Episode 96: They transformed an apartment complex and doubled investor's money along the way!
Real estate investor, author, and syndicator Matt Faircloth of the DeRosa Group joins Justin Fraser to talk about the challenges and triumphs of selling the DeRosa Capital 8, Douglas Square Apartments – from dwindling occupancy due to management’s poor communication with tenants, to refinancing the property twice, and ultimately, making the decision to sell the property making it a win-win situation for everyone involved. This property was a 4-year hold that they invested $2M in CapEx renovations and increased Net Operating Income (NOI) on the property by 8x.
Matt Faircloth is the co-founder and president of the DeRosa Group, a real estate investment company that specializes in buying and renovating residential and commercial properties. In this episode, Matt imparts some great insights into selling and buying a multifamily property and some important lessons from being on the seller's side of things.
Here are some power takeaways from today’s conversation:
2 main challenges prior to selling the DeRosa Capital 8, Douglas Square Apartments
Conversation tips with your tenants
Strong local presence in a management company
How they raised occupancy during COVID times
Using a broker with a big, national reach when selling a property
Buyer interview tips for multifamily
Episode Highlights:
Building Strong Local Presence as a Management Company
A lot of people buy real estate thinking that they can just pull out as much as they can out of it without putting stuff into it. When you’re looking to renovate a property to increase rent, don’t just email your tenants or put notices on the door saying their rents are going to go up or they can just move out, because that will certainly drop your occupancy rate. There’s definitely a better way of handling these conversations with tenants in a more humane way.
Using a National Brand Broker When Selling a Property
It's important for you to talk to all brokers when you go to buy a property. But when you go to sell, using a national brand is important because they have a deep mailing list and they know how to run a “multiple bids” scenario for you.
Buyer Interview Tips for Multifamily
There are things that are going to come up and you can't have a perfect property that you're going to retrade somebody – meaning renegotiate the price and renegotiate the terms. There are more next-level things that are going to happen and issues that may come up.
Now, good buyers have a nice contingency and construction budget. It pays to ask about their construction budget and their contingency because it's good to know that they're going to roll their sleeves up and renovate the place, and not just cross their arms and hope the cash flow comes in.
For buyers out there, make sure you have a healthy construction budget and a contingency of "just in case" money. That way, when you go to those interviews, it’s going to make that seller more comfortable knowing that you got a place to go for things that are unexpected.
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