10 Steps to Acquiring a Multifamily Property

Recognizing the quality of a deal is key to successful commercial real estate investing. It is more than finding an available apartment complex in a good location or negotiating a better price.

At Sunage Equity Capital, our ten-step buying process views every deal through a conservative lens giving us the tools needed to identify those with the highest potential for above-average returns.

• Establish our criteria: We focus on stable regional markets with high population growth and major employers with expanding operations.
• Assemble a buying team: Our acquisition team includes local specialists such as commercial real estate, mortgage, and insurance brokers, along with a real estate attorney.
• Search for Deals: Partnering with local agents, we search for properties within our preferred region based on our criteria.
• Analyze potential deals: Property analysis starts with comparing the property with the established criteria. Those passing the standards test are evaluated for value add projects that could increase revenues and drive appreciation. Stress-testing, using proprietary software, helps uncover how the property will likely perform under various scenarios such as rehab cost overruns, changes in economic conditions, and other events that could impact investor returns.
• Property tour: An in-person tour allows us to evaluate our assumptions and get a first-hand account of the neighborhood, the property’s condition, and its current operating structure.
• Submit an offer: If we do not identify any red flags that would preclude successful ownership, we make an offer by submitting a letter of intent (LOI). The LOI is a non-binding agreement that demonstrates our interest in the property.
• Negotiate a contract: If the current owners accept the LOI, we negotiate the terms of the agreement, which include the final price, deposit requirements, and closing timeframes. Closing generally occurs within 60 days, but most contracts allow for one or more extensions.
• Due Diligence: Once the contract is in place, we have two to three weeks to complete our final due diligence, including inspections and assessments by third parties.
• Securing financing and raising capital: With the contract in place, we begin the process of securing a mortgage and raising money. The syndication allows investors to pool funds to meet the down payment requirements. Investors interested in the deal can review the projections and meet with Francis Aniekwensi to discuss the opportunity and answer questions.
• Close the deal: With financing in place, we are ready to close on the property. Investors contribute as part of the down payment capital required to secure funding. While hold periods typically run between five and seven years, monthly or quarterly distributions often begin within 12 months.

Learn more about our approach to finding profitable properties on our website.

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