Company Description
This property is a fully occupied Mixed-Use building with 4 residential units (2br/1ba) on the upper level and 2 retail units on the lower level.
Both retail units are renewals and consist of a Church and a community center which both generate consistent cash flow. The Church has been there since November 2015 and the Community Center has been there since May 2021. They are both gross leases and both pay for their own electricity. Water & sewer is included in the rent.
One of the residential tenants works at the community center handling production and is also a member of the church congregation.
Refer to the "Documents" tab above to view the following information:
Rent rolls for all 6 units
Inspection report notes and repairs
Utilities
This property has a 7.5% maintenance reserve instead of the usual 5% to account for the deferred maintenance items mentioned in the inspection report.
Updates:
Update 5/3/2022: Token holders voted to extend the tenant in Unit 2 a 6 month lease for $900/month.
Update 7/1/2022: The tenant in Unit 2R reported that the AC unit is not working, the thermostat reads 95 degrees inside the property. The tenant changed the filters and reset the circuit breakers without success. A service technician replaced the control board and identified that the blower is not running. Additional repairs to replace the motor are required to get the AC back up-and-running. The unit was replaced in 2014 and is not too old, but it is in bad condition per the service technician. A new blower is only $675.05 compared to the cost of replacement which is $6,436.55. The Service technician advised the PM team to replace the motor and also complete a cleaning and preventative maintenance on the unit. Based on the original governance survey all token holders completed after their first token purchase, 63% of token holders voted to follow the Property Manager's recommendation for any immediate repairs. The total cost of repairs is $1,192.60 to replace the control board and the motor. These funds will be taken from the maintenance reserve of $32,887 which will be replenished with 10% of the cash flow until it is full again.
Update 7/20/2022: The tenants at 640-2R, 642-2R and 642-Retail all owe rent for the current month and have a past-due balance. The tenants claimed that they were approved for rental assistance under previous ownership. However, they have failed to show proof of approved assistance and we were not able to verify the claims from the diligence rent roll report. Based on the recent governance survey for rent delinquencies, the winning vote for this property is to offer the tenants cash for keys equal to 50% of the monthly rent to move out immediately. If the tenants decline, then the PM would offer them 100% of the monthly rent to move out immediately. The Vacancy Reserve of $8,770 will cover the missing rental income until the tenants either pay off their current balance or new tenants are found and new leases are signed. If new tenants are found, the Property Manager will look to increase rents on the units. Update 2: The insurance provider has made a recommendation for Risk Improvement. They noted that a piece of concrete tile has fallen during their inspection of the property. The repair is needed at the front of the building in order to improve the appearance of the property and avoid any trip/fall hazards for pedestrians. The Property Manager provided an estimate to remove and replace the concrete tile and they are recommending the repair due to the fall/trip hazard liability and to improve the overall insurability of the property.
Update 8/18/2022: The Property Management fees have been reduced to 5.7% due to a new National Partnership Agreement between Lofty and the Property Manager, HomeRiver Group.
Update 8/19/2022: The retail tenant (Church) reported leaks onsite. The Property Manager obtained an estimate for roof repairs & maintenance, along with tuckpointing bricks where the 2nd floor addition was installed, for a total cost of $3,312. The PM is also recommending to install a concrete chimney cap & damper on top of the chimney which has a total cost of $1,017.75 They are not recommending an optional upgrade to tuckpoint where needed throughout all wall elevations (up to 120 lbs of mortar cement to be used in total) for $2,164.30, as it is not an immediate need and is something that can be revisited down the line. Based on the original governance survey taken by all investors, 61.7% of investors (Supermajority) voted to follow the Property Manager's recommendation for any immediate repairs. The total cost of $4,329.75 will be deducted from the Maintenance Reserve which will be replenished via 10% of the cash flow until it is full again.
Update 9/22/2022: The tenants in Unit 640-2R, Unit 642-Retail, and 642-2R have not paid rents to date and they have all declined Cash for Keys. The tenants claimed that they were approved for rental assistance under previous ownership. However, they have failed to show proof of approved assistance and we were not able to verify the claims from the diligence rent roll report. The seller had supplied a ledger, income statement, and receipts that rents were being paid during diligence & prior to closing. The PM is still in the process of figuring out the rental assistance situation for rent arrears. A process server has been out to the property over 10 times to post the 5-day notice and the tenants have all been dodging the server, preventing the PM from being able to move forward with eviction. The PM will be out onsite this week to personally post the notice since the process server has been unsuccessful. The Vacancy Reserve has been expended at this point. Once we receive an update from the Property Manager on next steps, you will be notified immediately.
