CLOSED on a 98-unit TODAY!

[Ben Leybovich]

So, we had another thread going for a couple of weeks here. And this is not yet a success story, since a lot of work needs to be done to make it a success. 

But, today, @Sam Grooms and I closed on this 98-unit in Phoenix.

This is a syndicated private placement acquisition. @Jillian Sidoti and her firm, whom I highly recommend, helped with the PPM-related docs. 

The unit mix includes studio, 1x1, 2x1, and 2x2 lay-outs. The asset was constructed in 1984, and has by and large been un-touched on the interior of the units. However, the bones are very good, the unit sizes are attractive within the sub-market, and the location is experiencing very significant gentrification.

This was a mom-an-pop owned property. Rents are low even for as-is condition. Our Cap Rate on the way in is a bit under 5%. Our expected Cap Rate after the re-positioning in Y3 is 8.3%. Obviously we feel that there is a lot of upside on the rents. 

We have a $1.4M renovation budget, which includes complete reno of the interiors, as well as close to $500,000 in the common areas.

I could talk for hours, but I won't. I have a feeling me talking for hours might happen on the blog :) 

But, feel free to ask questions - I won't tell you everything, but I'll do my best to paint the bug picture.

[William Kim]

@Ben Leybovich @Sam Grooms Congrats on this deal that happened almost a year ago now!  How's everything going so far on the property?  Investors getting their (monthly/quarterly) payments? :) 

As Sam is aware, I'm new to the real estate world and syndication does intrigue me quite a bit as I'm a working professional not looking to leave just yet, but want to create "passive" and not active income streams.  Trying to digest a lot of information through browsing BP forums, podcasts, and posts and various other resources.  

[Sam Grooms]

Originally posted by @William Kim:

@Ben Leybovich @Sam Grooms Congrats on this deal that happened almost a year ago now!  How's everything going so far on the property?  Investors getting their (monthly/quarterly) payments? :) 

As Sam is aware, I'm new to the real estate world and syndication does intrigue me quite a bit as I'm a working professional not looking to leave just yet, but want to create "passive" and not active income streams.  Trying to digest a lot of information through browsing BP forums, podcasts, and posts and various other resources.  

Everything is moving right along. Most of the common area and exterior projects have been completed. We have painted the property, finished the landscaping, added a fitness center, updated the laundry room, renovated the pool area, and rebranded the property. The office remodel and business center will start next week.

As for the interiors, 25 units have been renovated, all of which are leased at or above our projected rents. In fact, most units are preleased before the renovation is complete. We haven't received any push back from the marketplace on our post-renovation rents, so we recently increased them another $30 on average. 6 more are currently being renovated.

Here is a graph from last month's reporting showing NOI since we took over.

[William Kim]

@Sam Grooms That's awesome, Sam.  And thanks for sharing.  Glad to hear things are progressing well.  Hope to invest in syndications sooner rather than later!

[Sam Grooms]

Here are some before and after pics, too. 

[Rodney Robinson]

@Ben Leybovich Beautiful find. It sounds like there will be plenty of upside!

[Ben Leybovich]

Originally posted by @Rodney Robinson:

@Ben Leybovich Beautiful find. It sounds like there will be plenty of upside!

 Thank you. We inherited an average monthly income of about $60,000. In March we hit $69,000 with 19 renovated/leased units. That's $470 bump per unit. Shooting for $80,000 GOI by the end of Y1.

I can't believe this thread is still alive. We closed on another one about 3 months ago. And now about to close yet one more. The numbers are all very similar.

[Rodney Robinson]

@Ben Leybovich thanks for sharing. I must be late to this thread. Great success story. 

[Ben Leybovich]

Purchased 20 months ago.
- 98 Units in Phoenix
- Purchase Price $8.15M
- Renovation Budget $1.5M
- In-place Income $60,000/mo.

Current

- Revenue $86,000
- T-12 OpEx $430,000 ($36,000/month)
- Community Reno complete
-49 Interiors Complete.
- 1 interior in process
- Remaining LTL in classic units $14,000

This has been a challenging lift. The property was a disaster when we got it. But, it has definitely turned the corner and is operating more or less stabilized.

We will finish the renovations within 12 months, and we project being able to hit $100,000+ revenue. We started with NOI of $25,500, which means this property was negative cash flowing for a while. The NOI is at around $50,000 today, with another $14,000 to come from capturing the classic unit LTL.

#ThisIsValueAdd :)