Investment Info:
Large multi-family (5+ units) buy & hold investment.
Purchase price: $4,500,000
67 unit portfolio purchased from a large investor in NH. 13 different properties over three different cities. purchase price of 70k per unit. Building sizes range from a 5 unit to a 24 unit building with mixed commercial and residential use.
Currently, we are in the process if rehab and BRRRR ing the properties. Purchased with 7 other partners. We are using a construction loan through a local bank with interest only payments for one year. The bank required 27% down payment, we had to raise roughly 1.5M to bring to the closing table.
The property will likely clear over $325k in pure cash flow after all expenses once rehab is complete, shared across the seven partners based on equity stake in which each owns. I was able to put $0 of my own money into this deal.
What made you interested in investing in this type of deal?
Small scale syndication, large amount of units, hands off investment.
How did you find this deal and how did you negotiate it?
I was able to find this deal with one of my partners through a family member who happened to be a real estate agent in NH. We were able to go see the properties and make an offer the day it hit the MLS. There were 5 other offers all cash offers, we had a finance contingency of bank financing. The seller chose us because he was amazed that two mid 20 year olds were trying to purchase a portfolio of buildings which is what he did when he began investing. Being young is the greatest asset we have.
How did you finance this deal?
We financed the deal through a local bank in the town in which my partner and I live in. We have a great relationship with them and they financed 73% of the deal through a construction loan with interest only payments for one year. We needed roughly 1.5M to bring to the closing table for a 4.5M purchase price.
How did you add value to the deal?
BRRRR, we are using a construction loan to rehab most of the units and add value. We have an *** complete appraisal of 6.5M. The entire portfolio will be worth roughly 2 M more than when we purchased it after the rehab is complete.
What was the outcome?
The outcome is a 67 unit portfolio which will cash flow roughly $350k in pure cash flow span across the seven partners in the deal. I was able to put a total of $0 of my own money into this deal in exchange for 4% equity. While 4% does not seem like that much, 4% of 6.5M is quite a bit year after year, especially with $0 initial investment. Infinite return on my money.
I was able to put $0 into this deal by doing most of the ground work to get the deal done ( raise money, find partners, etc)
Lessons learned? Challenges?
You really do not need any money to invest in real estate. After this deal, I had purchased 80 total units in 2020, which was supposedly a "rough year" for most.
Finding a deal is the most important aspect of investing in real estate. If you can surface a real, good deal, the money and lending and partners becomes very easy to find.
Being young is not an excuse.
Feel free to reach out and I'd love to walk you through in detail how we were able to complete this deal in 7 weeks!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Trish Marchetti - Agent in NH
Yun Rhee - Agent in NH
