Value Add Multi-Family on Vancouver Island, BC Canada

[Brandon Lawson]

Investment Info:

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

Purchase price: $8,000,000
Cash invested: $1,000,000

We currently have an accepted offer of 8M for 126 units in Duncan BC with a 2-year closing which will allow us to renovate the building (w/construction loans) and increase the value prior to refinance. We have implemented a unique tenant upgrade package for the existing tenants that have already increased the average rental income substantially. Upon stabilization the average rents are projected to be approximately $1000/month which should achieve a projected after repair value of 18M-20M

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

We have specialized in value-add multi-family over the past few years and have had a lot of success stabilizing underperforming assets. We've always been interested in projects that allow us to use creative strategies that see significant lift in the first 1-2 years of the project.

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

This deal was brought to our attention through an acquaintance who has known the owner for some time. Guy Bouchard (President of Top Down Investments) presented a creative option to the seller that was originally denied. It was about 2 years later that he had approached him for a second time and presented a creative option that would allow us to pay the seller more than the average buyer could in this market and make him some interest on lending extra capital to the project.

How did you finance this deal?

We are using a strategy that we call the TDA (Top Down Approach). This is where we secure the property at todays value with an extended close and the right to purchase at any time within (1-2 years typically). We then proceed with the stabilization of the building (pre-close), which brings us to closing on an already stabilized asset at its new market value.

How did you add value to the deal?

We are using a tenant upgrade plan that allows the existing tenants to pick between multiple options each associated with different levels of new lease amounts. The majority of the lift from this particular building will come from the re-build of 32 units that were damaged in a building fire and an additional 20 units that were sitting vacant.

What was the outcome?

Still in the process and going very well. Tenants are happy with our unit upgrade plan which as allowed us to add approx. 2M in value to date with a lot more lift to come over the next 1.5 years as we stabilize the entire building.

Lessons learned? Challenges?

Will be revealed at the end of the project!