Strategic Approach

Located on a history strip, the Broadway Portfolio was given to the seller as part of an inheritance. The seller was unsuccessful at renovating the four residential units and two commercial units to conform with changing construction code and decided they had to sell. The acquisition was fueled by a thesis of sizable demand for high quality low priced rentals in a city with no rental supply. Additionally, the volume of construction required was light, working with the city on getting approvals was more difficult which played to our strengths.

Value-Add Plan

Upon acquisition, the four vacant residential units were brought up to code and rented. A zoning variance was submitted to Salem City’s zoning department for a conversion of the two commercial units into three residential units. This change would increase revenue, lower vacancy rates, and yield substantially more attractive financing compared to the formerly mixed use property. Additionally, an appeal to FEMA successfully removed both buildings from the flood zone, saving $11,500 per year in flood insurance. 

Property Metrics

Deal Type: Buy, Renovate, Rent, Refinance

Acquisition Method: Off Market Acquisition

Property Type: Seven Residential Units

Financial Metrics

Purchase Price: $165,000

CapEx: $70,000

Est. Appraised Value: $600,000

Annualized Return upon Completion: 159%

Duration: 12 Months