Last Friday Ridgeview Property Group closed on the $6.64M sale of the Barcelona Apartments in Crystal, MN. Congrats to the 31 investors who joined us on this deal, and a heartfelt Thank You for trusting us with your hard-earned money.
Closing is always exciting, but it also means the time has come to set our repositioning plan into motion. Soon the Barcelona name will go by the wayside, and the property will be rebranded to the Morada Apartments (Morada means "dwelling" in Spanish). Our ability to attract top-quality tenants is hindered as long as our property maintains its 1970's interior decor, so we want to get renovations rolling as quickly as possible. We’ve also got 5 apartments sitting vacant generating zero income, so we need to renovate and lease those units quickly as well. Here are 4 tips for carrying out your property reposition as efficiently as possible:
Vacancy costs add up fast
Per our stipulation in the purchase agreement, the seller halted all leasing activity when the property was put under contract. As a result, we have 5 vacant apartments currently, and we want to renovate and lease them up as quickly as possible. Our rent research shows these apartments will be renting for an average of $1,389 per month, meaning these 5 vacant units are missing out on a combined $7K in potential rent every month. It’s no surprise then that we are highly motivated to waste no time between the property closing and starting the first renovations.
Have your contractors and supplies ready to go
Weeks ago we engaged an interior designer to pick out cabinet colors, wall colors, light fixtures, and everything else needed for the apartments. In addition, we ordered kitchen cabinets, bathroom vanities and all other products that require time to manufacture and ship. The goal is to have them stored onsite to be available as soon as we need them. For properties like The Morada that have ample garages, one or two garage stalls can be used to store these supplies. Right now we are storing appliances, sinks, faucets, light fixtures, etc in a garage. Note, if no garages were available, we would rent a shipping container as we did at Riverway in Champlin.
Demo and paint completed 4 days after closing
We've lined up contractors in advance too. A dumpster was dropped off shortly after closing, and the demolition team started on the vacant units right away. The old flooring, cabinets, and appliances get removed in short order. All circuit breakers at The Morada are Stab-Lok brand, and will eventually need to be replaced. Simultaneous with the apartment demo, we have enlisted electricians to replace those panels. Once the demo and panel replacements were completed in the unit, the painters come in next. This all happens in the first week!
Rebrand immediately
Renaming the property allows you to detach from any previous reputation the building had, and also to give the property a more modern feel. In our case, The Barcelona did not have reputational issues, but we felt Morada is a bit more trendy. When changing the name on Google Maps, be sure to also move the location pin so that potential residents are directed to the correct entrance.
Temporary signage on Day 1. Permanent signage to come
Exterior signage is a big deal as well. Temporary exterior signage went up immediately so that potential renters aren't confused when they drive up and still see Barcelona. We also update the signage throughout the building immediately, most importantly in the main entrance but in common areas like the laundry rooms.
You don’t need a completed apartment to start leasing
Those 5 apartments we are renovating will be completed within 4 weeks. To minimize vacancy as much as possible, we have them listed online for rent already. With no completed units, we resort to using photos from a completely different property. The pictured apartments don't have the exact same layout as our units, but they give potential tenants an idea of what the final look and feel will be. Leasing apartments without a completed unit can be a tough task, but we have had plenty of success doing so. It helps when you show prospects the actual products being installed: faucets, lights, granite, etc. Lastly, to give the leasing agent as much of a leg up as possible, we prioritize repainting and decorating the leasing office in the first week.
Final Thoughts
Once again, the acquisition of the 71-unit Morada Apartments marks a significant milestone for our investors, and we extend our heartfelt congratulations and gratitude for their trust in us. The repositioning of the property is already in full swing with renovations underway. Vacancy costs add up quickly, so the name of the game is to waste no time. Everything is planned in advance, from engaging contractors and ordering supplies to carrying out the rebranding of the property. Leasing efforts begin immediately, no need to wait until the renovations are complete.
Market News
Bill Seeks To Curb Investors From Buying Single-Family Houses
Politicians want to slow the tide of corporations buying up homes and converting them to rental property.
The legislation would limit corporations to ten single-family rental homes in each city. Those companies that already own more than that would be required to sell them within two years of the law taking effect.
Source: KARE 11. (2024, March 7). "Corporate Rental Conversions Target of New Bill."https://www.kare11.com/article/news/politics/lawmakers-move-to-limit-rental-conversions/89-cc842203-d934-45f4-864a-60ac4aa4eff9
Tips & Tricks
Terms:
Purchase Agreement: A purchase agreement, also known as a sales contract or purchase and sale agreement, is a legally binding document that outlines the terms and conditions of a real estate transaction between a buyer and seller. It typically includes details such as the purchase price, property description, financing terms, contingencies, closing date, and any other relevant terms agreed upon by both parties. Once signed by both the buyer and seller, the purchase agreement signifies their mutual acceptance of the terms outlined and initiates the process of transferring ownership of the property.