10 Unit Rehab; Project Discussion

[Wesley Sherow]

Good Day BP Community,

I wanted to share the progress on a 10 unit rehab in Albany, New York. Here's the deal details: 

Purchase Price: $730k
Location: Albany, NY
Layout: 6, Two Bedroom Units, 4, Tiny One-Bedrooms
Budget: $100,000, Renovation & Improvements

When we located the property it was owned by a local business owner. We ended up discovering that instead of giving his employees raises, he rented apartments to them and gave them discounts on rent. While it made the acquisition a bit of a better deal, it really made it hard for tenants when we took over. 

The Challenge: Among the 10 total units 4 were already vacant, and one tenant was allegedly using/dealing drugs. The one bedrooms were far too small for a high class of tenant. Two bedroom rent prices in the building were going for under $800/month, and one bedroom rent prices were notably only about $600/mo. 

The Road So Far: Two of the vacancies were of two bedroom units. We renovated cosmetically, and did some minor structural by taking the wall down between the kitchen and living room to open up one giant space as is the current trend. Those units have been rented for $1,585/month each, or nearly twice the original two-bedroom pricing on the building. The one bedrooms had a similar treatment except that they were entirely gut renovations. We demolished nearly all walls except the bathroom and opened them up to massively sized studios. Interestingly, the new renovation is constituting rent prices of $1,100, or nearly again twice the original value of the units. 

All-in, we've spent about $80,000 on the renovation of these total 5 units, and have raised the monthly rent income of these 5 units from $3,400/month to $6,470/month. This amounts to an increase of $36,840/year, or at a 7% cap rate, $526,000 in value on the total worth of the building! 

Our goal is to refinance in Mid-2022, and renovate any other units that vacate along the way to further transform the building from a Class C to a Class B+! 

If you want to hear more about this project (in fact it's my first done with a group of investors) reach out and i'll be happy to chat!