Apartment Complex- 171 units/ 3 Buildings
This property is an apartment complex of three independent buildings consisting of a total of 171 units. The buildings are three floors and are constructed of brick masonry over frame construction. The structure contains a main level, upper level, and sub-basement level half in the ground. The common areas accommodate wide hallways, multiple exits and boiler heat. Each building has its own parking lot and courtyard.
The units range from the studio to a two bedroom apartment with nanny quarters. Many two bedroom units have Master Bathrooms attached to the second bedroom. Each building contains its own laundry room and trash facilities. The facilities typically rent for $600.00 to $900.00.
The buildings were neglected for many years and had serious structural and operational issues:
• Initially, the rent roll showed approximately 70% filled. However, further investigation revealed that many of the tenants owed back rent. Actual paying and current tenants represented approximately 33%. No background checks on tenants were conducted and no security deposits were collected by the previous borrower. Therefore, many of the tenants were not qualified by the borrower.
• The buildings had a drug and crime problem that did not provide a safe haven for tenants to live there.
• The buildings mechanicals and structures were breached and broken. The roof on the buildings was in need of complete tear off. The roofs had been seriously leaking for over two years which caused a mold and third floor hallway ceiling collapse.
• Mold remediation was needed due to a serious mold issue present in the buildings. This complex was serious enough that the health department could have possibly shut down the complex down.
• The doors on all buildings were broken and compromised causing a security issue.
• There was infestation of bugs and wasps that presented a serious health and safety issue.
• The structure throughout the halls, rooms, office, grounds were completely run down.
• The complex financials did not present a positive cash flow.
• The news media and previous tenants had given the apartment complex a very bad rating for living. The stigma had been as “the place not to be”.
Make necessary structure improvements to achieve maximum asset value and to introduce a strong marketing program.
ALPS Property Management completed major repairs on the building’s roof membrane, mold remediation, pest and rodent treatment and other strategic structural and cosmetic issues.
We addressed the inadequate marketing program previously used by participating in an extensive marketing campaign to advertise and promote for lease. We evicted all unpaid tenants and brought the rent roll back up to a respectable occupancy rate prior to selling the facilities.
We were recognized by the area as the most improved complex. Our efforts continue to strengthen the equity position and help build value back in to this asset. The result was a much stronger value than first when taking possession of the complex. The asset was marketed and sold to a private investment group.