All Forum Posts by: Jacob Hamilton

Investment Info:

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

Purchase price: $1,485,000
Cash invested: $25,000

I've never done an apartment syndication deal before but this deal came to market and was simply too good to pass up, I locked it up with an LOI almost as soon as it came to market and worried about how to fund and finance it after it was locked up. After having the property under an LOI I found a strategic parter that has done syndication before and assisted in the legal doc preparation for the syndication and raised some capital along side myself.

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

I own several single family rental properties in this market and we really do not have any multifamily in my market that is not institutional so this deal was a complete anomaly. I have always wanted to get into the multifamily side of the business but really had no idea how to get into it; I figured to just write an LOI and try my best to figure it out as I went along knowing that the worse case scenario was that I voided the LOI.

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

This deal actually came to MLS and was being very poorly marketed by a property manager, it had poor photos, extremely low rent estimates and basically no other marketing aside from it being posted in the MLS. The property management company had been managing for occupancy and really not for performance so this left for quite a bit of unseen and unadvertised upside that I think a majority of the marketplace missed out on.

How did you finance this deal?

My strategic partner and I both raised about $350,000 each and over subscribed the deal by $50,000, we both put in $25,000 and then shopped two local banks for the financing of the acquisition + construction loan. The most important side of this was that my strategic partner had worked with this bank before on other deals and had the experience to get the loan. I noticed that banks don't really care about your single family experience but more so your experience in the specific asset class.

How did you add value to the deal?

I found the deal, and ran the initial proforma on it and realized the value add potential. I also raised half the capital needed to fund the deal and used my construction expertise to advise on the cost of the rehab for all eight units in the building. Essentially, I handled the construction budgeting, brokering and half of the fund raising while my partner handled the bank financing, legal and the other half of the fund raising.

What was the outcome?

We went under contract in April and closed in June, we raised the money in what felt like a matter of days which to me goes back to the old saying that if the deal makes sense then the money will come. We are currently past the project planning side of things and have all of our drawings and plans submitted to the City and should have approval to begin construction in the next 30 days or so. From there we will lease half the building to a corporate rental company and the other half separately. 

Acq Price: $1,485,000 

Renovation Cost: $650,000 

As Complete Apprised Value: $3,947,000

Lessons learned? Challenges?

If the deal makes sense then the money will come. I have zero experience in multifamily syndication, my partner has just enough to get by and we just found a good deal and finding the money was the easiest part. Considering that we did assume half the building occupied we are learning a lot about property management as we go but I'm confident that this deal will pan out in a profitable way considering the price we got it for and the upside it has.

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

I was the broker for this deal, I would recommend myself to anyone looking to get into investing in the Washington DC area, specifically Virginia. We did have an amazing architect do the plans, an incredible lender and my staff assisted throughout the entire process for getting documents prepared, planning inspections etc. Overall it was a very positive transaction and very painless, it seems like the most painless deals are the best deals for everyone.

Thanks Grant! Good luck to you!

 Crazy how much costs can fluctuate around the country! $200 a foot around here would be in our higher end luxury market.

 Yes, I did have to shop banks a bit to find one that would allow it. 

 It is off Oak Ridge Rd! The construction was considerably lower than a typical new construction home because we did not have any significant concrete costs, the home was built on the existing foundation of the old home. This not only saved us a lot but also no grading plan was required for this home either. This home likely would have cost us around $60,000-$70,000 more if we had gotten a grading plan and poured new concrete. 

@Trevor J Dammon I think if you are well capitalized and not focused on getting your hands dirty with fix and flips, toilets etc, then and you are focusing on a net worth approach to things then your biggest goal right now should be growing your network. I think if you got to your local real estate investors club and rub elbows with the builders, and flippers who have experience and want to grow and you invest in them then this is probably your best place to get the highest ROI with the lease amount of work.

I think the Dave Ramsey approach to paying off bad debt, getting on a budget and sticking to it is all good common sense advice that everyone at a high level follows to a degree. Whether it be your personal budget or your business budget, I don't know any successful individuals that their business does not have a budget in place and would argue that most wealthy individuals also have a personal budget in place as well. 

The notion that Dave Ramsey's advice is for the poor or middle class is a fair argument in his methodology for real estate investing but when it comes to the tried and true staying out of bad debt and sticking to a budget; he could not be more spot on for anyone. 

