Two Loft Buildings 20 Units Total
$1,100,000.00 USD

Currently Under Exclusive Option
10% Cap Rate as-is/12 – 15% Pro Forma
New Transit station under construction nearby
New Police Headquarters nearby
Homeless Shelter and Day Labor building nearby will be
moved
Historical Landmark nearby involved in multi-million
dollar upgrade
At least two large revitalization projects nearby
Very close to downtown
Owner is selling because of his age, current medical
condition, and spousal pressure

While there are many development, revitalization, and
urban growth projects going on within a few blocks of
these properties, the immediate surroundings are not
very pleasant to look at. This, of course, has kept
the price down. There are quite a few factors that
play into the general unpleasantness of the
surrounding area. A homeless shelter and day labor
building not far from the properties is in heavy use.
The city council is currently in the process of
finding a new home for these purposes and when that
happens, the surrounding area will quickly clean up.

Also, with all of the projects that are going on
around these properties in the early to mid phases of
completion, from the outside, the whole area appears
to be torn apart. This, again, plays into the favor of
a low purchase price.

The current cap rate is 10%. However, this is
calculated based on the current owners figures. The
current owner has a full time, onsite manager, who
gets a salary and benefits, plus an external
management company. As well, current leases must be
renegotiated and brought to current market value. With
some simple changes to these business practices, a cap
rate of 13% or higher could be achieved with no
capital expenditure whatsoever. The pro forma provided
by the current owner is only 10.5% cap rate, based on
his figures. Again, this would be substantially higher
based on a change in the business practices.

An example of changes that can be made to improve cap
rate and cash flow that does require small capital
expenditure is the reconfiguration of under performing
space. There are a total of 20 units in the current
configuration. A 6000 square foot unit is currently
renting for $0.25 Sqft. This unit could easily be
changed into 5 units, renting at $1.00 Sqft. This
change results in a four-fold increase in cash flow,
without a large investment.

The cap rate and net income off of these properties is
simply the tip of the iceberg. The fact that there
are so many great projects happening just blocks away
is sure to improve the values of these properties a
great deal. Of course, no guarantees can be made in
this sense, but simply looking at a map of the area
and seeing what is happening will put all of this in
perspective.

If you are interested in this project, please let me
know. I am seeking money partners, or lenders only.

Thank you,

Tad Murphy
P: 817.429.1159
F: 817.492.4123


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