Two investments in two cities with different exits

7 Replies

2806 Magnolia, Saint Louis, MO

Originally purchased 3,000 sq ft dilapidated townhome in an up and coming area. Original exit plan was to perform full rehab in 8 months with resale price of $250-270k, resulting in minimum $55k profit, 30% CoC. The property had one BIG issue and that was a power substation located behind the home, which would reduce the number of buyers. One week after purchase, the owner of the substation requested to purchase the property because they were looking to expand their substation to the lot next to ours. Expanding of the substation would have been a major issue for resale, so after discussion with our team, we decided to sell ~33% above all-in cost. The profits were less, $20k with CoC 24%, but with < 2 months and no work, it was a win-win for all parties involved. A lesson re-learned on this project is that we need to ensure flips have no issues that can affect resale time. Our investors made 1.5% per month or about $2k. Much less than the $21k planned, but they quickly redeployed their funds in the next available investment.

2420 Upas, San Diego, CA (across from Balboa Park)

We provided $150k temporary gap funding with a local rehabber for $1M home. Original plan was to be repaid in 2 months with maximum time of 6 months, but due to delays with architect and designs, project dragged out 8.5 months. Our investors were paid very well and did not mind the extensions since they received 2% per month or $26k.

I am a Managing Partner for EAC’s Saint Louis and San Diego markets and was also a personal investor in the San Diego deal. Although things did not go exactly to plan, I was happy with the ending and learned some lessons that helped us improve our process.

Vil Nikollaj, Managing Partner, Realtor®

EAC Group Investments

@Sarah D. We do not share final #s until a property is sold. After the property is sold, I can share more, but we won't know the final outcome as it's not our project. We were short-term, quick turnaround gap funders in the second lien position, so we charged high interest. We were bought out since delays would continue to eat into their profits.

Too bad you are not on my buyers list.  You could have paid $20k less for that property on Magnolia.  Seriously, I was offering it for $55k.  And I rehab and sell most of my properties in that area and I don't think anyone would have minded the substation.  However they would have balked about the vacant apartment building across the street. 

If you want better deals in STL, you can join our buyers list at www.jdspropertiesstl.com 

Thanks for the information Vilson. I run a hard money lending company here in San Diego that specializes in Fix & Flip and Construction loans. I always have borrowers asking if I could recommend equity partners on deals as I typically only fund the first. I would like to connect with you and discuss ways we can work with one another.  

Thanks John, but we purchased for $51k, so slightly better deals. I'm on your buyers list. My partners have purchased some projects from you in the past. 

The apartment building is in the works of getting a remodel as well by the city or city partner, so we weren't as worried.

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