We are all wondering what will happen as a result of this crisis I’m sure. I’m wondering about my internet marketing business, the house flipping business and my choice to hire a mentor to help me learn how to buy large multi-family properties. The real estate industry has essentially come to a complete halt as Realtors are not allowed to show houses and I’ve pulled all of my listings off the market that aren’t under contract. This makes me wonder what will happen next.
I’m trying to look past this inconvenient and scary time and look at what it might bring in terms of a positive outcome. There is a good possibility this could be good for the multi-family syndication business as people with money in the stock market might be looking for investments that are much more stable than the “casino” that Wall Street seems to be.
I’ve been analyzing deals with my mentor, a couple right here in York, PA. None of them so far have been ideal because they have already been fully renovated so there isn’t much opportunity for “value-add”. This is a technique used to improve the property in some way to increase rents and the overall value of the asset.
My mentor, Jens, has an opportunity currently that is “textbook” multi-family investment. I’ll copy the details below. I’m impressed with this opportunity because it fits all of the criteria for a great investment that I’ve been learning about over the past few years as I have been educating myself about this business.
Another reason I’m wondering if I made the right choice is because I fear that I won’t be able to show enough of my friends the opportunities that exist in multi-family investing or I will do a poor job. The task of educating people about this business seems daunting. I fear people will think I’m trying to sell them something or take their money which is completely inaccurate and quite the opposite.
The opportunities are not for everyone, for sure, and I’ll try to show everyone that multi-family real estate is one of the safest asset classes that exist on the planet. My mission is to do my best to educate my friends so I don’t feel like I didn’t do my part to make everyone aware when opportunities come available.
Here is an opportunity my mentor is offering, I stand nothing to gain by sharing this with you except for showing you what a “textbook” deal looks like. Keep in mind this deal is closed to new investors since it is underway:
Open Doors Capital in partnership with PeTro Properties is excited to offer the opportunity to invest in Shoreline, Apple Tree and Maple Lane, a 127 unit apartment portfolio in Erie Pennsylvania. The investment consists of 3 separate properties that we are buying from the same seller.
This is an opportunity to invest in a value-add portfolio, purchased at a price that allows us to provide great returns by updating the apartments and increase rents.
We are also taking advantage of historically low interest rates to further improve the returns on this deal.
Of course, these are unprecedented times in our nation, but we are confident that our conservative underwriting and sufficient reserves allow us to manage any downturn in the economy. We focus on value add workforce housing that we feel will continue to enjoy very strong demand.
The deal is already close to fully subscribed, but we have a few spots open and we are taking backup reservations.
Investment highlights:
- Projected Cash on Cash Return 8% – 12%
- Average Annual Return 15-18% with proceeds from sale
- 75/25 investor/general partner split
- $50,000 minimum investment
- Long-term fixed agency debt at historically low rates
- Great cash flow market
- 7-10 year hold (with the option of return of initial capital and staying in the deal)
- Money to be wired by May 1, 2020
- PPM ready by early April