Brownsboro Terrace 18 Unit Condo Opportunity
We got an accepted offer on this "18 out of 30 unit" condo deal with a purchase price of $1,850,000.00. That is only 103k per unit, and they are currently selling for 130k per unit, on average. The best part is that the seller is already doing what we at HobKnob do best, Mid-Term Rentals! Why is this a good thing? There are no long term leases in place, they already come fully furnished (he is renting them on AirBnB) and will be cash-flowing from day one. The day of closing, 16 of the 18 units will be occupied. We are seeking 550k with a projected ROI of 19.8%!
(OPPORTUNITY CLOSED)
FULLY FUNDED!
Picture of one of the condo units
The ultimate goal for this deal, is to own all 30 of the units. The current owner bought the first 6 that he is selling back in 2015 and today owns 18 of the 30. He has done major renovations and you can see all 18 units, pictures and his pricing on his website at the following link https://louisvilleshorttermcondorentals.com/view-each-condo/ (he has maintained an average occupancy of 90% over the past 5 years). Another great fact about the rest of the units in this complex, is that they are okay with Mid-Term rentals, as it has been a normal thing since 2015, plus we will have majority voting rights and be president of the condo association.
In 2023, the total rental income was $391,957.16 and his expenses were $176,211.26 making its Net Operating Income $215,745.90 (actual financials available upon request). Below, you will see a list of all of his 2023 expenses:
The current systems that we have at HobKnob, will allow us to cut these expenses down by $15,219.26 making our new total expenses, within the first month after closing $160.992 (New taxes have been calculated). The condo fees cover the association's insurance policy which covers the exterior of the buildings all the way to the drywall. They also cover errors and omissions protection for board members, all exterior landscaping, repairs & maintenance, snow removal, tax filing, & property management costs for Kentuckiana Property Management, whom are in charge of collecting all condo units' fees and handle anyone who is late on HOA payments through their own mediation team at no extra charge.
We will also:
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Do some updating to all of the units' decor and furnishings to match our current properties and their style (you can see them at www.StayHobKnob.com)
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Turn the five 2 bedroom units into real two bedroom units by adding a wall where it will convert it from a "loft like bedroom" to and actual private bedroom (you can see what I am referring to on this link)
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Add all of the 18 units to our HobKnob Ecosystem. We have maintained an average occupancy of 98% with a total of 63 rental units, and in turn, we will convert the sellers current 90% occupancy to over 95% occupancy within the first 3 months.
We will raise rents on average by $150 per unit, after all of updates have been implemented, bringing in around 31k in additional income.
Above, are current pictures of some of the units. (You can see all of the pictures on this link). When we take over, we will have a 3D walk through of each unit and also professional pictures taken with the new decor/furnishings, like our Brook Property)
Structure of the Deal
This will be an 85/15 partnership deal, meaning that the investing partners will get 85% ownership and we would get 15% ownership + 1% acquisition fee for researching, finding, underwriting, acquiring and managing the asset. We are looking to raise 550k with a minimum investment of 50k (This breaks down to $6,470.59 per 1% ownership on an asset valued at $2,000,000.00. (Seller hired a third party company to get to this valuation and the full report is available upon request).
We are going to do a "Simple Split" payout structure with a Preferred Return and hurdle rate of 8% to our Investors. This means that we will not make any money until our investors make 8% cash on cash annual returns. (We are projecting annual average cash on cash returns of 15%)
The Numbers
The new ROI (Return on Investment) projections once all of the new updates have beed completed (within 10 months) are as follows:
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$34,200 Monthly Rental Income
$2000 average new rent times 18 units at a 95% occupancy
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$13,416 Monthly Operating Expenses
New operating expenses using Hobknob's systems
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$11,760 Loan payment to Stock Yards
The loan is a 5 year fixed term, based on a 20-year amortization, with a rate based on the 5-year treasury rate plus 2.75-3.00%
currently equal to 7.07-7.32%. (Amazing rate for a commercial loan today)
The Net Income will be around $9,024 a month ($108,288 annual). So if you invested 100k, you would have 15.45% ownership (based on $6,470.59 per 1% ownership) and would make an annual return of $16,730 making it a cash-on-cash return of 16.73%! This doesn't even take into consideration the loan pay-down by the tenants, the appreciation of the asset (it is located in an A location) and the K-1 that you will receive at the end of each year to help offset your tax liability.
The target annual return after all of these factors are taken into consideration will be 19.8%.
Since this is a 5 year fixed loan, we would refinance this asset, and we are projecting a payout to all of the owners of 73% of their initial investment (this would be a tax free event), while maintaining the same ownership structure and still be receiving the quarterly cash-flow of this amazing asset.
If you have any questions, or want to invest in this great opportunity and become a part of the HobKnob team, you can reach out to me at 812-989-5349 or at Brian.Rios@StayHobKnob.com
550k out of 550k has already beed raised!
This AMAZING OPPORTUNITY has been FULLY funded and is now CLOSED!
Stay tuned for the next Hobknob Investment
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The information provided herein is for informational purposes only and is not intended to be a comprehensive analysis of every material fact regarding any real estate investment. This information does not constitute legal, tax, investment, or financial advice and should not be considered a recommendation to buy, sell, or hold a particular investment or security or to engage in any specific investment strategy. Real estate investments carry various degrees of risk, including but not limited to the potential loss of principal invested.
Investors should consider their financial ability, investment objectives, risk tolerance, and the market environment before making any real estate investment. The value of real estate can fluctuate, and the performance of a specific investment can vary significantly over time. Past performance is not indicative of future results.
Market conditions, property values, and legislation can affect the profitability of real estate investments. Additionally, factors such as property taxes, operating expenses, financing terms, and environmental regulations can impact the overall return on investment. It is recommended that investors conduct their own due diligence and consult with professional advisors, such as a financial advisor, attorney, or accountant, for guidance tailored to their individual circumstances and to discuss the potential risks and rewards of real estate investing.
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