Update on our 20-Unit Apartment

[Tony Castronovo]

Not sure I have updated y'all in awhile, so here goes.

- Closed on the property at the beginning of August 2018

- Completed exterior and mechanical improvements, including new TPO roof, new HVAC systems, several concrete balcony/landing replacements, and new paint (HVAC systems and roof were at the end of their useful life.  Negotiated 50% of the combined costs at purchase).

- Completed 7 of 20 interior renovations, with 2 more planned to be completed at the end of the month.

- Cleaned up the property, including overgrown bushes and trash.

- Removed all undesirable tenants.  All tenants were/are on month-to-month leases.  We can remove any tenant with just a 30-day notice.  We did have to evict one tenant who just would not leave.

- Placed our first tenant this month into one of our newly renovated units.  $200/month increase from the prior rents.

We originally planned to take about 15-18 months to renovate the property, keeping occupancy high during the process.  But a few things we learned right off the bat:

- Repairs and maintenance were killing us as the previous owner never did a thing and was the "king of cob" as the tenants pointed out.

- We had a rough crowd at the community.  Tons of smokers, loitering, cussing in public, and even a couple situations that made the local news (tenant through a TV off the second-story balcony, then the next week drove his car into one of our contractors trucks and threatened him with physical violence...4 police cars on the scene).

- New desirable tenants do not want to move into an apartment complex and pay market rents when it's still a dump

So we accelerated the entire process.  The downside is that occupancy is really low right now.  But our loan has 12 months interest only, so we figure it's a little easier to manage the lower occupancy now, get the place cleaned up, and hopefully see that proverbial hockey stick kick in soon.  Our big goal now is to fill units....but we are at the slow time of the year.  We may need to drop our rents a bit until we get past the winter months.

PM me if you'd like a link to our website to check out some of the finished units.  If interested I can share some of the before photos as this place was a train wreck, including a hoarder who took two full size dumpsters to clean out trash from her unit. Ceiling was caved in due to roof leaks, etc.

Here are a couple teaser before/after photos: