I bought a 200+ unit Off-Market deal for $6 miillion and it appraised at over $10 Million

[Brian Adams]

In July 2014 I bought a 200+ unit deal in Dallas, TX for $6 million and at closing the property appraised at $7.4 million.

The deal was off-market and I located by doing a strategic direct mail campaign.

This was a tough repositioning deal, but since buying, I have spent $500k of my $750k rehab budget doing interior and exterior upgrades.

I am working with a third party management company in TX and we have increased rents over a $100 per unit since acquisition.

We increased occupancy from 84% in July 2014 to today we are 99% occupied.

I raised $2 million for the deal by doing a syndication. For those of you don't know a syndication is where you pool funds from other investors. The offering was a 506(b) and the minimum investment was $100k.

An SPE (single purpose entity) was setup to acquire the property and we formed an LLC.

I secured a bridge loan through a hedge fund who gave aggressive financing at 84% LTV and a rate of 6.25% I/O (interest only) and I was the loan sponsor. With commercial deals, generally the debt is non-recourse with no personal guarantee unless you do something bad called the "bad-boy" provision.

The investors receive a preferred return of 8% and share in back-end profit. This is a unique deal as upon refi the investors get their principal back, plus an overall 20% yield on their money and they exit the deal. I retain 100% of the deal and will cash flow about $20k a month. 

The refi will happen before 9/30/15.

The cool thing is I am getting ready to go under contract on a 130+ unit deal in SC and need to raise $2 million for this deal. Where do you think my investors from the TX deal will hopefully bounce their money too, SC baby...

By the way I am a CPA who quit my job to pursue large multifamily deals. Here is a link to the thread and my story if you need some inspiration. You don't need to be a CPA to go after the bigger deals. Just determination, focus, and a lot of work.

Also, and I don't toot my own horn very often, but I feel there are some REALLY good nuggets of info in this thread:

I quit my CPA Job to Buy Large Apartment Buildings

Finally I had the privilege of doing a BP Podcast that will air on August 13, 2015 so keep an eye out for the link and I hope you will be able to listen in and learn a thing or too.