286-Unit Multifamily Oklahoma City

This was another fully vacant complex due to neglect and mismanagement. This is the 2nd purchase I made with this seller. This was another completely vacant building. 286-Unit in the heart of Oklahoma City, OK. There was extensive water damage and complete neglect. We acquired the complex for $1.1M. This required a massive $2.6M in rehab cost. The rehab took 3.5 years to complete including leasing. We leased the units as they became available. 

Here's how it worked out:

Acquisition and rehab totaled $3.6M. Market rents in the Greater Oklahoma City area averaged $600 per month for our complex. 286 units leased to market occupancy of 95% totals 272 units. Monthly income from $600 on average totaled $163K. Monthly income multiplied by 12 is $1.9M. 50% expense ratio totaled $979K. With a market cap rate of 10% it brings the value to $9.8M.

In Conclusion:

A deal is not a good deal unless everyone feels like they have gained something (a win / win scenario). We had 3 investors who invested a total of $3.6M. They earned $540K annually for 3 years for a total of $1.6M. They earned a premium of 15% for an additional $540K. This brought their grand total earnings to $2.16M. We sold the complex for $8M. The end buyer gained nearly an instant $2M plus nearly $1M in annual income. The company earned $1.8M after holding and closing costs.