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  • Writer's pictureVivek Sagi

Recap of our first deal in 2021

On February 9th, we closed on our first deal for 2021, in Austin. We purchased three separate apartment complexes with a total of 127 units. We are rebranding them to operate under a single brand called "The Cameron".

2020 was a very slow year for us and across the industry. We vetted over 100 deals and got selected into the final three for many properties. However, we retained our underwriting discipline and did not chase deals. In fact we walked away from over $300K in our personal capital from one deal, which I discussed in an earlier blog post.

We are excited about the value we can unlock with this acquisition and are confident of delivering very good returns for our investors with this property over the next three years.

As we always do after a closing, we spent some time on a retrospective to reflect on our acquisition process. Here is a summary of our takeaways that we plan to apply to future deals:

  1. Austin's growth is for real - We are seeing very high interest from investors to invest in multi family real estate in Austin. In fact we were significantly oversubscribed on our equity raise and had to scale back investments to fit most of our investors into the deal. There is also a large number of buyers in the market making it extremely competitive. We do hope Elon would stop tweeting about Austin being the next boomtown, so that we can manage our traffic amongst all this market froth, but that genie is out of the bottle.

  2. Relationships matter, even more than before - We were able to land this deal because we had built very good relationships with the broker working on this deal. While this was the first deal we had closed with this broker, we were a know entity to them. Over the last several years we had looked at many deals from them and had come close to landing a few. In every interaction with them we were transparent about how we were underwriting it and what we would and would not do. As they saw us perform on other deals they gained confidence in us. When it came time to recommend us to the buyer, they had confidence that we would close and be easy to work with. All because we treat each relationship as a permanent one that is independent of any particular deal.

  3. Local expertise matters - We know the Austin market very well and also have an incredible relationship with local property management, maintenance and operations teams. Part of the reason we were able to land this deal was because we were able to complete thorough inspections, due diligence and appraisals within 2 weeks. This gave us an advantage compared to out of town buyers who were willing to pay more but could not move fast.

  4. Be patient. Act fast when you find value - We were excited about this deal from the moment we toured it. We were very familiar with the area and the opportunity before we even stepped foot on the property. However, we did not like the initial price and decided to not pursue it. Then a few months later this came back on to the market. For the first time in more than eighteen months of looking at deals in Austin, we saw units listed for less than $100K a door. As soon we saw this we knew there was a lot of value to be unlocked. We jumped in with a strong offer and built a relationship with the seller to create confidence that we could close quickly.

2021 is shaping up to be a very busy year for us as we already have two more deals in the pipeline. Look forward to applying the takeaways from this acquisition and sharing new takeaways from future acquisitions soon.

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