Big Deal - Does anyone Invest in RE
Does anyone invest in real estate...
Well, I work for a very small company that purchases distressed debt and they usually ask me if I have any capital so I can participate in deals. We usually laugh after they ask me because they know I am student and I could not afford to invest.
The smallest deal we have worked on... If I had the capital, I would want to invest in deals similar to this:
- 22 loans secured by multi-family properties in one area
- 10M+ in UPB
- 1 lender, 1 borrower
- 14 days due diligence
- funding provided shortly after by way of equity
- purchased from lender within last 30 days of final foreclosure proceedings
- slightly less than 3M paid for the notes
~ 60% of properties occupied at time of purchase
Owner stopped paying lender, lender wanted to sell the loans, receiver put in place, lender sold, foreclosure is finalized, receiver out, investor takes possession, investor fixes properties, rent some sell some.
Where is the value add?
one off some properties
fix properties-collect rent
Current Value ~ 6.5M
So, in summation you're looking at roughly 136k per property(obviously each property has a different value, but lets take a look at avg.) One of the properties sold for ~280k.
The rents in this particular area are extremely high.(figures not included)
I can go on and on, but this was the gist of the deal. Many variables left out. It's pretty interesting to work on distressed deals. Every situation is different. The valuation is not hard, but strategy, due diligence and great lawyers are key.
Not sure if you guys would consider 3M a large number, but its a big deal to me. Small deal to them. Not afraid to say it, I love this stuff