Investing in a Multifamily Syndication as a Limited Partner

[Ian Jimeno]

Investment Info:

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

Purchase price: $5,250,000
Cash invested: $25,000

Invested in a Multifamily Syndication with Zion Capital, headed by Kyle Marcotte and Van Hagye. The property is in North Austin next to the new MLS stadium, class C property which projected 15.5% IRR and 1.7x multiple over 5 years.

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

Excellent story and resume by Kyle Marcotte and Van Hagye (Zion Capital) with over $50 Million in assets under management as of Sept 2021. I'm a part of the mastermind headed by Kyle, so I am aware of his mentality, personality, and track record when going into this deal as a limited partner. 7% preferred return accumulated over the life of the business plan.

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

I was introduced to the deal by Kyle. The deal was negotiated by Zion Capital.

How did you finance this deal?

Syndication, loan of $3.4 Million, LP equity of $1.85 Million.

How did you add value to the deal?

Originally owned by a mom and pop business, looking for interior and exterior renovations to match the up-and-coming scene of North Austin amidst the increasing popularity of the MLS stadium developed approximately 1 mile north as well as the Apple Campus, Amazon warehouse, The Domain, etc.

What was the outcome?

Still under management. Distributions should be coming out sometime in October.

Lessons learned? Challenges?

Still under management and learning about the asset class. First multifamily deal as an LP. I would say to do your research on the property itself. I've heard some stories already saying the tenants are less than friendly, but that's what happens with a C-class property sometimes. I'm looking forward to when Zion Capital invests in a more stable asset class such as a B+ or A property.

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

Zion Capital is a fantastic business with energetic, enthusiastic, and brilliant leaders. Follow Kyle Marcotte and Van Hagye in their future deals.