14,000 SF Mix Use Value Add Acquisition - Mount Airy Neighborhood of Philadelphia

[Stuart Udis]

Investment Info:

Other commercial investment investment.

Purchase price: $1,730,000
Cash invested: $560,000

14,000 SF 11-unit mix-use building consisting of 2 retail spaces and (9) second floor apartment units. One commercial space leased to credit tenant, the second historically operated as a restaurant but is currently vacant. The 9 apartment units will be turned over (leases are terminable with 60 days notice) and will receive new kitchens, bathrooms, in-unit laundry and general bldg deferred maintenance improvements. Contract price: $1.73M, "as is" appraisal: $2.1M, "improved & stabilized": $3.4M.

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

It is a well situated asset in the neighborhood in which I operate. The building represented good value and is consistent with my focus on $2M-$5M total cost projects where there is a lack of natural market participants in the Philadelphia market. The building is also within 3 blocks of more than $20M of for-sale housing to be built as part of my pipeline. Therefore, the vacant 3,250 SF corner commercial space will also provide for a place making opportunity that will benefit future projects.

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

Broker represented transaction. Relied on neighborhood track record to get to front of the line & took advantage of transaction space with limited market participants.

How did you finance this deal?

Construction Loan with at 80% LTC with $ 800,000 held back for construction and misc. soft costs.

How did you add value to the deal?

Value will be added by upgrading the apartment units to achieve market rents and securing a new tenant for the vacant commercial space.