Take bits and pieces from all the information you consume and form your own opinion, bring those opinions here and get feedback and other takes on things.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $480,000
Sale price: $1,080,000

This was a new construction project that I took on in 2021 and finished in mid 2022, the whole project took roughly 10 months from start to finish. I bought the property in a suburb of Washington DC, specifically Falls Church Virginia; this area has been growing a lot in the past 10 years with a considerable amount of new construction homes being built. The existing home on the property was slab on grade so this new home was built on the existing foundation.

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

I've been a real estate agent for the past 5 years and most of my business has been helping other investors and developers, in my market the traditional fix and flip margins are so low typically that this was the best happy medium between a fix and flip and a full blown development. Typically when you build a new home on an existing foundation you do not need a site plan so that saves a lot of time permitting and simplified the construction as well.

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

The lot for this property was actually on the MLS, it had been on the market for 45 days or so and was over priced by 6% or 7%, since it was overpriced there was simply not a lot of competition for this deal. I submitted an offer for $470,000 and it was listed for $500,000 originally and then we met in the middle at $480,000 with the terms I wanted. I ended up with a 10 day study period to check the footings on the foundation, verify setbacks, etc and then a 45 day close.

How did you finance this deal?

The financing for this deal was fairly creative, I used a combination of a private money lender and a mid sized local bank to fund the deal. I obtained a construction and acquisition loan from the bank and then I used private money to cover the down payment required from the bank; the private money was placed as a 2nd position deed of trust and the bank was in 1st position. The private money was a $200,000 loan and the bank loan was $630,000; the private money was paid at 12% and bank at 4.25%.

How did you add value to the deal?

As a real estate agent my value to this deal was finding the deal but also lining up the funding and bringing the team together to complete the deal. I have a small staff for my sales business that assisted in purchasing material, running permits, managing the GC and more. The GC we hired had very little support staff so my teams role in the backend of things was intricate in getting this deal done in a relatively timely manner.

What was the outcome?

This deal was profitable but not as profitable as we had initially anticipated and also took considerably longer than we initially anticipated as well. I've done a breakdown of the deal below, it was profitable but the education and experience from doing this was worth more than what I made.
Sale Price $1,084,650
Commissions and Closing Cost -$35,000
Interest Carry Cost -$37,000
Build Cost -$455,000
Acquisition Cost Including Points -$11,687
Acquisition Price -$480,000
Net Profit $65,953

Lessons learned? Challenges?

First lesson, be as involved in these deals as you possibly can. This is my third spec home and the first one I basically handed each draw I got the the GC without question, I made money but was not completely and fully aware of everything going on at the project everyday. This project I did hire a GC but was involved in selecting subcontractors, selecting finishes, county approval, every little detail I was involved in and now I feel more confident about the building process as a whole.

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

I did work with a GC who provided the proper licensure for the project, as well as daily project oversight. I would recommend that anyone getting into a larger project like this use a GC but make sure that GC will allow your input into the project. Take advice when advise is given but question everything you feel the need to question so you can learn about all facets of the business.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $480,000
Sale price: $1,080,000

This was a new construction project that I took on in 2021 and finished in mid 2022, the whole project took roughly 10 months from start to finish. I bought the property in a suburb of Washington DC, specifically Falls Church Virginia; this area has been growing a lot in the past 10 years with a considerable amount of new construction homes being built. The existing home on the property was slab on grade so this new home was built on the existing foundation.

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

I've been a real estate agent for the past 5 years and most of my business has been helping other investors and developers, in my market the traditional fix and flip margins are so low typically that this was the best happy medium between a fix and flip and a full blown development. Typically when you build a new home on an existing foundation you do not need a site plan so that saves a lot of time permitting and simplified the construction as well.

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

The lot for this property was actually on the MLS, it had been on the market for 45 days or so and was over priced by 6% or 7%, since it was overpriced there was simply not a lot of competition for this deal. I submitted an offer for $470,000 and it was listed for $500,000 originally and then we met in the middle at $480,000 with the terms I wanted. I ended up with a 10 day study period to check the footings on the foundation, verify setbacks, etc and then a 45 day close.

How did you finance this deal?

The financing for this deal was fairly creative, I used a combination of a private money lender and a mid sized local bank to fund the deal. I obtained a construction and acquisition loan from the bank and then I used private money to cover the down payment required from the bank; the private money was placed as a 2nd position deed of trust and the bank was in 1st position. The private money was a $200,000 loan and the bank loan was $630,000; the private money was paid at 12% and bank at 4.25%.

