This deal represents Phase I of a 28-unit new construction project being acquired by IRV. Developer (Seller) agreed to closing contingency of 100% leased occupancy and minimum average rent levels of $895/Unit/Mo. for the 1BR units and $1,115/Unit/Mo. for the 2BR units. Projected NOI of +/- $110,000 and Yr. 1 CoC return of +/- 15%. Phase II (12-units) is nearing completion and closing is projected for some time in June/July 2020.

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

New product in a market with little new product being introduced despite diversified employment base (State Farm, Illinois State University, Country Financial, Rivian Automotive, etc.).

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

By following the market through a local broker, LoopNet, and CoStar, we noticed that there had been a recent sale of a newer 16-unit complex in an area of the MSA we liked. By driving by the property that had sold, I noticed an adjacent site being prepared for construction. Assuming it was same developer and similar product, I called and engaged in a conversation. This led to the purchase.

How did you finance this deal?

Regional bank for the debt, two (2) individual investors provided the equity.

How did you add value to the deal?

Hiring the best-in-market property management company.

What was the outcome?

Successful closing. Now we build a sizable reserve and look forward to distributions next year.

Lessons learned? Challenges?

First time buying new construction, so negotiating the details of the purchase sale agreement was trickier than usual. We built-in safeguards for tenant worthiness, pricing levels of rents, escrow hold backs for completion of landscaping, warranties, protection against damages to Phase I during construction of Phase II, etc.

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

First Site, Ltd. is the absolute best-in-market property management firm for Central IL. First Site not only helped with the transition, but put together the punch list and monitored the tenant selection process during lease-up. Busey Bank also stepped up tremendously. This closing occurred in the midst of the CV-19 crises and Busey could have used this as a premise to change our terms or pull out altogether. They did neither. In fact, they lowered our rate by 35 BP's. They were awesome.