Gray Moves Towards Closing On Derry 12-Unit

 

Gray Property Group is pleased to announce that it has completed due diligence and secured financing for its latest acquisition, a 12-unit apartment building at 6 Old Chester Road in Derry.

The Property, under contract at $520K ($43K/unit), represents a huge value-add opportunity. Despite full occupancy and sound structural integrity, the building is in need of significant cosmetic and utility system upgrades to correct current rents that are well below market at ~$700/unit/month. Gray plans to invest an additional $240K ($20K/unit) to rehab the Property in stages of 3 to 4 units at a time, bringing rents up to market at ~$1,350/unit/month within 4 months and achieving a stabilized valuation of $1.2M. The projected cash return is north of 30%.

Like our previous projects, this deal involved a significant level of creativity. First, the deal was found off-market via a direct mail campaign, which allowed us to build in a 5% discount off the purchase price due to the lack of a broker’s commission. Second, we negotiated a $100K second mortgage with the seller with no interest paid for the first 18 months, which improves cash flow during the rehab period and has allowed us to responsibly use a greater degree of leverage.

Gray plans to close on the Property on August 30th and begin rehab immediately. Stay tuned for updates.

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