Transforming a 115-Unit Fractured Condo
Miami, Florida
The Berlin Group, led by its principals, identified an opportunity in a fractured condo that was sourced through an REO sale (Real Estate Owned) from a local lender. However, this Class C asset came with significant challenges, including deferred maintenance, permit issues, and city violations.
Acquisition and Challenges:
​
The property was acquired for a combined purchase price of approx. $6.5 million and financed with a $4.3 million private loan. The balance was raised through an investor group. At the time of acquisition, ownership records were incomplete, adding complexity to the management process. Water theft occurred after hours, resulting in up to 40% increases in water bills.
Value-Add Strategy:
​
A comprehensive capital expenditure (CapEx) plan was developed, targeting improvements for both the property's interior and exterior. The objective was to create a pleasant living environment which would lead to happier tenants, improved tenant retention, increased demand, and ultimately higher rents.
Execution:
​
The building's appearance was revitalized through painting, installation of a new fence, pothole repairs, and addition of handicap ramps. To enhance safety, security cameras were strategically placed throughout the premises, especially in areas where incidents of water theft and illegal dumping had previously occurred. The primary focus within the property centered on kitchen upgrades.
Value Creation:
​
In 2019, a successful cash-out refinance was completed through Fannie Mae, securing $12.3 million with exceptionally positive loan terms. As a result, over $7.7 million was distributed to the investors. This impressive outcome was driven by a combination of factors: a solid fundamental asset class, favorable market conditions, and effective execution of a well-defined strategy. Notably, the property remains a valuable asset within the Berlin Group's portfolio.
Note: Some figures are approximate and rounded for clarity.