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Updated almost 4 years ago on . Most recent reply
24 Unit Value Add Deal
Investment Info:
Large multi-family (5+ units) buy & hold investment in Cuyahoga Falls.
Purchase price: $1,690,000
Cash invested: $5,000
Contributors:
Tal Tamir
This was an off-market deal that our team immediately jumped on. We underwrote it and quickly put it under contract. As a value add deal, we budgeted $8,000 per unit to fully renovate the property and increase rents by approx. $150 per unit. Year 2-3 we will refi and return 70%+ of our investors initial capital to them. Year 7-8 we project an exit. Since we had to raise $750,000, we decided to syndicate this deal as a 506(b).
What made you interested in investing in this type of deal?
We specifically look for 20+ unit properties in B and C class neighborhoods (preferably off market). This property fit the criteria. The units are also a very attractive mix of 2/1's and 2/1.5's and are townhome style. In addition, water is separately metered.
How did you find this deal and how did you negotiate it?
A local wholesaler brought us the deal and we immediately underwrote it on the first day and submitted an offer before anyone else really had the chance to. We promised an easy and seamless close and were able to deliver.
How did you finance this deal?
We utilized a bank that offered us non-recourse financing as well as competitive 6 months of interest reserves. We were also able to get 1 year of interest only, a competitive rate of 3.375% and a step down pre-payment penalty that fit with our business plan.
How did you add value to the deal?
We are adding value through operational efficiencies and renovation of the units. We plan to create a modern, affordable, clean and safe community that residents will love.
What was the outcome?
We closed and are already getting started on renovations!
Lessons learned? Challenges?
We had a large investor drop out at the last minute and had to rush to raise the extra money before closing. We learned to never stop raising money even for backup positions, and have the investors wire the money ASAP!