All Forum Posts by: Drew Chance

Quote from @Sher J.:

Congrats! No rezoning was needed?  How long was it from acquisition to breaking ground?

Did you sub contract or work with a GC?

No re zoning was necessary. By right we were able to build 5 dwelling units on this site. But if we gave 1 unit to the city as an affordable unit (not section 8, but deed restricted affordable for 55 years), they would allow us to double our base density to ten units. All by right. Plans and permits took us 14 months. Construction took 22 months. Almost 3 years to the day to get our certificate of occupancy from the day we purchased the land. Looking back there are a few months we could have shaved off, but not a ton. 

Quote from @Maxwell Ventura:

@Drew Chance

Amazing. How does your revenue compare to your mortgage payment on the remaining 8 years on your loan? 

Congratulations.

What's next for you? 

 Cashflowing very nicely. We should have beefed up the loan a bit higher. But the loan we got was pretty amazing terms (construction to permanent debt, low rate, low fees, interest only portion), even at the time, so we have a bit more equity trapped in the deal now than we probably should have, but cashflow will be very strong. 

We are seeking more North Park, Complete Communities, development opportunities. And we are currently building a 14-micro unit development in National City (10 x 1 bedrooms, 4 x studios). Project should complete around end of 2023. Hoping to continue to build the portfolio. 

Quote from @Anthony To:

Nice work. How are rents? How did you structure this deal with your partners?

 Rents are far stronger than original underwriting in 2019 (when we acquired the ground). We are about 25% higher than originally underwritten. 

We had 1 capital partner, 50/50 deal. Capital partner brought more of the capital in the beginning, and our job was to find deal, manage day to day developer duties, and eventually we had to bring in equal equity during the course of the project. 

Most of our projects are joint venture style. However, to scale into larger projects, we are considering syndicating our future developments.

Quote from @Bruce May:

@Drew Chance Nice work. Have you refinanced it and paid everyone back so you can hold it long-term, or what is your plan with the property?

This was not a syndication. We got a fantastic loan on this property during construction, 2 years construction loan I/O, converts to permanent after 2 years, for a remaining 8 years of a 10 year loan. Low rate that we would not be able to get today. So no plans of selling in the immediate term, would get hammered on prepay. Going to hold and are in accumulation mode currently.

Investment Info:

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

Purchase price: $840,000
Cash invested: $3,200,000

Ground up development of 10 apartment units (9 market rate, and 1 affordable unit) - Completed Oct 2022!

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

I had wanted to build something from the ground my whole career. This was our first new build, and very proud of the end result.

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

MLS listed property prior to Covid. Made cash offer and closed within 60 days of acceptance.

How did you finance this deal?

Cash from partners

How did you add value to the deal?

Built 10 units from the ground up.

What was the outcome?

Units were completed almost 3 years to the day from purchase (Socal permitting process is SLOW). Units are fully leased and stabilized as of writing this.

Lessons learned? Challenges?

Just ask... TOO MANY TO LIST HERE. But I am on open book.

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

Yes all of the above. Team sport. Lots of good recs for anyone looking to develop in San Diego, CA.

Investment Info:

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

Purchase price: $840,000
Cash invested: $3,200,000

Ground up development of 10 apartment units (9 market rate, and 1 affordable unit)

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

I have always dreamed of building something from the ground up. We have done tons of rehabs over the past decade, but never truly built something from nothing. So when this opportunity presented itself, it was really a dream come true.

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

This was an MLS listed deal. The seller was selling several lots in San Diego simultaneously, we negotiated the price down from the asking price.

How did you finance this deal?

Private capital from Partner on the deal

How did you add value to the deal?

This was an existing single family home, we have scrapped the home and are building ten apartment units on this lot, which will increase the value of the property tremendously.

What was the outcome?

We are currently under construction.

Lessons learned? Challenges?

Dealing with the City can take far longer than you ever dreamed, especially during Covid-19. Budget for extra time and extra money for fees you were not expecting. We are just beginning with the construction, so I am certain there will be a new set of challenges coming at us next.

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

Yes, we worked with good broker/seller of the property at acquisition, which we have become friends now. I am a broker as well, so we cooperated on the purchase. We are using private capital, so no construction financing on this project. Feel free to reach out for any advice, I am pretty much an open book and always here to help fellow investors.

Investment Info:

Single-family residence fix & flip investment in Coronado.

Purchase price: $700,000
Cash invested: $765,000

2 Bed, 2 Bath, 975 Sqft Condo in Coronado. Cosmetic renovation of the interior included: New Kitchen, bathrooms, flooring, base boards, doors, designer built ins, and new light fixtures and LED can lighting. House just opened escrow today. But reach out to me direct for details. Purchased in June, and opening escrow early august. Should be full cycle in around 100 days total!

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

I grew up in Coronado, have had my office and business located in Coronado for years, and do most of my investing around San Diego, but usually not in Coronado. So it is always a treat to do a project close to home.

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

The deal had sat on the MLS for quite a few weeks. It was one of the lowest priced, well located condos in the entire zip code. I am a broker, and negotiated directly with the listing agent.

How did you finance this deal?

We brought in a cash investor partner for the majority of the acquisition and renovation.

How did you add value to the deal?

We renovated the entire unit: kitchen, baths, flooring, head to toe remodel.

