18-unit multifamily, new construction

[Michael Krantz]

Investment Info:

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

Purchase price: $2,700,000
Cash invested: $445,000

We have submitted a proposal to the City of Minneapolis to purchase one of their properties and construct an 18-unit apartment building. The site is anticipated to produce an IRR of 13% and MOIC of 2.85x over 10 years. My wife and I are investing $200,000, we have identified 3 other investors and we will probably need two or three more.

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

Minneapolis has streamlined the entitlement process for this scale of development. Further, they are providing financial subsidy and an attractive land price.

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

I work frequently with Minneapolis staff who informed be of the Missing Middle Pilot Program.

How did you finance this deal?

The deal will be financed through commercial financing.

How did you add value to the deal?

The value comes from the location, land price and city subsidy. The area is also enjoying a renaissance (which we are enjoying because we live in the area). Several new developments in the area have been very successful.

What was the outcome?

TBD

Lessons learned? Challenges?

TBD

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

We are working with a very experienced contractor, architect, real estate CPA, real estate attorney, and real estate property manager.