Ups & downs of transforming a shop into residential

[Erwin Groenendijk]

Investment Info:

Single-family residence fix & flip investment in Valencia.

Purchase price: $70,000
Cash invested: $50,000

Contributors:
Adrià Creixell

A former local butcher shop that is being transformed into a beautiful, spacious, light apartment where the old characteristics are being maintained. The apartment is located close to the popular neighborhood Ruzafa in Valencia (Spain), a hip area with a lot of bars, restaurants, and charming artisan shops. The close proximity to Ruzafa is going to be one of our main KPI's to sell the project for the right price.

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

The fact that we bought the property as a former local butcher shop meant that we could buy the apartment for a less expensive price then what is asked normally for a project of this size (100 sqm) and in this Ruzafa neighboorhood of Valencia, Spain.

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

Via a trusted agent of us in Valencia. Listed at 82.000+ we first offered 68.000 after which agreeing on 70.000 in our second offer. Our strength was that we offered all cash and the availability to move immediately. Even though there were other offers, this gave us the advantage of winning this deal.

How did you finance this deal?

We financed this project through our investment community My Blue Bricks. Within My Blue Bricks, we are publishing group investment projects in which our community can take part in. There was a lot of excitement for this project, and within no time we had the amount together. We also always try to invest ourselves +/- 25-50% of the investment amount. This is because we believe in each project we move forward on, and we know that there is sufficient ROI potential to be made participating.

How did you add value to the deal?

Maintaining the old rough characteristics of the apartment, creating a completely renovated modern apartment with light from both sides coming in. An inner lounge patio, a kitchen island, and big crystal slides doors are just some of the highlights of the project.

And we managed to even get a 100 EU for selling the old grinder of the butcher shop second hand! If that is not a deal, what is?

What was the outcome?

We managed to negotiate the buying price for the local commercial shop down to 70.000. Currently, with still having one month to go before finishing the project, we have put 50.000 in for renovations, taxes, commissions, and homestaging services. Especially driven by the homestaging part, we are expecting to finalize the renovation and immediately sell the apartment within the upcoming month in May 2019 for a price of 160.000. This is leaving us with a net profit amount of around 40.000.

Lessons learned? Challenges?

Dealing with licensing for being able to officially transform the local butcher shop to a single-family residence.

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

One of our local agents in Valencia, Spain. Highly recommendable. Reach out to us if you would like the contact details.