Swope Ave - C Class Value Add Apartment Project

[John Galloway]

Investment Info:

Large multi-family (5+ units) commercial investment investment in Colorado Springs.

Purchase price: $740,000
Cash invested: $190,966

Project IRR (without fees) as of refinance in 2022 - 84.54%

Equity multiple as of refinance in 2022 - 2.6x

This was a value add real estate project located in Colorado Springs, Colorado. We acquired a C class multifamily building, implemented a new property management strategy, conducted whole property renovations, and ultimately refinanced with a local lender for a profitable return. My role encompasses overseeing the project's acquisition and diligence and ongoing property management.

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

We've invested in several types of deals like this where the current ownership just isn't getting the most out of the asset. We had purchased another project from this owner and they were ready to move on from this one as well.

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

This project was listed on the MLS, however, there wasn't much interest in the broader market. We negotiated through our agents.

How did you finance this deal?

We used a local debt partner who had funded other similar deals for us.

How did you add value to the deal?

We remodeled all the units and replaced the current tenants who were causing trouble.

What was the outcome?

We added value and refinanced before rates went up.

Lessons learned? Challenges?

C class properties that have been badly managed are a real mess to clean up, however, they provide a great value add opportunity. If you are willing to really roll your sleeves up, you can make money.