Wind Chase Village Abilene TX

[Judy C.]

Investment Info:

Large multi-family (5+ units) buy & hold investment in Abilene.

Purchase price: $4,200,000

Purchased a 170 unit apartment community in Abilene, TX. Rents were well below market and it needed lots of TLC. Did a major rehab. Was able to negotiate a master lease for the property and take over management prior to purchase in order to generate some of the funds needed for the down payment.

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

I have spent my entire career in real estate including multi family management and brokerage. I have insight from the management side that helps me see where there is room for improvement in management for immediate growth of equity. I knew it was a great opportunity but would require a lot of changes.

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

I have always lived in the Abilene, Texas area and involved in multi family real estate so I knew the owners. They often came to me for advice over the years. They just became tired of the headaches and were ready to sell. They knew it would be simple and could walk away with a guaranteed income in the interim and a nice payday once I put a new loan in place. It has worked out well for all of us.

How did you finance this deal?

Negotiated to take over property immediately. Executed a master lease with a one year option to purchase for a fixed price and guaranteed them a set amount each month. I took financial responsibility for getting units ready to lease and beginning some rehab which they agreed to all funds invested. This would have been considered an interest free loan to them if I had not purchased. I received a credit at closing for capital improvements during interim, security deposits & real est commission.

How did you add value to the deal?

Implemented new office and leasing policies and spent many hours staffing, training, overseeing rehab. Corrected utility billings, implemented conservation efforts, such as replacing all exterior light fixtures, tightened policies and increased curb appeal and remodeled office & interiors.

What was the outcome?

The income has increased greatly along with the expenses. It is just getting to the point of leveling out. It takes time sometimes to see cash flow but the equity has grown substantially.

Lessons learned? Challenges?

I had an on-site manager who was fantastic. She relocated and I promoted the assistant manager who was not strong. This was a mistake. I wish I had recognized sooner that she was not doing a great job. It would have saved a lot of oversending and poor tenant choices. Having the right people in place is key!

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

Scotty Lindley and Anthony Sandoval who are now with First National Bank Albany/Breckinridge were the bankers involved. They were awesome to work with and totally understand investment lending. I was so fortunate to have them involved.