This is a 42-unit Class C property that is 100% occupied. It's located in a highly dense, blue collar part of Houston, TX. Properties in this part of Houston generally observe 100% occupancy. Houston is experiencing solid population growth and Hurricane Harvey has increased overall demand for apartments after people were displaced from their homes and apartments. Current owner is very hands off and has a full time property manager who takes care of marketing, leasing, work orders, etc. TPCG already owns 2 properties in the area and the same manager will manage those properties as well. This will allow the salary, wages and office expense to be spread across all 3 properties. Rents are under market. Expenses are not properly controlled. Three Pillars completed rehab on a similar property near by and achieved above market rents setting a new trend for competing properties to follow. This property fits squarely in their area of expertise.
The business plan is to reposition the property by performing extensive interior and exterior rehab and put in a better tenant profile and increase rents. TPCG has it's own construction crew that will perform all rehab. They also have their own maintenance team to perform repairs and maintenance. This alone will result in a lot of savings on the repairs and maintenance line item. Furthermore, the water and gas bill can be lowered, as they did on their previous acquisition.
Due Diligence Day
Inspection and Rehab Game Plan
Players Involved in Deal
Broker: Lucas Fertitta, Houston Income Properties
Lender: City Bank
Terms: 2 years interest only, 30 year amortization, bridge to permanent loan, non-recourse
Construction Manager: Fernando Zamarripa, Three Pillars Capital Group
Maintenance Manager: Kent Herring, Three Pillars Capital Group
Thanks to our strategic partnership with TPCG, we have agreed that they will allow chosen individuals to be given the opportunity to be selected as Key Principals (KPs) on this deal. As those selections are made, they will be added here. This is the fastest way for the KPs to get a deal done, build their track record and credibility (read more on Become a Principal page)
We want to make sure that those individuals who are ready to do a deal done get a fair chance. The number of applications has been high, so we will help TPCG the best way we can.
03/01/2018- Three Pilllars received the Purchase and Sale Agreement from the seller. Attorney is reviewing the contract before buyer (TPCG) signs.
04/03/2018- Buyer and seller have signed the contract! Tomorrow the broker will open title. Inspection is scheduled for Friday.
04/11/2018- Appraisal complete. Environmental tomorrow. Insurance quotes this week. Elevation certificates were ordered for accurate flood insurance quotes.
04/16/2018- All bank ordered reports are done! Elevation certificates were ordered for flood insurance. Insurance quotes expected this week.
A glimpse into the previous project
Important Videos From All Involved In The Deal
Income Properties Portfolio