A Piece of Omaha History - 5th Avenue Apartments

[Owen Dashner]

Investment Info:

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

Purchase price: $1,835,000
Cash invested: $450,000

This is one of my favorite properties that I have ever bought. 31 units, originally built as a hospital, converted to a hotel, then finally converted to apartments in the 1980's. Units are all electric and have individual panels, water heaters, and HVAC systems. The property was owned by a non-profit and kept in great shape, but under rented. I won a bidding war to land a great deal. It has an elevator, a penthouse suite and also comes with a parcel of land that has a billboard.

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

This property is on the historic registry and is right in the heart of midtown Omaha in the path of progress. The existing rent roll was $20,000/mo. at purchase, and we have since already increased it with some lease renewals.

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

This property was being marketed as a development deal of an entire city block. The other 2 parcels were a large office and a small office, of which I wanted neither. I waited until they opened each parcel up to offers before I jumped in and made a strong offer. They were asking $1,695,000. I ended up using an escalation clause with me beating the next highest bid by $10K. I won the bid at $1.835M.

How did you finance this deal?

I used a commercial bank with 75% LTV, 5 year fixed, 25 year am at 3.5% interest. My downpayment was 1031 exchange proceeds from another property I had sold a couple months back.

How did you add value to the deal?

There are all kinds of value add opportunities on this one. The units are under rented by about 15% across the board, and there are no utility or CAM billbacks in place. We will be increasing rents organically upon lease renewals, plus doing cosmetic upgrades to force additional rents, as well as implementing some RUBS to add more to the NOI.

What was the outcome?

It is still a work in progress, but this should be a cash cow within about 18 months.

Lessons learned? Challenges?

Tuck pointing, flat roofs and elevators are not cheap. I had minimal experience with all of them. Large price tags!

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

Stephen Ward with Exceptional Properties Group

[Dmitriy Fomichenko]

Nice! Congrats @Owen Dashner !