Awesome Apartment Reposition!

[Mitchell England]

Investment Info:

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

Purchase price: $555,000
Cash invested: $44,000

This property is a 16 unit complex, including a 10 unit converted motel, two one bedroom single family homes and two duplexes. Day one, the property was in terrible shape. The current owner/manager was very behind on maintenance and did not background check her tenants. Leaks, bed bugs, felons and drugs!

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

It was the perfect reposition. The property was in very bad shape, but the purchase price offered great cash flow from day one. We knew that by renovating the property, we could increase cash flow as well as increase the value of the asset.

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

This was an off market deal, found by cold calling the owner/manager. The initial offer price was good, but we did negotiated further based on the inspector's findings.

How did you finance this deal?

The deal was financed through a local bank (Columbia Bank) in Hood River, OR. The portfolio was financed in two stages. We first purchased 12 units, with a renovation budget. Once we were completed with the renovations, we refinanced the 12 units and acquired the neighboring 4 units with 0 out of pocket. There was a lot of meat on the deal, so the bank was very willing to make it work!

How did you add value to the deal?

We added value in a number of ways! Our first step was to put the property under professional management. Our management company ran background checks and drafted new leases for the existing tenants. We then began renovations on the vacant units as well as the exterior of the building. The goal was to fill vacancies as fast as we could, while also increasing the curb appeal. This included exterior paint, landscaping, signage, removal of an old carport, garbage cleanup, etc.

What was the outcome?

Today, the complex is a respectable place to live. It is both visually attractive as well as clean and safe. Financially, we have greatly increased cash flow and the overall property value as a result. It is a great asset to own and continues to spin off attractive cash flow.

Lessons learned? Challenges?

Everything takes longer than you would expect. Contractors are busy, property managers are busy, people move in slow, move out slow, etc. Patience is the game when you're trying to change the course of a big ship!

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

Columbia Bank in Hood River, OR. Coldwell Banker Management Company Goldendale, WA.