Today, we’re putting the finishing touches on 830-832 Beaudry, a 7 unit building we renovated through Adaptive Realty Fund 3.
This project ran into some hurdles and was delayed approximately three months past its scheduled completion date. Some of the delay was unavoidable, but most of it was the contractor failing to supply sufficient labor because he was swamped on other projects. That’s on us, because we’re overseeing the construction.
The cost to us of this delay is not trivial. We ran up an additional $10k in interest on our bridge loan and probably $5k in misc. holding costs; these costs are born by the fund. But the investors earned an additional ~$30k in pref; that’s money the deal will have to pay out before we get our full ownership stake in the deal.
The good news is that the building came out great. We’ve got beautifully renovated three bed units in Echo Park with skyline views of Downtown starting at $2700 / month. That’s a very reasonable price and I think the units will go quickly.
If we hit our rent targets for the building (likely, but certainly not a sure thing!), we’ll be in a position to refi out the bridge loan and all of the capital invested by the fund to date, while keeping the loan-to-value to a reasonable 60-65%. That’s a win, no matter how you slice it.
Wish us luck on the rent-up, and I’ll keep you posted.