Unique Change of Use - Office to 4 Unit STR/Airbnb Near Beach

[Ian Brown]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $657,000
Cash invested: $200,000

Unique Adaptive Reuse Project - Office to 4 Unit STR/Airbnb

This was purchased with existing office tenants in place and renovations are ongoing. Property will be converted from office to STR/Airbnb and should be fully-functional vacation rental/STR by summer of 2022

What made you interested in investing in this type of deal?

I own 2 vacation rentals a few blocks away and this was great opportunity to add 4 units in a creative way

Most investors didn't identify zoning allows STR vacation rentals and the property is already nicely configured for residential with 4 x 500sf units, which will become small 1 bedroom Airbnbs

How did you find this deal and how did you negotiate it?

Slowly and painfully, but eventually got to purchase price both parties could tolerate.

How did you finance this deal?

Private lender (physician) lent the entire purchase price and I will cover all rehab.

How did you add value to the deal?

The change of use! Office to Airbnb/vacation rental

What was the outcome?

Ongoing - should be ready for guests late summer 2020

Lessons learned? Challenges?

This project was hard to finance b/c it's an office and lenders were having trouble with engaging resi appraisers to handle this valuation of an existing office bldg.

Ultimately, I solved that issue by using a private individual for purchase loan.

Also, b/c this is "commercial" in city code, I have to use architect to draw everything for permitting and approvals and will likely need to add fire sprinklers to the bldg.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Brokered on my own behalf