Day 10: Before Time Runs Out | Saving a Failing 200 Unit Apartment in 90 Days (Ep. 3)

It is 100% creatively— this place is 75% occupied. This is legitimately the problem. It's full of junk! And you moved the stuff— oh wow, that broke right off. That's $45,000 a month of increased income. Speed is where you make money in deal— We gave ourselves 90 days to turn around a failing 200-unit building. Now we did step 1, we closed the darn thing. We're on episode 3 of this series, so if you haven't seen it yet, you can go back to the beginning and actually check out the close. The numbers, but we did this thing crazy low down. $371,000 down to buy a 200-unit building. $12.2 million transaction. Ultra low down. However, that was phase one. Now we actually have to execute the project. We are ten days in as of the filming of this video. I've gone out. I've started the project personally. I've trashed out some of the units. We got things ready to go. But here's where we're at today. By the way, welcome back to the channel. This is Multi Family Strategy. I am Christian Osgood. We just closed a 200-unit creatively financed, not seller financed, creatively financed. With the current lender. The bank actually gave us a custom note to close this, which is how we got this done. So now low down is fantastic. It doesn't mean the project is free. In fact, we have some serious money to get spending on this, about $1.5 million to get the project rolling. We're getting our teams going. So on today's episode, I'm going to talk about where we are at today on this challenge. We have 80 days remaining of the 90. So I'm going to share where we're at on day 10. The staffing, the actual physical part of the building, the lease-up, and our next steps. If you are trying to do a project like this and make a ton of money on it, this is how you turn around a project like this extremely quickly. Here we go. So what are we actually trying to accomplish? We want to get renovated, made ready, leased up. We're going for a target of 95/95. We want to get 95% of market rent at 95% occupancy. Now, over the next 80 days, We're not as worried about 95% of market rent. We do want to see if we can hit 95% occupancy. That means we have to get make-readies done, we have to get the staffing in place, we have to get the leasing plan in place, and we actually have to execute on all of it. And we have to do it really fast, really well. So the scope, day 1, we have 46 vacancies out of 200 units. That's a pretty good chunk. Virtually, we have a quarter of the building that is currently unoccupied. Now we do have 4 non-pays, so literally exactly 50 units Are offline in terms of income. We've already started the process for the pay or vacates and the eviction process. We'll see how we do on collections, but we actually started with the existing tenants. For the most part, we're collecting rent. We just have a lot of vacant units. Now, what you saw in the past episode, a lot of these units have never been online. They're not made ready. So it's not that we have a leasing problem. It's that we have a problem of no units available to lease, which means that is step number one. We want to try to get through this. In the first 20 days, we're halfway through that. So where are we at right now? I'm gonna pull this up from our team. This was our starting scope of work. 19 units need trashing out, tub and counter resurfacing, 37 units needed, floor replacement, also 37 units needed, full paint, whole interior, 31 units, sheetrock repair in 19 units, paint touch-ups in 11 units, appliances needed in 15 units that we're aware of. We'll probably find a few more broken appliances as we go through this project. So things that I am aware of that we needed: 12 refrigerators, 4 stoves, and 5 dishwashers that were all completely out of service. Now, if you guys have followed the channel for any amount of time, you know my least favorite thing in all of real estate is when people mismatch the colors of their dishwashers, their stove, their range, and their fridge. They should all just be one color. We decided to go with black for almost all of these unless the existing appliances were already almost all white, in which case we'll swap out one there. But generally speaking, we're going all black appliances, all the same appliance. Every single unit. And in the first 10 days, we've had all of our fridges and half of our stoves already delivered and getting installed. In addition, we've trashed out 18 of the 19 units that need trash out. By end of day tomorrow, we'll have all of the junk removed from every single property. In fact, as you can see from this text right here, every single dumpster is completely full, which is why we haven't done the last unit. We just need to get a little bit more space. Trash comes later today and we'll get it all set up. But the trash out, how do we do it? We found a local staffing company that provided 4 additional employees for us. We kept 1 maintenance guy on from the prior ownership who's actually doing fantastic. So staffing-wise, we need 3 people. We started with 2. We have a leasing officer who runs the office, is helping with the transition of the whole property, and is running the admin and initial lease-up. However, she doesn't get to lease anything until we get units ready. So our Employee who we kept is helping keep the make-readies rolling, and he knows where most of the things are at project-wise right now. So we have external help coming in, and starting next week, my normal contractor that I like to use in Texas is going to be adding multiple teams of 3 people to start renovating units. They're finishing up a project right now. So next week we'll have 2 groups going through of 2 people from a staffing company doing various projects. We'll have 1 person coordinating all of them. From onsite, and we'll have 2 groups