The Mike Watson Institute partnered on this property with Houston students, Kevin Liu & Jim Stephens.
Jim Stephens says of the Holman deal, "This deal was actually found while attending a 2-day seminar in Houston. Kevin could not wait to get started so he started searching for projects toward the end of class. We showed this property to Dean Severns and Pam Watson, both members of the Mike Watson Institute. Dean told us not to wait, so Kevin and I went out and looked at it that evening".
We purchased the property for $1,050,000 and the seller agreed to carry 75% of that for 1 year with 10% interest. It is a 56 unit weekly rental apartment complex with a 100% occupancy rate. It cash flows while we are having our new conversion drawings prepared by the architects. We have received weekly rentals while we are waiting to convert. Our goal is to build 34 condos that will average 1375 square feet. The reason we need to go down in number of units is because they are currently only 400 square feet each.
We went before the Urban Planning Committee with our project and they loved it. Since this is the densest corner in the Midtown District, they were impressed with the fact that we are going down in density but up in value. They made mention that we would be up for nomination as “Developer of the Year” if we complete this project and offer to write a letter of recommendation to the City of Houston.
Jim and Kevin added, "We are learning a lot through all the meetings with city officials and architects. The architect we are working with adores this project. We chose him because he is the demographic that we are trying to capture in this market. As the project progresses, we become more excited about it’s completion. Through the course of this deal, our knowledge has been greatly expanded and we have become more prepared to complete the process all over again"!
The Property
3 buildings with the same owner, 56 apartment units all rented out on a week to week basis, 38 underground parking stalls
The Find
During a 2-Day Camp in Houston, we went on Commercial Gateway and found it.
Current Use
56 units all rented out on a week to week basis.
The Technique
Thanks to the power of the Multi-Offer Spreadsheet the seller turned down a full priced cash offer ($1,075,000) and went with our offer of $1,050,000 with 75% Seller Financing.
Highest and Best Use
Condo conversion – 30 units at around 1500 square feet, selling for $250,000-275,000 per unit.
Acquisition Price
$1,050,000
Result
Short Term Focus: Create vision of 37 unit condo conversion, start the construction drawings. Continue to collect weekly rents of $5,600 while beginning the drawings. Total investment to date: $1,060,000. Put up for sale for $2.35 million.
Short term profit: $94,150
Long Term Focus: If the property does not sell in the short term, we will continue to change apartments within 18 months into 37 condos ranging in size from 800 to 1200 square feet. Property is close to community college and the cultural areas of Houston.
Long term profit:: $1,956,647
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