Incredible Value Add Deal

[Garrett Hawk]

Investment Info:

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

Purchase price: $900,000
Cash invested: $250,000

Purchased a 96 Unit buildings that was 60% occupied.
Building was mismanaged with an 8k/month pay roll for 50 occupied units.

Purchased this property and simply changed the management structure.
Month two cash flow was $18,000/mo with 35 empty units.
Keeping the occupancy with 35 empty units and still cash flowing 18k/mo (before debt service)
The NOI will be 216,000.

On a 12 cap rate is 1.8 Million, we will double our investment in a year or less.

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

The low price per unit was the first thing that drew me to the investment.

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

Loopnet. I negotiated it by offering 60k below asking price and it closed quickly.

How did you finance this deal?

Community Bank

How did you add value to the deal?

Changed management structure, lowered rents, re-branded building

What was the outcome?

Month two has projected cash on cash return of 50% at 60% occupied

Lessons learned? Challenges?

If you buy at the right price, you have a lot of room for error.

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

I was a buyer's agent/partner on the transaction