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HIGHLIGHTS

 
 

OVERVIEW

Sitting on the southern edge of Greenville, this 1985, six building, 40 unit complex provides a whole host of value add capital improvements. Situated on 4.6 acres, this properly is located near the industrial corridor on highway 85, about 35 minutes from downtown Greenville, and 45 minutes from Greenville/Spartanburg International Airport (GSP).

*Deal did not pursue with broker because property resided under a USDA program that was in the process of being de-listed at the federal level; however, showcases an ideal scenario.

UNION MATRIX

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1 BEDROOM

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2 BEDROOM

BUSINESS MODEL IN ACTION //

01 // buy right

  1. Property is located within the chosen market.

  2. The 30-year loan is expiring and the owner is shedding the property from their portfolio.

  3. Original purchase price was $45,000 in 1984

  4. The underwriting is based on actuals using the most recent T-12 and last 90 days.

  5. The market is giving 6-7% CAP rate.

  6. Average income in the area is $52,000

  7. Average property class are B & C’s.

  8. Confirmed economic vacancy.

  9. Give the seller and seller’s broker our underwriting to understand how we came to our conclusions.

  10. Have a building inspector examine every unit, club houses, etc and use drones and snake cameras to be complied into report and repair budget. This report will be used to take back to the seller and used to reinvest 3% back into the property in the Finance Right.

  11. Roofs were replaced in the last 10 years

  12. HVAC were upgraded in the last 5 years

  13. 10 min. drive to 85, 30 min. to Greenville.

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02 // finance right

  1. Rate: 4.00%

  2. Amortization 20 years

  3. Term: 7 years local bank

  4. Refinances within 5 years

  5. Recourse loan with community bank

  6. Ask for $200,000 owner financing as part of the down payment. An offer to place a lien on the property for the first 12 months would be offered to show good faith. This benefits the seller because they are receiving deferred payment verses having to pay capital gain tax on the entire purchase price.

  7. Ask bank for interesting only installments for the first year to reinvest back into the property.

  8. Ask the bank for 3% to refinance back into the property. The additional 3% would not be rolled into the mortgage. The purchase price would be 1.3M and the seller would write a check for $39,000 at closing. These funds would go directly into signage, website, landscaping, and rehabbing apartments.

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03 // manage right

  1. Hire a recommend third party management company with a track record.

  2. Understand the systems the management company places into the property.

  3. Start leasing vacant units at market rates after renovation. Renovated apartments will adhere to Cornerstone Community Capital color and material standards.

  4. Start the implementation of RUBs relevant to market. This would include water, sewer, garage, and pest control.

  5. Value adds would include application fees, moving-in fees, pets fees, and storage fees.

  6. Have liaison to establish a communication method between the on site super and CCC to understand the needs/concerns of the community and be able to react quickly.

  7. Start a renovation plan beginning with signage and landscaping.

  8. Establish weekly calls with the management company.

 

CASE STUDY DEEP DIVE

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