Second deal - 8.5% Cap On In-Place Now @ A 10%+ Cap 2/19

[Anthony M Scandariato]

Investment Info:

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

Purchase price: $1,060,000

10 unit mixed-use property (9 apartments, 1 retail) in historic downtown Butler, NJ.

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

It was under-managed (passed down to a second generation who wanted nothing to do with the property) and completely mis-marketed. Lastly, it was listed with a residential broker who only had the property on Zillow and did not know what a cap rate was! Also, the retail had a five-year lease and fit well with the demographics of the town. The rents were also substantially below market.

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

Through our buyers agent. They were asking almost $1.3MM, we bought it for $1,060,000 and also negotiated $100,000 in seller repairs.

How did you finance this deal?

Through Lakeland Bank, 75% LTV, 4.75%, 30-year am, 5-year loan. We also financed ~$20K as a term loan for improvements at the same interest rate.

How did you add value to the deal?

Invested in common areas, exterior improvements, power washed, re-paved, etc., Did light cosmetic upgrades that make a big difference in retaining and attracting new tenants.

What was the outcome?

Able to raise majority of the tenant's rents on average by $300/unit with no turnover!

Lessons learned? Challenges?

Unless you ask, you won't get!

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

Our buyer's agent.