All Forum Posts by: John Galloway

 What's up Max! Let's try to make something happen soon. 

Hey Ty! 

Send me a DM and maybe we can find a time to get together. 

Yes! Activity is down, however, it is possible to flip in Denver these days. 

We are currently marketing a flip and will be looking to pick up another before the end of the year. Flipping for us in this market equals being very picky and sticking to our hurdle rates, which means lower volume. There are so many deals that don't pencil, but the ones that do seem to do well for us.

Let's connect if you want to talk more granularly about strategy and market.

Investment Info:

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

Purchase price: $740,000
Cash invested: $190,966

Project IRR (without fees) as of refinance in 2022 - 84.54%

Equity multiple as of refinance in 2022 - 2.6x

This was a value add real estate project located in Colorado Springs, Colorado. We acquired a C class multifamily building, implemented a new property management strategy, conducted whole property renovations, and ultimately refinanced with a local lender for a profitable return. My role encompasses overseeing the project's acquisition and diligence and ongoing property management.

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

We've invested in several types of deals like this where the current ownership just isn't getting the most out of the asset. We had purchased another project from this owner and they were ready to move on from this one as well.

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

This project was listed on the MLS, however, there wasn't much interest in the broader market. We negotiated through our agents.

How did you finance this deal?

We used a local debt partner who had funded other similar deals for us.

How did you add value to the deal?

We remodeled all the units and replaced the current tenants who were causing trouble.

What was the outcome?

We added value and refinanced before rates went up.

Lessons learned? Challenges?

C class properties that have been badly managed are a real mess to clean up, however, they provide a great value add opportunity. If you are willing to really roll your sleeves up, you can make money.

Investment Info:

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

Purchase price: $2,830,000
Cash invested: $725,000

Project IRR (without fees) as of refinance in 2022 - 29.26%
Equity Multiple as of refinance in 2022 - 1.44x

This was a syndicated real estate project located in Colorado Springs, Colorado. We successfully acquired a 30-unit building, implemented a re-leasing strategy, conducted unit renovations, and ultimately refinanced the property with the Fannie Mae Freddie Mac Small Balan Loan program for a profitable return within just 24 months. My role encompasses overseeing the project's acquisition and diligence, fundraising efforts, and ongoing property management.

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

We were fortunate enough to compete for a portion of a large portfolio acquisition in Colorado Springs. An owner of about $25M in property passed away and a fund was able to buy his entire asset portfolio out of probate. We had a relationship with the fund manager and were able to pick up this asset from them. The apartment is in great shape and was meticulously maintained by the tenants.

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

We have existing relationships with the listing broker and the fund that listed the property for sale.

How did you finance this deal?

We financed the deal with a local lender and then refinanced with the Fannie Mae Freddie Mac Small Balance loan program. The debt is amortized over 30 years and is non-recourse.

How did you add value to the deal?

We replaced the property manager and were able to get around $250.00 more per month than proforma rents. We renovated several units, but most of the value was brought with a more robust leasing process.

What was the outcome?

We have a stabilized, cash flowing asset on 3.23% non-recourse debt.

Lessons learned? Challenges?

The property was not a deeded age-restricted community, however, it was run like one for years and the original tenants had that expectation. We had to be sensitive in the transition as the community was pretty tight nit and resistant to some of the changes we were making.

Thanks @Dmitriy Fomichenko! It was a fun one. 

Investment Info:

Townhouse fix & flip investment in Aurora.

Purchase price: $248,955
Cash invested: $90,389
Sale price: $387,500

This was a fix and flip project located in the vibrant city of Aurora, Colorado. We acquired a townhome property from a wholesaler, executed a successful renovation and remodeling plan, and achieved a profitable sale just 116 days later. My responsibilities included construction and contractor management and overseeing the asset's successful marketing and sale.

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

We perform several flips a year when we find them from wholesalers. We have strict criteria and only buy if we can properly segment risk.

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

We purchased this deal from our wholesaler network. We always perform a proforma before making any offers. In this case, the numbers worked, so we bought the deal.

How did you finance this deal?

We used hard money for 80% of the project cost.

How did you add value to the deal?

We painted, replaced flooring, added countertops, fixtures, and bathroom finishes.

What was the outcome?

We sold completed the project ahead of schedule and under budget - 116 days from purchase to sale.

Lessons learned? Challenges?

We learned that Xcel energy can be a real nightmare to work with during a panel swap. Try to take care of your necessary electrical work before you get to your marketing period.

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

I am both the principal and the agent. If you need help selling your flip, I am very experienced and know exactly how to help. Otherwise, Steven Silva with Simple Staging did an amazing job with the staging and the photos.

Investment Info:

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

Purchase price: $904,000
Cash invested: $207,000
Sale price: $1,265,000

Project IRR (without fees) - 97.81%
Equity Multiple - 2.34x

This was a syndicated real estate project in the city of Aurora in Colorado. We purchased an 8 unit building off market, re-leased it, remodeled the units, and then sold for a profit 18 months later. I was responsible for the project acquisition, fundraising, project management, and sale of the asse

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

My team has a ton of C class multifamily value add experience and we knew we couldn't pass up this opportunity when it came to us off market. We are very comfortable with the Aurora submarket, stabilizing, and implementing new property management. The project just fit really well.

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

We came across this deal off market via the listing agent. It was not in proper shape for the broader MLS and the owner wanted to sell direct to an experienced investment team.

How did you finance this deal?

We financed this deal with a multifamily mortgage through FirstBank.

How did you add value to the deal?

We replaced the property manager, remodeled the units, rented out the storage units, and did a better job marketing the property for lease.

What was the outcome?

We executed our strategy with an internal rate of return of 97.81% and a 2.34 equity multiple before fees.

Lessons learned? Challenges?

8 unit multifamily is definitely a sweet spot between the smaller and larger multifamily investments. You can get economics of scale by purchasing multiple adjacent lots. These buildings are often built by the same builder and are essentially cookie cutter units.