108 Unit Split Site Multifamily Portfolio

[Phil Capron]

Investment Info:

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

Purchase price: $3,950,000
Cash invested: $1,100,000

108 unit split site portfolio
5 buildings
Appraised for $1,550,000 higher than purchase price :)

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

I had purchased my first multifamily property the year before and really enjoyed getting the monthly checks (as opposed to the roller coaster of fix and flip/ wholesaling). I'd read all the books and blogs, and listened to all of the podcasts, and was ready to really go for it in multifamily. This portfolio enabled me to get into multifamily in a big way.

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

This deal was publicly listed through a big brokerage on LoopNet. Say what you want about LoopNet, but there are deals there. I was able to negotiate an amazing deal because of the CapEx required and the fact that it is a split site portfolio. It's a fairly large purchase for the submarket at just under $4,000,000, so it was too large and had too many moving parts for a small operator, and was a little too small and ugly for bigger players. I was happy to take advantage of that market void.

How did you finance this deal?

Community bank. 75% LTC 5.2%, 3 years IO, 7 year term, 30 year am. We also obtained a signature loan for 100% of our CapEx budget

How did you add value to the deal?

$500,000 in renovation and superior management. The seller was the builder of the properties and had a great system for their business and had successfully managed them for decades. My group saw the opportunity to improve efficiency with online advertising, virtual tours, as well as the implementation of RUBS and other fees to increase top line revenue.

What was the outcome?

We are absolutely crushing it. I'll continue to upload photos of completed buildings and units as they are available and will also break it down by building for a more comprehensive look and to illustrate lessons learned in a more precise fashion.

Lessons learned? Challenges?

Multifamily is awesome. Tracking construction and management numbers are critical to success.

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

I assembled an unbelievable team of a commercial real estate broker, a class A contractor, and a property management company owner to take down this project without syndicating. It's been a fun journey thus far and we are looking forward to enjoying many years worth of fruits of our labor.