What was the outcome?

We entered escrow in early August 2019. Near our proforma sale price.

Lessons learned? Challenges?

Dealing with the City and permits is always a challenge. But we were able to pull the permits fairly quickly, made it through inspections during remodel, and had a good sized hiccup at final inspection with the City wanted additional electrical upgrades, even though the home passed rough electric. We have known for a while not to argue with the city, just work with them to make them happy and move on.

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

Yes, I am a real estate broker that found, negotiated the deal on the front side with a listing agent. Now I am the listing agent working with a cooperating selling agent. Both agent experiences have been great. No lender on this transaction. Escrow and Title are our usual people: Elite Escrow Coronado and First American Title.

Hey All, 

Sorry my post was confusing upon re-reading it:

$595,000 (All-in purchase with purchase closing costs)

$492,000 (Hard Money Loan Amount - $476,000 at closing and $16,000 Renovation Funds received during reno)

$193,000 (Total out-of-pocket funds invested into the deal: downpayment, renovations, carrying costs)

$810,000 (Sales price on the market)

$32,000 (Approx Commission and Closing Costs on Sale)

Since we just sold this home, and I don't know who may be looking at the info, I refrain from posting true profit figures. But with these numbers, you should be able to come up with the profit and COC and ROI for the deal.

Please reach out directly for more information. 

Thanks

Drew

Investment Info:

Single-family residence fix & flip investment in San Diego.

Purchase price: $595,000

Cash invested: $193,000

Sale price: $810,000

3/2 1575 sqft single-level home, backing a canyon in desirable neighborhood in Clairemont area of San Diego. The home was purchased from a local wholesaler with a private money loan. The renovation consisted of just about everything cosmetic: roof, windows, flooring, kitchen, bathrooms, doors. We lucked out with a new HVAC system and new water heater installed just before purchase. The electrical was upgraded in recent years as well. 77 days held total with reno, listing and sale.

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

We love Central San Diego as our preferred area of investing: its close to our home, we know the values, we have tons of team member vendors to make our renovation and sale easy, and its extremely desirable. Hard part is finding the deal, but the rest is easy.

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

This deal came from a wholesaler. There was no negotiation possible. Multiple buyers wanted the home, we purchased on their terms and were happy with them.

How did you finance this deal?

We purchased the home with a combination of a hard money, and then JV between my company and an investor partner I use for a lot of my deals to fund the purchase.

How did you add value to the deal?

Remodeled the existing home with a new everything: Roof, windows, Kitchen, bathrooms, flooring, painting, landscaping, and more.

What was the outcome?

Very successful, easy transaction from start to finish. The asset was held 77 days, and the return was solid. We were pleased with this transaction.

Lessons learned? Challenges?

We can always improve on our construction. About a week was wasted on the front end waiting on a few materials. We used a couple Generals because our normal GC was busy, and that caused some budget waste in hind sight. But we were able to keep the project moving along, so that may have been for the best (carrying costs eat you up). We accepted the 1st offer, with 3 back ups in hand within 48 hours of listing, over asking price. I wonder what a full week or market exposure could have brought?

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

I am an investor and a broker, but yes we cooperating with another agent that sold the home. Our private money (hard money lender) did the loan for the purchase. 

Investment Info:

Single-family residence fix & flip investment in San Diego.

Purchase price: $595,000
Cash invested: $193,000
Sale price: $810,000

3/2 1575 sqft single-level home, backing a canyon in desirable neighborhood in Clairemont area of San Diego. The home was purchased from a local wholesaler with a private money loan. The renovation consisted of just about everything cosmetic: roof, windows, flooring, kitchen, bathrooms, doors. We lucked out with a new HVAC system and new water heater installed just before purchase. The electrical was upgraded in recent years as well. The remodel was 45 days, and the home sold in 2 days on MLS, and escrow was 21 days, putting our total days held around 77. It was a quick one and we would love to do more in this super hot submarket of an already very hot San Diego real estate market.

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

We love Central San Diego as our preferred area of investing: its close to our home, we know the values, we have tons of team member vendors to make our renovation and sale easy, and its extremely desirable. Hard part is finding the deal, but the rest is easy.

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

This deal came from a wholesaler. There was no negotiation possible. Multiple buyers wanted the home, we purchased on their terms and were happy with them.

How did you finance this deal?

We purchased the home with a combination of a hard money, and then JV between my company and an investor partner I use for a lot of my deals to fund the purchase.

How did you add value to the deal?

Remodeled the existing home with a new everything: Roof, windows, Kitchen, bathrooms, flooring, painting, landscaping, and more.

What was the outcome?

Very successful, easy transaction from start to finish. The asset was held 77 days, and the return was solid. We were pleased with this transaction.

Lessons learned? Challenges?

We can always improve on our construction. About a week was wasted on the front end waiting on a few materials. We used a couple Generals because our normal GC was busy, and that caused some budget waste in hind sight. But we were able to keep the project moving along, so that may have been for the best (carrying costs eat you up). We accepted the 1st offer, with 3 back ups in hand within 48 hours of listing, over asking price. I wonder what a full week or market exposure could have brought?

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

I am an investor and a broker, but yes we cooperating with another agent that sold the home. Our private money (hard money lender) did the loan for the purchase. We have a team in place for our purchases. Please DM me with questions. Happy to help.