of 3 people going through starting renovations on the interior work, the paint, and the full make-readies. My goal is that by day 20, we have about 25 available units to start marketing, and then you guys can follow with us our exact process for how we market every single one of these units and how fast we lease. Now again, we only have 80 days left to hit this target of 95% occupancy, so we gotta get ripping. So the first thing that you need to do when you do any project like this is you have to get the units physically ready, as I mentioned before. So the first thing you want to do is you want to phase out what does a make-ready unit actually look like and how would we get them all there? So that's how we broke this out. When we said, hey, 90 days to get this done, we need to get stuff online because it's going to take some time to lease 45 units. Once we get them marketed, we have to do showings, we have to find interested people, we have to get these leases signed, move-ins scheduled. There's a lot of work to be done, but first we got to do the basic blocking and tackling. So you saw me out there cleaning some of the units. But we really have to phase out what needs to be done first. So step 1, the junk that's lying around, pull it out. That can be done really inexpensively with day labor. I mean, you just get people, bodies in the units doing the work. Now, when you want to do a correct painting, a little bit of electric, we're swapping out some outlets, doing some wall repair. I prefer to do that with a licensed bonding contractor who actually knows what they're doing. So you don't have to go back in and do it twice. I hate doing projects multiple times when you can just do them correctly once. So we're bringing a quality team in there to get everything turned. They're gonna have multiple teams doing multiple units at a time. Now, when a unit is finished, we're gonna have it photographed, and then our leasing person's gonna come out and they're gonna actually walk that unit, and they're also gonna give us our— their thoughts and opinions. We wanna make sure the units are actually done. We'll then get them photographed and we'll get them online. I'll go through this process in the next episode for exactly what this looks like, as we should have completely made-ready units ready to go and online at that time. So I'll actually go through our software. What it looks like, how we take the pictures, and the entire marketing strategy. I'll give you guys the entire playbook as we do this on episode 4. But for today's episode, I just wanna talk about what the actual physical looks like. If you have a clean unit with solid flooring, keep the carpet if it's salvageable, it looks good. If not, replace it with LVP. I love glue-down LVP. Click-together works too and looks a little bit nicer. The glue-down stuff, if you have damage, you can pull off individual planks pretty easily and replace it. So it depends on the aesthetic you're going for, but I really am a big fan of glue-down LVP. The main thing for me though, hard floors everywhere. Where we can eliminate carpet, it is always better. It looks nicer, it's easier to clean, it stays in better repair. The next thing that we are going to do on an operations standpoint is we're actually going to start collecting security deposits. Prior ownership gave people an option to either pay more in rent or do a security deposit. What happens logically if you are a tenant and you are leaving and there's absolutely no cost whatsoever to you to leave the place a mess? Everyone leaves it a mess because there's no security deposit to actually get back. So that's why you're seeing units where there's junk everywhere, where there's holes in the walls, things are beat up because people haven't been incentivized to care. So with a little bit better leasing, the maintenance will start getting a lot better. Now, simultaneous to all of this, we're going to start some exterior renovation. The decks look old and tired. The parking lot has some damage. We're going to get crews working on that simultaneously with all this. But the first thing I'm focused on, if the goal is 95% occupancy, we have an otherwise very, very solid building that doesn't seem to have an actual leasing issue. We can start moving in people while we're getting through this project. We want to get this income up as soon as humanly possible. Every month that we have vacancy, that is missed revenue. Now, for me, I personally like getting paid, so I do like getting cash flow as high as possible. But when you have investors, as we do on this project, The most important thing to me is I have to make sure that I'm also getting them the best return we can, which means we're managing the incomes and the outflows of the project. I want to make sure that we're optimizing income as quickly as we can. So 95% occupancy and 100% of the units available is the first project that we're gonna be working on. So a summary for our 90-day scoreboard. We have 80 days left. We have 46 units to make ready. We've trashed out 18 of the 19 units that needed trash out. We have purchased a dozen of the refrigerators we need. However, we have created zero rent-ready units and zero leased units. We're gonna start getting those numbers up as fast as we can. Do you think that we can actually finish this project on time? I'm curious to see your thoughts. Call your shot now. I'm gonna film the entire thing, so you're gonna get weekly updates on this bad boy, but put your answer in the comments below after you've done all the great things that you always do with liking the video and subscribing, all the things you do to help promote this channel. Let me know if you think we can pull this off. in the comments. Are we going to make it or are we going to fall short? 95% occupancy. I'm calling it right now. I think we're going to hit it.