College Station Fourplex package

[Gregory Schwartz]

Investment Info:

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

Purchase price: $1,060,000
Cash invested: $300,000

This is a package of 3 fourplexes on the same street in College Station, TX within a mile of Texas A&M and less than a 30 min walk to Kyle Field. Purchased with my partner.

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

We want to continually progress toward our goal of purchasing an apartment complex. We have had a good experience with our first 4-plex and figured it was time to grow.

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

This deal came from a direct mail campaign. Analyzed the deal and showed the buyers what we needed to make it work for us. They told us what they needed for the deal to make sense for them. The sale price was as high as we could go and as low as they could go.

How did you finance this deal?

We used a commercial loan (25% down, 20 year am, 5 year arm, first-year interest only). For the down payment, I reach out to my partner (dad) and showed him my projections. He agreed it was worthwhile and agreed to put 2/3 of the down payment.

How did you add value to the deal?

The units we clean but old and the rents being charged were consistent but low. We will upgrade the units when we have a vacancy driving the average rents from $690 to $900 over the next 2-3 years.

What was the outcome?

To be determined.

Lessons learned? Challenges?

The biggest setback was the appraisal. The bank was lending based on the ARV. The appraiser would determine the current and future value based on our scope of work. But the appraiser determined that the 60k worth of flooring, cabinets, and appliances would not increase the value of the 3 fourplexes and therefore the current value and the future value were both $1,065,000. This means we have to come out of pocket for the first year's repairs. Not ideal.

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

As a licensed agent with Keller Willaims, I was able to represent myself. The commercial lenders at City Bank Byran, TX were very easy to work with.

[Gregory Schwartz]

Thanks @Kameron Yellin @Katie Neason @Dmitriy Fomichenko and @Jason Noel 

Im quickly learning that purchasing is the easy part. The real work begins as we renovate and increase rents while providing excellent service to our current tenants.