Mastermind Commercial Flip

[Eddie Borio]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $5,200,000

Cash invested: $825,000

Sale price: $11,450,000

48 unit apartment complex that we rezoned to condos and sold each unit individually
Our group was
1) Those bringing a skill or trade to the project
2) Those bringing only money

One key was being grandfathered from the parking requirement per unit.

Each unit was updated, which was difficult since the square footage of each unit varied between 302 square foot and about 850 square foot.

Our mastermind included experts in Branding, due diligence, analysis, construction, and electrical.

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

We were part of a mastermind group and wanted to take the practices of what we learned at a conference together and apply it in real life. It is super scary to do projects alone, but when you get the right people with a positive attitude, along with integrity, then a lot of the scary things become more of tasks to accomplish together.

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

After the conference, we had a group of about 20 people committed to do a deal together.
One of our guys on the project became the deal maker, and the rest of the team were due diligence.
Because there was a lot of hair on the deal with respect to attempts to convert the project from apartments to condos in which paperwork was not done correctly, we were in a strong negotiation position to reduce the purchase price down over a million dollars. The deal was one that was aging on the MLS.

How did you finance this deal?

We financed it 100% by friends and family.

How did you add value to the deal?

This project really required a team to mastermind which way we were going.... from restoring it to the 20's vibe, making it contemporary loft feel, or basic rehab.

After reviewing the project we found that it would be partial restore (like removing drywall from the beautiful bricks inside the apartments), to acid cleaning the HUGH building, and adding a garden park feel in the center of the closed courtyard.

The condo conversion (from Apartment status) was our focus for getting upside.

What was the outcome?

We sold it and doubled or initial investment in about a year.

Lessons learned? Challenges?

A mastermind group can be great or not, depending on upfront agreements of effort committed.
And if one person is committed to trying to do everything "virtually" without ever visiting the property.... well try to expand their belief system to accommodate the greater good.

Don't rely on email to project manage, nor put it in google docs (or Excel in our case), as you need a software that keeps everyone in the loop so things get done, and deadlines not missed.... also keeps accountable.