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Writer's pictureJohn Casmon

How I Closed on My First Large Apartment Complex


Recently, we closed on a 192-unit apartment complex in San Antonio, Texas. This is by far our largest deal to date and I’ve had quite a few people ask me how we were able to acquire such a large deal. Before I can answer that question I have to dispel a myth about how large deals like this are done.

I used to think that large apartments were owned by the super-wealthy. I mean who else can afford to buy a multi-million dollar apartment complex? Well, the truth is larger deals are usually purchased by a group of investors, often in what is known as syndication. In the simplest terms, syndication is pooling together resources to acquire an asset. While it may seem intimidating to buy 192 units, the reality is when you pool together resources - including money, time, knowledge, and relationships - it can easily become a more practical investment.

The way we set it up is by creating an LLC, which divides the roles and responsibilities into General Partners and Limited Partners. The General Partners manage all aspects of the property from the acquisition, securing financing, hiring and managing vendors and overseeing operational performance. The Limited Partners invest passively and receive profits from the cash flow and liquidity events such as a refinance or sell. This means that if you love the idea of investing in multifamily, but hate the idea of dealing with tenants, you can now invest through these private offerings and get all the advantages of owning apartments, with none of the hassles!

Now that we’ve established how these deals actually come together, let’s talk about how we actually made this one happen.

1. Partner With Others

We developed a relationship with like-minded investors who happened to be focused on opportunities in San Antonio, Texas. I love the Texas market as a whole and San Antonio was no different with strong population growth, employment growth, warm weather and no state taxes. Over the greater part of a year, we stayed in touch with the other investors and as they got closer to getting a deal under contract, I offered to partner with them to aid in due diligence, marketing and raising capital.

One truism for real estate investors is we are ALWAYS looking for deals and capital. Once you have one, the urgency to find the other becomes immense. The same was true here. My partners had the deal, but needed to come up with more than $6 million dollars and when they decided to take me up on my offer, it was time to get to work.

In the rest of this article, I’m going to share some of the tips, along with the challenges, I faced when speaking with potential investors about this deal.

Our partners have written great articles recapping their key lessons and takeaways, which delve deep into how we won the bid, along with financing, underwriting and capital raise. I encourage you to check out for more details on this deal.

2. Know the Market, Know the Deal

I’ve spent the bulk of my time focused on Chicago and Cincinnati, but was familiar with the strong economy in San Antonio. However, I needed to better understand the market, submarket, data and this specific deal.

Since I came into the deal after it was already under contract, I asked a lot of questions on the assumptions made and verified the info through my own market research. I specifically wanted to confirm that the underwriting was conservative so I verified renovated rents of comparative apartments, along with the additional income projections from new amenities. Once comfortable with the underwriting and projections, I was ready to start my investor conversations.

3. Be Yourself, Be Open and Be Honest

When speaking with potential investors, it’s important to present the opportunity, not to sell someone on a deal. Ultimately, we’re looking to help investors reach their financial goals by simply pairing them with an investment opportunity. Granted, there is a sense of urgency to raise the necessary funds (over $6 million in this case), but you never want to appear desperate.

I received a lot of questions on the partners, the property, and the projections. I answered all of them as openly and honestly as I could. I did not wing it. I did not make up facts and if I did misspeak, I made it a point to correct myself. Again, this is NOT a sales pitch where you're solely focused on closing.

I made it a point to tell everyone what excited me about the deal and also the things that concerned me and how we were mitigating those risks. I also invested in the deal, along with the other GPs so investors liked that we had skin in the game.

4. Follow Up & Understand Objections

In various investor conversations, many people were clear on their interest level upfront. However, some investors were more on the fence. No matter where they stood, I shared as much info as possible through email, phone calls, marketing presentations, webinar, and in-person meetings. I spent this time presenting information and answering questions. I shared info until someone told me they were not interested and even then I asked if they would like to continue to receive updates. My goal wasn’t necessarily to get someone to invest in the deal, but to get them comfortable with me, comfortable reviewing larger deals and interested in learning more.

Those who were hesitant cited unfamiliarity with the market and the experience level of the GPs. I shared multiple reports and data on the market and explained why the market was a great fit, but on the experience, that’s tough to change. While the team controlled over 1,000 units in real estate, the GPs had not been through a full cycle including disposition. However, our experience was supplemented between our broker, lender, property management and mentors. In fact, our mentor’s partner, who has acquired over $150 million in real estate in 2017 alone, personally guaranteed the loan on this deal.

While this put most people at ease, some still expressed concerns on the current cycle in multifamily, while others had differing investing criteria. This was great to hear from potential investors, not to try to sell them on this deal, but simply to understand their concerns. Understanding objections provides an opportunity to clarify and provide additional information so the investor can make an informed decision. Again, this is not about selling, but presenting investment opportunities to help people reach their personal and financial goals.

So how did I close on 192 units?

So how did I close on 192 units? I partnered with others and together, we raised the money for the deal. Not really the earth-shattering, innovative response you were expecting was it? Well, the truth is when you break it down it’s simple, very simple, but definitely not easy.

Doing my first large deal was certainly a learning experience and while I often speak with experienced syndicators, who have provided guidance and tips, nothing can prepare you like actually doing it. At the end of it, we raised the funds needed and are positioned to convert this apartment complex into a great living community and cash-flowing asset for our investors.

The day we closed was a momentous day, but it really marked the beginning of the true work to deliver for all the investors who believed in us. We are already on our way rebranding the property, launching a new website and hosting our first community event with residents so they can get to know the new staff. We’re excited to deliver on this project and can’t wait to get going on the next one.

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