38 Pratt Street Investment Offering
PROPERTY: The property is located at 38 Pratt Street Allston, MA 02134. The property is under contract for a purchase price of $615,000, scheduled to close on October 26, 2012. The building is a three story, wood framed house zoned as a three family residence. The lot is 6,970 S.F., the interior is 2,114 S.F. and it was last sold for $470,000 in 2009. The building is in average to fair condition and will require extensive interior renovations. The first floor is a 4 bedroom, the second floor a three bedroom and the top floor a one bedroom. Utilities are all separate. There are 7 parking spaces in the rear driveway. One of the existing units will be delivered vacant so work can begin immediately. The other units are leased until August 31, 2013.
Allston Village is a neighborhood that is home to numerous bars, restaurants, retailers, artists, music venues and more. A traditionally young and vibrant neighborhood, Allston is the west side launching pad for Boston and is home to many young professionals, immigrants and college students. Learn more by clicking this link: http://www.allstonvillage.com/ This is an area of intense rental demand where thousands of students search for limited housing every year and pay high rents to be close to the MBTA B Green Line and a number of universities. This neighborhood is considered an extension of Boston University West Campus and is a short T ride from Kenmore Square and the prestigious Back Bay. Demand for housing for both sales and rentals is very strong here.
MAP: https://maps.google.com/maps?oe=utf-8&client=firefox-a&q=38+pratt+street+allston&ie=UTF-8&hq=&hnear=0x89e379db4594cd53:0x14b0f040a0f9d08a,38+Pratt+St,+Allston,+MA+02134&gl=us&ei=UGc_UMfwHee66wG7nIGYDg&ved=0CCEQ8gEwAA
STRATEGY: This is another property offered through our development partner Resnick. The interior needs cosmetic updating and some reconfiguration of the layouts to maximize the space. Each unit will be updated one at a time. The roof, heating systems and windows are all either updated or in solid condition. Because it is a student rental, landscaping and exterior work will be minimal. Once the units are updated the rents can be raised 60%+ with no problems. Two highly active rental brokers located in Allston within 5 minutes drive of the property, Benjamin Apartments and Boston's Best Realty, both projected rental income to be as much $8,000 monthly for all 3 units. Zelman and Resnick have been renting out units in this same area since the 90's and 80's respectively and know the values extremely well. The building will be highly profitable as a rental once all 3 units are renovated.
SALES VALUES: Once the rental income is maximized close to $8,000 monthly, the building will be worth over $900,000. Because of the unique rental value, price per square foot and homes intended for owner occupants are not accurate market comps. A $950,000 resale value would give the house an 8%+ cap rate - a solid rate for a potential investor on a property that is already rented up and fully renovated. Resnick has had offers from $900,000 to $980,000 in the last year on other multi-family houses he owns in the immediate area that have similar gross rental income. We project that there will be upward pressure on prices and they should remain at the current level and most likely increase throughout 2013. The building could easily be worth over $1Million by 2014.
FINANCING: We will split the equity ownership with Resnick similar to our previous deals and finance 75% of the purchase price ($460,000.00) as well as obtain a construction loan of $100,000.00 for a total mortgage of $560,000. $155,000 in cash is required to purchase the project and obtain financing with Walpole Cooperative Bank. Funding will come from the sale of 16 Spring Street #1, which closes on September 14, 2012. We will profit $113,000 and also receive purchase deposits back of $38,000. All profits for Resnick and Genesis alike will be rolled through a 1031 exchange company and then paid towards the purchase so we are exempt from paying capital gains taxes. The difference will be paid with our refunded deposits and either $4,000 cash from Resnick or the company accounts. We will have about $18,000 in the account by mid-September.
RECOMMENDATION: The property is in need of extensive rehab but still an excellent opportunity in a rental area of extremely high demand. A solid ROI of 27% is projected on the rental (see analysis below); a gain of over $300,000 in equity is projected once renovations are completed; we will preserve our profits from 16 Spring Street and not pay any capital gains tax. Our main strategy of developing this property as a rental leaves us little concern in the face of any recession, as rents have risen in this area since the last real estate collapse. Funding is already accounted for and this is a great situation with perfect timing considering our forthcoming sale of 16 Spring Street.
Beantown Company will manage the property. They currently manage approximately 195 units. Marc Resnick oversees the management team consisting of a head property manager, an in-house attorney, two full-time maintenance men, and three office employees. Our experience on the 16 Spring Street project and 15 Waldo Mortgage has gone better than anticipated.
*All projections of revenues, expenses, profits, rents, distributions, refinancing scenarios, sales values and ROI are merely estimations based on current real market data and property information. Genesis Equities LLC and Steven Zelman do not guarantee performance in regards to any information contained on this website or in any related documents or emails.
Allston Village is a neighborhood that is home to numerous bars, restaurants, retailers, artists, music venues and more. A traditionally young and vibrant neighborhood, Allston is the west side launching pad for Boston and is home to many young professionals, immigrants and college students. Learn more by clicking this link: http://www.allstonvillage.com/ This is an area of intense rental demand where thousands of students search for limited housing every year and pay high rents to be close to the MBTA B Green Line and a number of universities. This neighborhood is considered an extension of Boston University West Campus and is a short T ride from Kenmore Square and the prestigious Back Bay. Demand for housing for both sales and rentals is very strong here.