How did you add value to the deal?

As a real estate agent my value to this deal was finding the deal but also lining up the funding and bringing the team together to complete the deal. I have a small staff for my sales business that assisted in purchasing material, running permits, managing the GC and more. The GC we hired had very little support staff so my teams role in the backend of things was intricate in getting this deal done in a relatively timely manner.

What was the outcome?

This deal was profitable but not as profitable as we had initially anticipated and also took considerably longer than we initially anticipated as well. I've done a breakdown of the deal below, it was profitable but the education and experience from doing this was worth more than what I made.

Sale Price $1,084,650
Commissions and Closing Cost -$35,000
Interest Carry Cost -$37,000
Build Cost -$455,000
Acquisition Cost Including Points -$11,687
Acquisition Price -$480,000
Net Profit $65,953

Lessons learned? Challenges?

First lesson, be as involved in these deals as you possibly can. This is my third spec home and the first one I basically handed each draw I got the the GC without question, I made money but was not completely and fully aware of everything going on at the project everyday. This project I did hire a GC but was involved in selecting subcontractors, selecting finishes, county approval, every little detail I was involved in and now I feel more confident about the building process as a whole.

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

I did work with a GC who provided the proper licensure for the project, as well as daily project oversight. I would recommend that anyone getting into a larger project like this use a GC but make sure that GC will allow your input into the project. Take advice when advise is given but question everything you feel the need to question so you can learn about all facets of the business.

Investment Info:

Single-family residence fix & flip investment.

Purchase price: $480,000
Sale price: $1,080,000

This was a new construction project that I took on in 2021 and finished in mid 2022, the whole project took roughly 10 months from start to finish. I bought the property in a suburb of Washington DC, specifically Falls Church Virginia; this area has been growing a lot in the past 10 years with a considerable amount of new construction homes being built. The existing home on the property was slab on grade so this new home was built on the existing foundation.

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

I've been a real estate agent for the past 5 years and most of my business has been helping other investors and developers, in my market the traditional fix and flip margins are so low typically that this was the best happy medium between a fix and flip and a full blown development. Typically when you build a new home on an existing foundation you do not need a site plan so that saves a lot of time permitting and simplified the construction as well.

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

The lot for this property was actually on the MLS, it had been on the market for 45 days or so and was over priced by 6% or 7%, since it was overpriced there was simply not a lot of competition for this deal. I submitted an offer for $470,000 and it was listed for $500,000 originally and then we met in the middle at $480,000 with the terms I wanted. I ended up with a 10 day study period to check the footings on the foundation, verify setbacks, etc and then a 45 day close.

How did you finance this deal?

The financing for this deal was fairly creative, I used a combination of a private money lender and a mid sized local bank to fund the deal. I obtained a construction and acquisition loan from the bank and then I used private money to cover the down payment required from the bank; the private money was placed as a 2nd position deed of trust and the bank was in 1st position. The private money was a $200,000 loan and the bank loan was $630,000; the private money was paid at 12% and bank at 4.25%.

How did you add value to the deal?

As a real estate agent my value to this deal was finding the deal but also lining up the funding and bringing the team together to complete the deal. I have a small staff for my sales business that assisted in purchasing material, running permits, managing the GC and more. The GC we hired had very little support staff so my teams role in the backend of things was intricate in getting this deal done in a relatively timely manner.

What was the outcome?

This deal was profitable but not as profitable as we had initially anticipated and also took considerably longer than we initially anticipated as well. I've done a breakdown of the deal below, it was profitable but the education and experience from doing this was worth more than what I made.

Sale Price $1,084,650
Commissions and Closing Cost -$35,000
Interest Carry Cost -$37,000
Build Cost -$455,000
Acquisition Cost Including Points -$11,687
Acquisition Price -$480,000
Net Profit $65,953

Lessons learned? Challenges?

First lesson, be as involved in these deals as you possibly can. This is my third spec home and the first one I basically handed each draw I got the the GC without question, I made money but was not completely and fully aware of everything going on at the project everyday. This project I did hire a GC but was involved in selecting subcontractors, selecting finishes, county approval, every little detail I was involved in and now I feel more confident about the building process as a whole.

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

I did work with a GC who provided the proper licensure for the project, as well as daily project oversight. I would recommend that anyone getting into a larger project like this use a GC but make sure that GC will allow your input into the project. Take advice when advise is given but question everything you feel the need to question so you can learn about all facets of the business.