Commercial BRRRR in Galveston Texas

[Timothy Church]

I decided that I would like to keep a chronological record of my current project and share it with everyone. So here it is!

This is my new building on the corner of 27th and Market St in Galveston, Tx. It was originally built in 1957 for the ILA (International Longshoremen's Association) to be used as a lodge for their #1453 chapter. It is a mid-century modern building consisting of metal-framed structure which is enclosed in terra cotta hollow tile bricks. It had the lodge upstairs with 2 offices, a kitchen, and bathrooms. The downstairs consisted of an apartment and 3 commercial spaces.

The previous owner purchased the building from the ILA and transformed the upstairs into a massive model railroad museum! It was an impressive sight! Here is a virtual tour of the upstairs showing all the work he had done.

Here is the plan!

This project is going to be a commercial house hack/BRRRR project. The upstairs will be divided into a personal residence as well as 2 apartments. Downstairs will be made ready for the 3 commercial tenants and I will be using the downstairs apartment as an office/hang out space. I purchased the building on October 10th for $310k. At that point, the appraiser said the as-is value was $510k!! He also said after build-out but before performance (ie tenants) the building would be worth $850k. My current renovations budget places the rehab at around $315k. I am going to try to get the value up to the level of being able to refi and pull out all my cash.

While this is happening, I will also be renting out spaces to tenants. I will have the 3 commercial spaces available first. These spaces range from 845 to 1040 sq ft and will be rented for between $1,000 to $1,200/month. There will also be two Airbnb apartments upstairs which will be catering to tourists coming in for event downtown as well as cruise traffic. They conservatively should bring in $1,500/month each after expenses. Between these spaces, I should be able to bring in roughly $6,300/month. Currently my burn rate for this property $5,000/month before utilities for my spaces! 

I'll be posting regular updates to this thread with photos of what is happening and the plans! I will be posting quite a bit now to catch up on the last month. Would love to hear everyone's thoughts!