Value-add 19 unit with 24% increase in gross income planned

[Craig Markhardt]

Investment Info:

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

Purchase price: $850,000
Cash invested: $212,500

61,000 SF Retail & Multifamily, Mixed-Use, value add property purchased at 9.83% Cap Rate. Raised $337,750 with Preferred Returns of 8.0% to investors. Value add includes bringing off-line units and building out unfinished square footage to increase annual revenues by at least 24% within the first 12 months of ownership.

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

I found that my past experience in these types of properties as a former licensed plumber and a 19 veteran mortgage banker has given me the experience and confidence to improve the performance of the project.

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

Two friends knew it had been on the market and separately recommended I look into it, so I contacted the seller directly and found an out of state investor was flying in to see it that following Monday, so I made an appointment to see it that Saturday and made an offer on Monday morning, finally competing with the out of market investor and winning the deal.

How did you finance this deal?

Bank financing for 75% and raised the remaining capital from investors

How did you add value to the deal?

I have $71,000 budgeted for value-add improvements that will begin immediately, and will be increasing income and refinancing in 18-36 months to make larger scale improvements.