38 unit apartment. This was our first step into our goal of multifamily syndication. We wanted to take down a decent size commercial multifamily deal (get into the game). My partner Lee Fjord and I went 50/50 on this deal. This is a Value Add deal that we plan on cash out refinancing in the first 12-18 months.

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

I have wanted to get into commercial multifamily since I started learning about real estate investing. I love the power of forced appreciation, tax benefits, and scalability of commercial multi family.

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

This was brought to us by a local broker. We negotiated a selling price of $1.3M with a $55k credit toward closing costs and year one deferred maintenance.

How did you finance this deal?

We initially were going to go with a CMBS agency debt but the fund dried up on day 40 of our 60 day contract. We scrambled to find a local bank that would lend to us. They liked the deal and believed in us as operators. 80% LTV, interest only for the first 12 months and no pre payment penalty. This will allow us to refinance after we get NOI to where we believe it can go.

How did you add value to the deal?

Half the units have already been updated. We are turning every unit that becomes vacant. This includes paint, floors, kitchen boxes, vanities etc. We are painting entire exterior, cleaning up curb appeal and re-branding. We will add coin laundry in the basement and possible storage. We are making this apartment a cleaner and safer for our tenants. We hope this will help us get rents up.

What was the outcome?

TBD.. Stay tuned

Lessons learned? Challenges?

Commercial multifamily is completely different the SFR or small multi families. You must learn the rules to the game(debt options, dealing with brokers, etc.) Try to keep emotions out of your decision making. Having boots on the ground is comfort if you are an out of state investor. Im sure I will learn plenty other lessons as we enjoy this ride.

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

Yes my partner Lee Fjord is a stud and I am grateful to have him. We used Peoples bank in St Louis. Our Property management (Real Property Management Gateway) are also rock stars.