Diligence in the listing process pays dividends at closing

Challenges

• Ownership wanted to close before the end of the year, creating a tight timeline: three months to market, tour, review, conduct due diligence, and close
• To realize maximum value, we needed buyers to think beyond their typical value-add scope—we knew the best buyer would underwrite to a +50% increase in rents with a $2 million CapEx budget
• The property exteriors were not attractive and major deferred maintenance items were discovered during initial tours
• During the initial broker tour, the Multifamily Mason team discovered a major CapEx requirement (~$750k cost) that was not known prior to the tour. 

Action

Mason invited his exclusive buyers network to tour the property ahead of launching public marketing. While onsite, Mason communicated the CapEx requirements, property condition, and income upside to the buyer groups.

Our team brought in a local contractor who identified a solution to the unidentified CapEx at ~$250k, compared to the Seller’s current solution. This solution was then presented to each exclusive buyer during their tour, providing them the problem and solution at the same time.

Mason also hired an architect to render value-add improvements to use in the marketing package, drawing even more buyers into the deal and helping them create the property vision without touring.

Results

• All exclusive buyers submitted offers above pricing guidance
• We negotiated non-refundable deposits, three-week due diligence timeline, and closing 15 days before the end of year - achieving all of the seller’s objectives
• Set a market-best in-place cap rate

Sale Details

• Property Name: Irving Place
• Address: 100 N Irving Place, Kennewick, WA
• Close Date:  December 2021
• Units: 136
• Average Unit SF: 836
• Year Built: 1979
• Sale Price: $19,400,000
• Price per Unit: $142,647
• Price per SF: $169
• In-Place Cap Rate: 4.02%
• Proforma Cap Rate: 6.90%

Testimonial

“We did not fully believe Mason’s valuation of Irving Place at first, but he delivered above our expectations and on a record timeline, just 99 days from listing agreement to closing.”

- Bob Bennett, Principal, Client