Ashgrove Apartments, a 92-unit value-add multifamily property

[Charles Seaman]

Investment Info:

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

Purchase price: $4,876,000
Cash invested: $2,225,000

This is a 92-unit multifamily property that my partners and I own. We acquired the deal through syndication and are the operators of the deal. It is a value-add deal with a 2-5 year hold period.

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

It's a well located property with minimal capital expenditure work needed. It is already stabilized and cash flowing, which minimizes risk and jives with our model.

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

We found the deal through the listing broker. The buildings on this property are Cardinal style construction and the seller made it a requirement to have a buyer with previous experience with Cardinal style construction due to the complexities associated with obtaining financing for them. We met this criteria and were able to negotiate a below market price to acquire the deal at.

How did you finance this deal?

We used CMBS debt and got financing for $3,480,000 at 4.75%.

How did you add value to the deal?

Most of our value will be through operational efficiencies. Our biggest value add is simply recapturing the loss-to-lease, which is very achievable based on nearby rent comps. We will also be billing back more of the water/sewer bill to the tenants for reimbursement than the previous owner did. Lastly, while all of the units have washer/dryer connections, they don't have washers and dryers in them. We will rent washers and dryers to the tenants that are unable to buy their own appliances.

What was the outcome?

TBD, as we just acquired the deal on 9/5/19. A very favorable outcome is expected.

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

Yes. Greystone Brown Real Estate Advisors handled the real estate brokerage services for this deal and Bullock Realty Capital handled the mortgage brokerage services for this deal. Both are recommended.

[Shane W. Chapin]

@Charles Seaman Congratulations on the deal! Sounds like a winner! This is great motivation as I too am looking to get in to larger multi family deals myself. Thanks for posting and good luck with this property.