Brooklyn 2-Family to 8-Family Conversion

[Fahad Rajput]

Investment Info:

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

Purchase price: $1,000,000
Cash invested: $3,200,000

A development deal converting an existing two family structure to an 8-family structure comprising of 6,000SF.

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

A developer seeks for value add opportunities in real estate. This is a deal where we were able to quadruple the livable units! Talk about value add.

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

This deal was presented to me by another developer that I have done a JV with before. He was a bit cash-strapped and I ended up buying in to the project mid-construction.

How did you finance this deal?

1. Through my private equity firm. To learn more about is, you can visit blacklistcapital.com
2. Through a hard money loan

How did you add value to the deal?

Converted 2 units, built up 2.5 more stories and turned it into 8 units.

What was the outcome?

Pending.

Lessons learned? Challenges?

1. How to navigate stop work orders during a pandemic - takes very long.
2. Cost-benefit analysis with some risks
3. New regulations for construction due to pandemic

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

Just a co-developer and my attorney.

[Fahad Rajput]

Originally posted by @Aaron Gordy:

@Fahad Rajput That sounds like a very good opportunity that you capitalized on. How long was the process? I hope it turns out to be very profitable. Are you going to keep it as a rental? 

This is an 18 month project overall since we purchased it with approved plans. I however bought in mid construction so expect it to be about 9-10 months total for me. The plan is to sell as a performing asset right after.