Investment Info:

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

Purchase price: $1,925,000
Cash invested: $754,000

14-unit value-add opportunity. Bought the property by selling an 8-unit and 1031ing into this building. Renovating the units and raising rents. Appraiser assessed the ARV at $2.9m. Once the renovation is complete I will either refinance pull money out and put long term agency debt on it or 1031 into a bigger complex.

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

What makes me interested in this type of deal is that the value is based on the NOI of the asset and not based on the comparables. Since the numbers for commercial MF (5+units) are bigger than a SFR its easier to make the numbers work. If or when I refinance this building I can pull out a large amount of money and still have it CF while locking it into 1-3years of IO on a fixed 10 year term/ 30 year amortization.

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

This was an off-market deal that was shown to me by a local broker.

How did you finance this deal?

I financed this deal through a local bank.

How did you add value to the deal?

I will be putting in about $30,000/unit. This includes exterior and interior renovations. Some of the major things would probably be landscaping, painting the exterior, flooring, and putting in-suite laundry.

What was the outcome?

Yet to be seen.

Lessons learned? Challenges?

Some of the lessons I learned was that building relationships and knowing who to talk to is the most important thing. Not just in RE but in life.