Case Study – Ballard 5-Unit
Key Deal Points
- 1541 NW 52nd St, Seattle
- Seller Financing Terms: 5% Interest 3-yr IO, 25% down
- 5-unit with all two-bedrooms
- Sale Price $1.875M
- 08% Cap Rate
- Represented Seller
I highly recommend Candice Chevaillier, CCIM and her team, at Lee & Associates. They are professional as well as extremely knowledgeable of the current trends, and with experience. With very creative thinking, they were able to create a plan to help sell our building at the price we wanted. It was amazing that this sale could be closed in 10 days! If you want to buy, sell or lease a commercial property, they are the professionals to work with.
- Susan and Steve Adams
For more information regarding this case study, please contact:
Candice Chevaillier, CCIM
Principal
D (206) 773-2694
cchevaillier@lee-associates.com
Daniel Lim
Vice President
D (206) 773-2692
dlim@lee-associates.com
Dea Sumantri
Associate Vice President
D (206) 773-2680
dsumantri@lee-associates.com
Chris Larsen
Associate
D (206) 773-2695
clarsen@lee-associates.com
Challenge
The Lee & Associates Multifamily team brought the Seller’s property to market for the first time in 2018. While there were multiple offers, Seller had a price in mind that the buyers could not meet at the time. Though the property did not sell, our approach to servicing our clients to the highest standards left an impression on the Seller. Fast forward five years, the Seller once again trusted our team to represent them in the marketplace. The team was put to the test, marketing a low cap rate property in a volatile market in which interest rates had doubled in the last 18 months.
Action
Based on the first marketing experience, the biggest challenge was the low net income. We made recommendations on increasing rents closer to market so that we could achieve the pricing that the Seller wanted. In the last five years, Seller engaged a property management company and though they were able to generate additional income from parking and storage, the rents were still 20% below market. With the conventional interest rates at 7.5% and Seller’s pricing expectations setting the cap rate at 4.04%, it would require creative thinking around the financing. Our team suggested that Seller Financing will of help bridge the gap as well as highlighting the possibility of adding the 6th unit to to support the premium price.
Result
We received consistent market interest however, potential buyers quickly realized that even with the Seller Financing, it was tough to pencil at the desired pricing. We continued to market the property and many months of working to encourage buyers to strengthen their offer price, the right buyer finally came along. Through several series of negotiations, the Lee Multifamily team was able to bring both parties to reach an agreement and close in just 10 days.