RG 084 -The Ultimate Step-by-Step Guide to Closing on your first Multifamily Deal with Jason Yarusi
About Jason
- Jason owns and runs WA Building Movers and Contractors Inc.
- Jason is the host of the REI Foundation podcast
- Jason invests mainly in the Kentucky market.
Nuts and Bolts
Jason is a business owner and real estate investor; he owns and runs WA Building Movers and Contractors Inc which is a house raising company that serves homes in flood zones in new Jersey and New York. He is also the host of the REI Foundation podcast and his current investment portfolio boasts 4 fix and flip homes, 3 beach summer rentals and one 94 unit complex. His family has been in construction for 5 generations doing heavy rigging moving and lifting houses, however he wanted to develop other revenue streams. Jason invests in property in Kentucky, Louisville because you get so much more for your money than in New Jersey. In NJ you can spend $100,000 per unit and get $1200 in rent whereas in Kentucky you spend $25,000 per unit and make $500 in rent. He focuses on B and C class assets and takes advantage of mom&pop places with low efficiency where the rent can be increased quickly. When starting to invest in Louisville he reached out to people on the ground who could help, and he found people through Bigger Pockets who could help advise him on the right areas to invest in.
Increasing NOI
Once Jason knew what type of property and the area for investment in Louisville he called local brokers and property managers and found a 94 unit complex after a 6 month negotiation. It’s in a blue collar neighborhood with a strong rental market. The original owners had left the property to operate with no interference so the rent was under market level and the units needed some renovation. This meant that it was easy to increase the NOI; the laundry room was being used as storage and the residents were keeping pets but not being charged pet fees like all other complexes in the area. Jason organised the maintenance of the property and implemented a water efficiency programmer to save the tenants some cost on water bills and he also upgraded the boilers.
Making an offer and due diligence
Once the offer has been accepted there is 30 days of due diligence, Jason recommends that you add a clause to the contract stating that the 30 days only start after receiving all items on the due diligence list and that you have given them written notice that the items have been received. For example items like all accounts and maintenance figures, if you don’t receive these till 2 weeks into the due diligence time you won’t have enough time to examine them properly. Also during this time make sure to walk all units in person with the property manager, check the roof and add to the contract that all units should come ready to rent. By adding this the seller will have to fix any broken safety issues for example broken hand rails or fractured concrete.
Capital and agency debt
Jason brought in approximately $700,000 outside money for this deal and he admits that he should have started earlier when raising money because lots of people jumped in and out. He used agency debt for the loan from Fannie Mae 80% loan and 20% down payment and rolled CAPX into it on a 7 year term and interest rate at 3.9% although the rent can change each month depending on libor. Jason advises all new starters into real estate that when jumping up to a large property make sure you have a good team and mentors around you.
Top tips
- Most important habit – Get up early and work out
- Most influential person – Trevor McGregor
- Most important tool – His business partner Kevin
- Most importantfailure – Not taking action
- Contact – info@oakcappartners.com
