Owners of a high maintenance apartment building make a change to 46% more net cash flow.
Families who have owned apartment buildings for long periods of time can often benefit from a quick analysis of their portfolio. Last year, we were lucky enough to work with a family who had owned a 12-unit apartment building in Santa Ana for over 34 years.
The building was a 1950 construction with a majority of 1-bedroom units.
Rents were about 25% below market and the tenant base was primarily Section 8. The family had no depreciation left and was underleveraged. The burden of self- management was also weighing on the family members.
Our firm utilized proprietary financial modeling to showcase the best opportunities for the family to do better. Our simultaneous 1031 Exchange process helped the family move their equity into 38 units out of state.
The property was 2012 construction and consisted of 100% 3-bed + 2 bath units averaging 1,100 sq. ft. apiece. The replacement property generated 46% more after-tax net cash flow on day one of ownership.
We also sourced a highly qualified management company to handle the day-to-day which allowed the owners to spend more time with friends and family.