Case Studies

Case Study: Mix-use on Flatbush Avenue

Purchased: June 2020

Strategy: Value-Add

Purchase Price: $1.075M

Building: Mix-use

Renovation cost: $550K

All in cost: $1.7M

The building had a fire and sat vacant for 7+ years prior to us purchasing it in June 2020 for $1.075M. We proceeded to invest over $550,000 in a full gut renovation, thus transforming both the retail and two apartments into new modern and efficient spaces. The apartment layouts were reconfigured from 2 bedroom/1 bath into a 4 bedroom/2 bath layout, complete with a washer and dryer in each unit. Additionally, we added a 600 sq. ft. deck on the retail extension for the second-floor apartment. For the retail space, we decided to differentiate it by adding heated floors and a smooth cement finish — “chic industrial” with exposed brick. This renovation entailed the removal of the existing wood beams and installation of steel joists. This allowed us to capture the attention of higher-end retail tenants. In addition, we realized the building CofO (certificate of occupancy) was not reflected in the tax classification of the building — we hired an attorney to file a case with the Department of Finance to reclassify the building from a commercial K4 tax category to a mixed-use protected class 1. After a one year process, we managed to win this reclassification and thus reduce the real estate taxes from $27,000 a year to $11,000 (a value of over $250,000). After a seven-month renovation and leasing effort, we refinanced the deal as part of a portfolio and pulled out 100% of the equity we had initially invested.