N 90th - Apartment Development

[Augustus Bukowski]

Investment Info:

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

Purchase price: $145,800

Cash invested: $25,000

Sale price: $2,500,000

Buy, Build, Rent, Refinance, Repeat!

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

This project was on the MLS way too long as a short sale. I tried several times to purchase it, but kept getting outbid. Then the deal would fall through, and I would bid again. Each time getting outbid, and having the deal fall through. Finally when it fell through again, the agent called me and just gave it to me directly...... It was LR3 dirt for under 150 K come on Seattle, why would you not close it.

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

This project was on the MLS, it was a short sale. I followed up on the deal while it was under contract multiple times and let the agent know that I wanted it, and if it fell through I would close. Since it was a short sale, I told them I wanted it at the bank approved price and would close in 21 days from short sale approval with no contingencies.

How did you finance this deal?

Conventional investment property loan with 15% down payment through Fannie Mae. 6 months after the purchase, I did a cash out refinance and had negative 30 K invested in the transaction! I love financing!!!!!

How did you add value to the deal?

We built an 8 unit apartment project on the site.

What was the outcome?

We generated the highest $/sqft rents in the area, kept the property for about 1.5 years, and started to notice the rental market was a little more difficult. We decided to liquidate the project since our rents appeared to be at the height of what they could potentially be. We hit the market perfect and were able to liquidate before cap rates started to rise a bit.

Lessons learned? Challenges?

always re-evaluate your investment objectives. If your plan is to hold the property forever that is great, but maybe the correct move is to sell the property and roll those gains into a property that would generate more revenue and growth potential. Once you maximize your return on a project it is usually time to liquidate and put that capital to better use somewhere else.