction of leasing office, community outreach and many more items.  

December 2013 - Refinanced the building and took out $2.1m so at this time I had approximately $1m equity left in the building.  

Continued to operate the building for over 24 months and got the building up to 95% occupancy and relatively stabilized operations.  Over this time, between the rental income I earned and the capital expense that I ploughed into the building, I probably ran a loss of $100k so at this point, my equity in this building is about $1.1m.

Two months ago I sold the property for $5.5m.  After paying back the loan principal and commissions, netted proceeds of $3m or a profit of ~$2m.   

Roughly speaking my returns were 200% ROE / ~60% levered IRR

Although this was a nice deal and I made some money, there were some mistakes and lessons learned:

  • didn't pay attention to my loan prepayment and ended up having to make the decision to pay a hefty prepayment penalty when I sold the property
  • I am a licensed broker and in this market I probably should have marketed the property on my own.  However being busy with other deals and projects I opted to use a broker and pay the commission
  • Should i have sold?  I was lucky to find a 1031 exchange but in the event that I couldn't, I would be paying a hefty capital gain tax.  I'm also not buying into a particular exciting property but its closer to my target geographic area

Overall pretty happy with the outcome of this deal and looking forward to the next!

Loading replies...