Redevelopment play - medium hold

[Niles Emerick]

Investment Info:

industrial investment investment in Denver.

Purchase price: $201,000
Cash invested: $20,000

Large Parcel including two structures, one single family home and one small industrial warehouse currently housing an auto paint booth. Tenants were in place when I purchased. City has the area identified for future redevelopment, so it is a medium term buy and hold for an exit to a 8-story developer, or a lower scale townhome project.

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

Knowledge of the city's plans and future opportunity.

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

Found the property on MLS, identified incorrect lot size in the information and multiple structures which led to a quick move to acquire. Listed at 200k, offered 1k over ask to incent quick acceptance.

How did you finance this deal?

Private financing 80/20 - with half of the 20% coming from a 401(k) loan. Refinanced a year later with a local business bank.

How did you add value to the deal?

Increased rents. Deferred Maintenance.

What was the outcome?

Still holding, lots of 8-story rezoning happening all around within the block.

Lessons learned? Challenges?

The risk was worth it. Insurance on a mixed use property including retail and residential is tricky and expensive.