Kansas City Mixed Use, Commercial BRRRR

[Logan Freeman]

Investment Info:

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

Purchase price: $775,000
Cash invested: $850,000

Contributors:
Lucas Taylor

In one of the hottest areas of KC Crossroads this is a 12,000 sqft commercial building. It has 3 floors. I secured a LOI from a tenant before we closed the property for $17 NNN plus utilities for 3,750 sqft on the main level and $8 a sqft in the basement. We are building 2, 3 Bedroom AirBnB's in the lofted space which should bring in $100k each, gross, conservatively. This is a 9CAP, 13% COC return. I sold the appraiser on the future value and it appraised for $1.6MM.

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

The higher barrier of entry and more complicated projects like this weed out competition and produce juicy yields. Commercial BRRRR is a niche we are focused on dominating in KC.

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

Off market, through my consulting company and my network, I was introduced to the property owners. It was a very long and complicated negotiation, took 3 months and included 2 elderly sisters that were not on speaking terms. J Scotts negotiating book and Chris Voss's were very helpful!

How did you finance this deal?

Community banking relationships - using a construction debt product.

How did you add value to the deal?

I secured a LOI from a tenant before we closed the property for $17 NNN plus utilities for 3,750 sqft on the main level and $8 a sqft in the basement. We are building 2, 3 Bedroom AirBnB's in the lofted space which should bring in $100k each, gross, conservatively. This is a 9CAP, 13% COC return. I sold the appraiser on the future value and it appraised for $1.6MM.

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

Myself