My first multifamily deal: Jacob Blackett of SyndicationPro
Every investor’s story has a beginning. Everyone starts their portfolio with a first deal.
In this new First Deal series, we’ll dive into the very first commercial real estate acquisition made by successful real estate investors across multiple asset classes and strategies.
Jacob is the founder of several businesses including:
- SyndicationPro — platform to scale real estate syndications.
- Holdfolio — a real estate crowdfunding portal.
- Six10 Management — property management and construction.
Jacob closed on his first multifamily acquisition deal in March of 2017, syndicating a 46 unit project to 34 different investors. I asked Jacob to share his experience closing on his first deal and syndicating right out of the gates.
How did you decide to invest in multifamily properties?
I had been investing in single family rentals and fix and flips for a few years prior to purchasing my first apartment complex. I actually heard a podcast about apartment investing and that is what piqued my interest. After a few months of doing some research and meeting some multifamily operators, I decided to go look for a deal.
Where and when did you make your first multifamily acquisition as a principal?
We went under contract on our first apartment in Indianapolis in Dec 2016, we closed in March of 2017.
Tell us about the property.
It was a 46 unit in a gentrifying urban neighborhood. All 2 bed 1 bath units across two buildings on site. It was 50% occupied and neglected by the previous owner so it was a “heavy lift” as we spent about $15,000 per unit in total renovations. It was built in the 1960s, all brick with pitched roofs and boiler heat.
What was the business plan?
Our business plan was to renovate the exterior and interiors to achieve rent premiums of $200 per unit and then refinance within 3 years. We had the seller carry back 70% of the purchase when we acquired it. At the end of that three year period we decided to sell the property instead of refinancing, because it was just too small for our portfolio as we now purchase and hold 100+ unit complexes.
How many investors did you take on with that first deal?
We raised $685,000 from 34 investors.
Wow, 34 investors buying into your first ever multifamily deal. How did you accomplish that?
This was my first multifamily syndication, but far from my first syndicated real estate deal. In 2013, I saw the very first real estate crowdfunding websites coming online, and really liked the idea of raising money online through my website. So, I built out my website to do it and did my first raise online back in 2015: $345k from 18 investors to acquire a portfolio of 10 single family home rentals. I went on to do a dozen such portfolio deals before eventually getting this first apartment deal done.
Where did that online fundraising concept lead you?
In 2018 I saw some “investor portals” out there. I demoed a couple of them, and realized that the website I had built with Holdfolio to raise money online was better in many ways than those investor portal options. That was the light bulb moment behind SyndicationPro, and I pitched Ameet Mehta, a successful tech entrepreneur, to build it with me.
What is one thing you learned from that first multifamily deal?
When previous owners don’t invest the appropriate amount of resources into maintenance then you can inherit a LOT of deferred maintenance. We had budgeted correctly from an upfront capital improvements perspective, but could have done a better job of allocating more for an ongoing basis of high maintenance. The previous owners had put band-aids on everything, rather than fixing the real issues the right way. Now on similar deals we allocate 2 to 3 times as much to maintenance over the first 3 years of ownership to account for this ongoing liability. This gives you enough time to get this deferred maintenance caught up.
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