30 unit rehab and hold in Mesa Az

[Seth Johnson]

Investment Info:

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

Purchase price: $700,000
Cash invested: $780,000

Purchased a 30 unit apt. bldg (2/1) that needed a complete renovation. All units received new tile, new cabinets, appliances, tub surrounds, fixtures etc. We used a 350K hard money loan to finance part of the purchase and used my own capital (along with some small equity partners) for the remainder and the rehab.

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

This property provided and enormous opportunity to add value. We purchased for 700K, spent 325K on the rehab and when we were done the building appraised for 1.350 million in August of 2013.

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

This was an off market deal. Our realtor had a working relationship with the seller.

How did you finance this deal?

350K hard money loan, 455K equity raise, then used cash to finance rehab.

How did you add value to the deal?

We were able to purchase for below market due to the scope of work needed. We did a complete renovation, flooring, cabinets, counter tops, appliances, fixtures, showers, roof and 30 new A/Cs.

What was the outcome?

This is been the best deal to date. The property is a cash cow, and it appreciated very nicely.

Lessons learned? Challenges?

We were initially going to use the hard money lender to finance the renovation project, but as we moved along the process, we realized he was going to be challenging to work with in that respect. We feared he could slow down the renovation process, so we decided to self fund the renovation. As a result our contractor ripped through this comprehensive renovation in record time.