All Forum Posts by: Chris Blackburn

Uri- We are in a similar position.  How are you structuring the project?  

Building Apartments in theTreasure Valley?  

Looking for a recommendation for 2 100+ unit newer apartment projects in Eugene Oregon.  One is university housing specializing in upper-end one-bedroom units, the other is mixed luxury just a bit away from the University.  One recommendation was Greystar.  Does anyone have any other top-notch management company they would recommend or experience with Greystar?

Entitlements are buying time.  I am involved with overpaying on a 114 unit apartment project that we are closing on that I should be able to build in 90 days. (DD coming up)  It was sold to me as permit-ready- (it was not).  The land was originally purchased for $500,000 and we believe they spent an additional $100K on it.  We are in contract for $1.8M.  They have an appraisal at $1.6- Those are some nice numbers.   

I think there is a formula but it would be based on how far the entitlements go.  The value of 3 acres zoned multifamily vs 3 acres that has full entitlements (meaning you just go to the city to pay permits and start building) is significant.   I would estimate that it could double the value of the property.  At $200,000 an acre for flat zoned RM with no entitlements to $350-400K per acre with.  A couple of ways to look at this is the price per door.  Raw RM land flat may be worth $8,000-12,000 door-  Fully entitled could push this to up, fully entitled with approved plans could push this up to $16k-$24,000 per door.  Then you have to look at the density allowed.  (We see 20-24 per acre in my area)   Different when you are doing urban infill with residential highrise.  (different beast)  I am a good meat and potatoes builder on the apartment side.   Nice finishes- Nothing fancy, just what the people want.   

Investment Info:

Retail buy & hold investment in Salem.

Purchase price: $1,200,000
Cash invested: $6,000,000

This was purchased in 2018. It was 4 acres rectangle-shaped and 11x gable style buildings. A total of 39,000 sq ft of rentable space all pushed to the back of the property line. This allowed for additional development of the front space on a major road in Salem (Lancaster). https://youtu.be/PAzL5SxWd4s

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

Upside, extra land, lots of infrastructure in place

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

Loopnet, had been for sale for a LONG time- Really ugly

How did you finance this deal?

Cash

How did you add value to the deal?

updating the existing buildings and building new units I think the best option would have been a self-storage conversion. However- we decided to reface the fronts of the buildings and add glass roll-up doors. The first phase was expensive and the parking lot was expensive. We ended up building a commercial Sherwin Williams building in the front. Currently, we are building a C-Store, brewpub, and 2 spec buildings

What was the outcome?

We will know when the 2 spec buildings are leased. They have small units with great frontage- Looking at $2 a foot NNN. Should have $3M in equity in 3.5 years

Lessons learned? Challenges?

Really plan what the City/county will need when you develop. Costs and changes are expensive and painful.

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

AJ Nash Tradition Real Estate Partners Troy Willis Willamette Valley Bank Owen Construction

Investment Info:

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

Purchase price: $60,000
Cash invested: $340,000

www.KeizerMetro.com New build in Keizer Oregon. 13 apartments, 5 offices/salon/retail units. Ground-up constructions We were the developer, contractor, investor.

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

The land was priced too well to pass up. On a major road in Keizer ready to build.

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

Sat forever because it looked too complicated with entitlements/easements.

How did you finance this deal?

Cash and increasing the value of the project after entitlements increased the value of the bare land. Working with the bank to not fight seasoning the project (Good relationship with the bank) Being the developer and GC and the finance side really helps.

How did you add value to the deal?

Bringing our team in for land use, apartment design, entitlements and construction reduced the risk and offset the costs. Since this was our proforma and data used form existing projects our numbers were accurate. You always have to compensate for changes (increased cost) in the market. What worked in 2015,2016,2017 will crush you in 2020/2021. Local projects and local contacts really helped us meet our goals.

What was the outcome?

A project built on time and on budget

Lessons learned? Challenges?

Production style building may the best way to keep costs down. This project was unique and would be difficult to reuse the exact plans. Our future projects are going to be more streamlined and conforming. As this was an 18 plex- our future projects will take 1x 18 plex and use the same design and footprint. Repeat this over and over, the subs understand the exact costs, surprises, and improved timeline. We get a faster project, a better price, and incrementally improve the process.

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

For Commercial real estate in Salem and the surrounding area, AJ Nash Tradition Real Estate, www.traditionrep.com Troy Willis (commercial lender) Willamette Valley Bank or Steve W with Pioneer Bank. They are great for the $1M plus work.

Investment Info:

Other commercial investment investment.

Purchase price: $8,200,000
Cash invested: $2,000,000

Town Square on Broadway Salem Oregon. Mixed-use, 21 apartments, with ground-floor retail, movie theatre, food, dojo.

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

Under market rents. Located in an area that has significant development. Buying significantly below replacement cost. Potential for upside.

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

Adjacent to our location.

How did you finance this deal?

Swap 5/10 with no break fee in 5 years. 4.2% rate

How did you add value to the deal?

Covid put a bit of pressure on this project. Some tenants have been significantly impacted. Nice challenge and problems to solve for our team.

What was the outcome?

Still fighting- Certainly less 2020 did not help us.

Lessons learned? Challenges?

With covid- anything can happen. Have the liquidity to push through periods of rent challenges.

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

Tradition Real Estate AJ Nash Salem Oregon, commercial real estate agent

@Lyndon Timbang  In Oregon it requires a significant learning curve.  Covid has hit them pretty hard.   It is (and should be) tightly regulated.  The need is there.