MAP: https://maps.google.com/maps?oe=utf-8&client=firefox-a&q=38+pratt+street+allston&ie=UTF-8&hq=&hnear=0x89e379db4594cd53:0x14b0f040a0f9d08a,38+Pratt+St,+Allston,+MA+02134&gl=us&ei=UGc_UMfwHee66wG7nIGYDg&ved=0CCEQ8gEwAA
STRATEGY: This is another property offered through our development partner Resnick. The interior needs cosmetic updating and some reconfiguration of the layouts to maximize the space. Each unit will be updated one at a time. The roof, heating systems and windows are all either updated or in solid condition. Because it is a student rental, landscaping and exterior work will be minimal. Once the units are updated the rents can be raised 60%+ with no problems. Two highly active rental brokers located in Allston within 5 minutes drive of the property, Benjamin Apartments and Boston's Best Realty, both projected rental income to be as much $8,000 monthly for all 3 units. Zelman and Resnick have been renting out units in this same area since the 90's and 80's respectively and know the values extremely well. The building will be highly profitable as a rental once all 3 units are renovated.
SALES VALUES: Once the rental income is maximized close to $8,000 monthly, the building will be worth over $900,000. Because of the unique rental value, price per square foot and homes intended for owner occupants are not accurate market comps. A $950,000 resale value would give the house an 8%+ cap rate - a solid rate for a potential investor on a property that is already rented up and fully renovated. Resnick has had offers from $900,000 to $980,000 in the last year on other multi-family houses he owns in the immediate area that have similar gross rental income. We project that there will be upward pressure on prices and they should remain at the current level and most likely increase throughout 2013. The building could easily be worth over $1Million by 2014.
FINANCING: We will split the equity ownership with Resnick similar to our previous deals and finance 75% of the purchase price ($460,000.00) as well as obtain a construction loan of $100,000.00 for a total mortgage of $560,000. $155,000 in cash is required to purchase the project and obtain financing with Walpole Cooperative Bank. Funding will come from the sale of 16 Spring Street #1, which closes on September 14, 2012. We will profit $113,000 and also receive purchase deposits back of $38,000. All profits for Resnick and Genesis alike will be rolled through a 1031 exchange company and then paid towards the purchase so we are exempt from paying capital gains taxes. The difference will be paid with our refunded deposits and either $4,000 cash from Resnick or the company accounts. We will have about $18,000 in the account by mid-September.
RECOMMENDATION: The property is in need of extensive rehab but still an excellent opportunity in a rental area of extremely high demand. A solid ROI of 27% is projected on the rental (see analysis below); a gain of over $300,000 in equity is projected once renovations are completed; we will preserve our profits from 16 Spring Street and not pay any capital gains tax. Our main strategy of developing this property as a rental leaves us little concern in the face of any recession, as rents have risen in this area since the last real estate collapse. Funding is already accounted for and this is a great situation with perfect timing considering our forthcoming sale of 16 Spring Street.
Beantown Company will manage the property. They currently manage approximately 195 units. Marc Resnick oversees the management team consisting of a head property manager, an in-house attorney, two full-time maintenance men, and three office employees. Our experience on the 16 Spring Street project and 15 Waldo Mortgage has gone better than anticipated.
*All projections of revenues, expenses, profits, rents, distributions, refinancing scenarios, sales values and ROI are merely estimations based on current real market data and property information. Genesis Equities LLC and Steven Zelman do not guarantee performance in regards to any information contained on this website or in any related documents or emails.
Development Analysis
|
Purchase & Financing
Price $615,000 -Deposit $155,000 Subtotal $460,000 +Construction Loan $100,000 Mortgage $560,000 |
Rental Income
Current Projected #1 $1,700 $3,200 #2 $1,400 $2,400 #3 $1,150 $1,400 7 Parking $500 $700 Total $4,750 $7,700 |
Operating Expenses
Current Projected Mortgage $2,300 $2,800 Taxes $380 $400 Insurance $250 $250 Water/Sewer $200 $200 Electric $50 $50 Management $180 $180 Maintenance $100 $300 Total $3,460 $4,180 |
Profit & ROI
Current Monthly Income $4,750 - $3,460 = $1,290 Projected Monthly Income $7,700 - $4,180 = $3,520 Current Annual Income $1,290 x 12 = $15,480 Projected Annual Income $3,520 x 12 = $42,240 Current ROI $15,480 = 10% $155,000 Projected ROI = $42,240 = 27.25% $155,000 |
|
|
Rear View with 7 Parking Spaces
|
First Floor Kitchen
First Floor Bedroom
|
First Floor Bathroom
Second Floor Kitchen
|
First Floor Living Room
Second Floor Living Room
|
First Floor Bedroom
Second Floor Bedroom
|
First Floor Bedroom
Second Floor Bedroom
|
Second Floor Bedroom
|
Second Floor Bathroom
|
Third Floor Kitchen
|
Third Floor Bathroom
|
Third Floor Bedroom
|
Renovations 5/14/13
New Second Egress into Back Bedroom of First Floor
|
Old Second Egress Walled Up
|
New Kitchen in First Floor
|
Updated Bathroom in First Floor
|
New Kitchen with Dining Area in First Floor
|
Expanded Back Bedroom with New Closet in First Floor
|
New Egress in First Floor Back Bedroom
|
First Floor Bedroom
|
Reduced Stairwell Space to Make Extra Closet
|
New Kitchen in Second Floor
|
New Bathroom Second Floor
|
Bedroom Second Floor
|
New Closet in Back Bedroom Second Floor
|
New Closet in Expanded Bedroom Second Floor
|
Renovations 9/12/13
38 Pratt #3 Kitchen & Living Room
|
38 Pratt #3 Living Room & Kitchen
|
38 Pratt #3 Bedroom, Bathroom & Kitchen
|
38 Pratt #3 Bedroom
|
38 Pratt #3 Bathroom
|
Renovations 12/12/13
38 Pratt #3 Kitchen
|
38 Pratt #3 Kitchen
|
38 Pratt #3 Living Room
|
38 Pratt #3 Bedroom
|
38 Pratt #3 Bathroom
|
38 Pratt #3 Bathroom
|
