From solo to en junto and loving the growth!

[Will Fraser]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $1,114,500
Cash invested: $140,500

Contributors:
Alejandro Siguere, Hugo Urbina

I did a great deal with two partners in which we purchased a portfolio of 15 units. It's a killer package that we're going to love!

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

The single family homes were in a niche area that I was intimately familiar with, and another that I was even more acquainted with (right across the road from my house) and I had recently been interacting with some investors wanting to grow a portfolio in my city, so I put this in front of them and proposed a partnership and we found a mutually ideal situation and took it down!

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

This package of properties was on MLS and I worked up the offer to be as-is, at a number workable to our partnership. It took several back-and-forths, but knowing your numbers helps.

How did you finance this deal?

We used a commercial bank loan with a small local bank that we love and split the cash-to-close amount among the partners.

How did you add value to the deal?

We are going to adjust the rents to full market value over the next 12 months and manage it through excellent systems.

What was the outcome?

So far one of the 15 units was a "night before closing surprise vacancy" and one more tenant is running for the hills, which gives us some unfortunately depressed cashflow for months 1 and 2, but a great ability to replace those with ideal tenants at full market value. Woohoo!

Lessons learned? Challenges?

Underwriting a 15-unit package deal is just as complicated as underwriting 15 individual units, all at once. There is no shortcutting or understating the importance of due diligence. This time went well, but it was down to the wire with verifying some financials and next time I will have the listing agent or seller fill out the Estoppel Agreement during the due diligence period instead of simply prior to closing.

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

Absolutely! Wesley Anderson at Valor Bank was sensational getting it done!