All Forum Posts by: Marjeanne Fields

Thank you @Account Closed :)

@Adrian Chu We were surprised as well. It is a community that has been sitting idle for the last few years. They had a mayor that was against development and growth from what the Economic development office told us. This prevented that particular market from moving for the last few years. 

Now they have different leadership in government and the growth is exploding. 

@Michael Glaspie We typically have 30 days financial due diligence and 15 days physical due diligence. We ALWAYS write in our contracts that the clock doesnt start until we have RECEIVED the financials from the seller. Otherwise they could wait until the last day to give you financials and then you can potentially go hard on your EM without knowing if its a viable asset. 

@Kyle Ransom We just purchased a property in Big Spring Texas. Going to use the back club house area as a air bnb. Will keep everyone posted on how that turns out. 

From the numbers you are showing you are only at a 1.08 DCR. No bank will loan unless you can hit 1.2 DCR. Your estimate of $8000 per unit seems extremely high. We usually budget max $5000- $6000 but typically around $4000 per unit. Where is this property located? Your electric seems low. If you are new you might want to underwrite at a higher insurance cost unless you can use your property managers insurance.

Also- according to your numbers you are buying at a 5% cap and selling at a 5% cap. Might be a challenge to offload especially since we are looking at an economic down turn coming. 

I personally think that if you buy this property you will lose money. 

Hope that helps!

@Tony F. I might be able to help. PM me. 

We are preparing for the market to drop by buying multi family investment properties. While the SF space decreases (values based on the comps around it) multi family properties increase (value determined by income produced by the asset). When people lose their homes in the single family space during a downturn- they still need somewhere to live. This basic fact is what helps increase the appreciation of a multi family asset during an economic down turn. 

Economy of the area is the very first thing that is important to me. If that looks good then I start to look at the value add opportunity. In my opinion- its not one or the other... its both!

Investment Info:

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

Purchase price: $3,600,000
Cash invested: $1,615,000

Coronado Hills is a 68 unit, Class C Apartment building located in Big Spring, Texas. The property is currently 100% occupied and stabilized asset with several value add opportunities. The asset was originally built in 1968 and features 34 one-bedroom units, 28 large two-bedroom townhouses, and 6 large three-bedroom townhouses.

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

We love economies of scale. Actually added a second property down the street to maximize our property management fees. We love the area. Oil is hot hot hot! There are three additional large economic drivers in the area as well. Loved that it was 100% occupied with a 52 person waiting list.

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

Broker brought it to our attention. There wasnt much negotiations on price because it was listed as a 10% cap rate. This area is emerging and we are purchasing at just the right time. The seller knew what is happening in the area, and that they were selling at a very fair price. Really not much negotiations since everyone was on the same page.

How did you finance this deal?

We got a fannie mae loan. Interest only for first 2 years. Option to refi after year one. We also syndicated this deal with 21 investors.

How did you add value to the deal?

1. Increase rents to market rent
2. Add washer and dryers (hook ups available)
3. Fix fitness center
4. Fix club house
5. Add cosmetic upgrades

What was the outcome?

We just purchased. This answer is Tbd

Lessons learned? Challenges?

If you are investing in Texas, you will need a bank account opened in Texas. While you are doing due dilligence make sure you open the account.
If you are going to work with others to help raise money for the project make sure everyone is clear on what they are getting paid.
Don't hire long winded attorneys!

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

Yes. Please contact me for the following recommendations:
1. RE Atty
2. Broker
3. Lender
4. Title co

Hey Fred. We have been finding great deals in the turciary markets in Texas, AZ and Oklahoma. Sweet spot seems to be 40-80 units. We look for markets that are experiencing 2% or higher job growth. Texas markets are fantastic right now because of the Mammoth oil find. 

Would be happy to connect you with one of our broker. Private message me if possible and I'll give his info.