Textile Factory Apartments - New Addition to Portfolio

[Brian Green]

Investment Info:

Large multi-family (5+ units) buy & hold investment.

Purchase price: $365,000
Cash invested: $91,000

8+ Unit Apartment Building. Property is an old textile factory re-purposed into 1 bedroom apartments and a small commercial space. Great living spaces in a rural market in Upstate NY.
Business plan includes cosmetic renovations including counters, paint, lighting, etc. Re-lease to qualified Tenants and stabilize the property within 12 months. Refinance and hold long term for cash flow.

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

Value captured at acquisition. Higher returns available in rural market. Character and construction of the building. Market knowledge having already invested in the area previously.

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

MLS listed. Negotiated through listing broker. Additional concessions achieved following due diligence and inspections.

How did you finance this deal?

Local bank financing. Interest only for first year. ARV set by appraiser with additional financing scheduled at stabilization to capture increased property value.

How did you add value to the deal?

Cosmetic renovations and professional management.

What was the outcome?

Project is ongoing.

Lessons learned? Challenges?

We cleared out all the existing Tenants and in retrospect there were a couple that we maybe should have kept in place to cover some ongoing operating expenses. They failed to meet our Tenancy Standards but we probably could have worked with them further as existing Tenants.

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

Brian Sheldrick, VP of Commercial Financing, Capital Communications FCU.