We have been preaching multi-family real estate investing for almost 2 years now.  The reason is simple.  More foreclosures, less credit, less loans.  The rental market has surged over the last 18  months.  Rental rates are increasing and inventory is much tougher to find.  Our team provides real estate investors of Florida apartment complexes a full service.  We assist in identifying the asset, negotiating the price, and budgeting a Capital Expenditure report, all the way through stabilization.

You will find hundreds of apartment complexes for sale on LoopNet and eBay.  My feeling is that once an apartment complex that is distressed or repossessed is listed to the public, the deal is already gone.  There is a reason it is public.  I’m not saying that you can’t find good deals there, but you will find much better deals when they are not listed.

We have a receiver that we work with who provides us with some good opportunities for our investors.  Most of the complexes we work with this receiver on is in the Tampa and Orlando markets.  What makes things more complex is that most of these complexes are what we call “Value Add” opportunities.  For example, the one we are working on currently is 330 units.  The occupancy rate is 20% and the property is in need of major capital improvements.  That said, the area is dense with surrounding communities that are a minimum of 90% occupied, thus if we can get our “value add” complex for a good price, the potential is there.  Once we invest some Cap X to this current project, the equity will be substantial.

We ran some numbers on this complex.  At an 80% occupancy rate at today’s rental numbers, this complex will have a 10% Net Capitalization Rate at $11 million.  We currently have a contract in place with one of our investors to purchase from the bank at $3.2 million.  After looking at the rehab needed to get this complex comparable to the surrounding ones, we determined that we need an additional $1.8 million to $2 million in Cap X.  Assuming that number is $2 million, we are invested at $5.2 million.

We feel we can rehab the property within 4-6 months and per our property management firm we hired, we can achieve 90% occupancy within 18-24 months.  At that point, our investor can keep as income property, or we can sell it at an attractive 10% Cap Rate.  Assuming we sell at a 10% Cap in 2 years, the gross profits are almost $6 million, not taking into consideration the cash flow from occupancy.

Negotiating an apartment complex with a bank is not easy.  It is easy to get into trouble if you don’t know what you are doing.  We have a very experienced team of market specialists and contractors where it is our job to get the best deal from the receivers/banks that we have working relationships with.

If you would like additional information on apartment complex opportunities in Florida, feel free to call us for a consultation at 877-688-7582.  Ask for Scott.

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