All Forum Posts by: Tyler Pertree

Investment Info:

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

Purchase price: $30,000,000
Cash invested: $18,000,000

We are working on a project in Oklahoma City with the following incentives:Opportunity Zone, Empowerment Zone Area Round III OKC, Tax Increment Finance (TIF), Core to Shore OKC, Urban Renewal, General Obligations Bonds, New Market Tax Credits, Historical Tax Credits, Community and Economic Development,Community Renewal InitiativeCommunity Development Block Grant ProgramsPartnerships for Sustainable Development CommunitiesNeighborhood Stabilization ProgramPlace-Based InitiativesQuality Jobs Act

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

First purchase was back in 2015 and the project started out pretty small. As time went on and we acquired more and more properties, many incentives were placed on the land. We found out that it was a TIF district, had historical and new market tax credits available, and now is an Opportunity Zone. I invested with the group before anything but the TIF was available because it's an excellent area for development.

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

Like many deals, I was referred by a friend who had the opportunity to invest. When I got in, the investment was $1000 per share, but the land was being bought at $7/sqft. Now the shares are $4000, but the land is $50/sqft. The projected exit price is $100 million + which would net me about a 700-900% profit on my investment.

How did you finance this deal?

So far, it has been investor financed - so basically it's completely unleveraged.

How did you add value to the deal?

We met with the city to get development hurdles handled in advance. Most easements were removed by the city and it was zoned to multi-story mixed used. We have also negotiated the TIF money and are now one of the only 20 Opportunity Zones in the state of Oklahoma.

What was the outcome?

The current outcome looks very good. Our initial exit strategy put the initial investors as making about 300% on our money. We were taking all of the risk, of course. However, now that it has so many incentives, we could easily break a 1000% increase for the initial investors and still have plenty of return for new investors with substantially less risk.

Lessons learned? Challenges?

Large projects have TONS of moving parts. Working with the mayor, the city, large national corporations, law makers, and developers takes a substantial time investment. I have experience with single family rentals and they are now very easy, however - this (estimated $2 billion in development costs) development had me learning so many additional pieces of a much larger puzzle. I was grateful for a smart team and good mentorship.

Out of curiosity - what structure would you use to buy a portion of a much larger deal?  For instance - there's a large deal I have had made available to me ($36 million) of which I'd like to raise $5-6 million to buy into it.  Would this be a syndication?  Would it be better to do it another way?  It's buying into an already existing company that owns a very large area in a downtown TIF district that just had city approval for a very large renovation that is now underway.

I have a great guy I use.  None of them are overly cheap, but he's good.  Everyone calls him "T".  If you need a remodel guy, you are welcome to message me for his info.  I've given him 7 homes to do and he's solid.  Just don't take him away from me :)

900 Gale, Oklahoma City, OK 73160

$70,000

KEY FEATURES
Year Built: 1965
Sq Footage: 1386 sqft.
Bedrooms: 3 Beds
Bathrooms: 1.5 Baths
Floors: 1
Parking: None Off street
Laundry: In Unit
Lot Size: 0.2 Acres
Property Type: Single Family House

DESCRIPTION

We have an investment property available in Moore, OK. The address is 900 Gale Moore, OK 73160. It’s located just south of NW 12th St between Santa Fe and Telephone Rd. It’s just under 1400 sqft, 3 beds & 1.5 baths. The roof is newer and in good shape. I’ve already had the HVAC and water tank checked and they were in good, working condition. We have several homes we are flipping and need to clear out our line of credit. This home was going to be a rental for us. All demo is done and there’s a dumpster out front (already paid for). An odd half wall, half window was opened up for the living room and reframed it so it flows into the converted double garage. It still needs to be painted, floors, full kitchen cabinets/counters, and bathrooms done. I estimate another $15k in work (labor/materials).

We have a similar rental on the other side of I-35 that is rented for $1100/mo. My property manager estimated this one would go for around the same amount especially since school is about to be out and people will be moving for the Moore school system soon. When it’s all done it should comp at about $110k.

The house was under contract, but the buyer fell through, so it’s now available again. Need $70,000 net to seller to close. Cash offers will be given preference.

Property Details Price: $$70,000 Address: 900 Gale City: Moore State: OK Zip Code: 73160 Year Built: 1965 Terms: For Sale Property Type: Home Square Feet: 1386 Bedrooms: 3 Bathrooms: 1.5 Lot Size: .2 Acres

Call (405) 546-2030 if you are interested

The nearby properties do not seem to offer pools for the most part.  The financials I went over line by line and honestly - they are suspect.  For instance - Retained earnings was NEGATIVE $250,000-$400,000 every year.  The "Mortgage interest expense" started at $60,000 year 1 and somehow was down to $5,000 year 5 (the actual mortgage was $950k to start and $780k at year 5).  I'm not positive how an interest expense can drop that much in 5 years when the mortgage is still quite high.  A few other things like that make me believe that the property did not likely keep good numbers and I may have to find other ways to value it.

Any suggestions would be amazing.

So, I've purchased 6 SFR homes but really want to get into multi-family. My issue is this - Obviously, these are much bigger deals. I don't completely understand the ins and outs of analyzing them and knowing when it's a "buy" or a "pass".

I walked through a deal today, so maybe you all can help me analyze this.

40+ unit apartment building, mid to mid-low end area.  Good school district and 1/4 mile from highway access.  Currently, 8 units vacant, 4 of which are under construction (plumbing issues).  Mix of 2 and 1 bedrooms with rents ranging from $525-595 currently.

Extras:
On site laundry - currently has a company supplying the washer/dryer units and giving 20% of the earnings (while the site is paying 100% of the water/disposal).  So unless my numbers are wrong, it is operating at a loss.  The units do NOT have washer/dryer hookups so this could be extra money if done right?

Rental office has an attached 2 bedroom apartment which can house the on-site manager.  

Technically has a pool area (filled in with dirt currently but is a nice grass landscaped area and brick fenced in).  Good possibility of a "play area" for kids or picnic area for adults with little expense to add this feature.

I went through the financials and it doesn't look fantastic as it's being run now. How should I value this property? Based on NOI only? From what I can tell, the owner has mismanaged this property and it needs some help. What other information is needed to know if this is a "go"?

Thanks for your help!

Tyler