20-unit multi-family apartment complex. Successfully transitioned out of SFH portfolio and used a 1031 Exchange to help purchase this investment. Closed August 2, 2018 (my birthday...no coincidence). Value-add project (really more of a total repositioning deal). Currently in transition and stabilization phase. Performing capital improvements with interior renovations scheduled to complete in March 2019.

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

Scalability. My SFH portfolio was growing slow and steady, but I'm trying to scale my business and take on bigger challenges.

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

My broker found it. Was a rebound deal as we were falling out of another contract and needed to meet our 1031 timeline (we didn't settle though just to fulfill the 1031 timeline...it checked all the boxes).

How did you finance this deal?

Local bank found through referral. 80% LTV including first year construction costs. Rolled in 1031 exchange funds from sale of SFH portfolio.

How did you add value to the deal?

Still in-progress. This property needed a lot of improvements, including a new roof, new HVAC systems, new balconies/landings, and full interior renovations.

What was the outcome?

We've renovated 65% of the units to date and have begun lease up. While we believe we can achieve a 50% increase in rents once we hit Spring/Summer we have currently been seeing a 40% increase through the holiday months. It's too difficult right now to gauge expenses as we have had very little repairs and maintenance since we are renovating. And we are really just revising our operations. Should have a better answer to this question in 4-6 months.

Lessons learned? Challenges?

- Everything costs more than you expect (as investors I think we see things through rose-colored glasses). Build in budget contingency.
- Best to move quickly when taking over a property with pent up repairs. We had a situation where all tenants were M2M and we planned to keep occupancy high, renovating two units at a time. Between the flood of repairs and the quality of the tenant base we took a much more aggressive approach and removed half the tenants within the first two months.

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

Of course! PM me for recommendations. If you are looking for a great local lender in the Bryan / College Station area or a commercial broker (Houston and surrounding areas) or a local real estate agent please let me know.