Multifamily properties produce significantly higher returns when they undergo partial or total de-regulation. This is usually achieved through unit repossession and enhancement:
Danconia’s unique edge is its buyout experience. Danconia routinely negotiates with rent-stabilized tenants before a property’s purchase, in order to gauge buyout possibilities and assess their costs.
West 147th St and St. Felix are multi-family residential buildings, both with a largely rent-stabilized unit mix. In this case, Danconia stepped in post-purchase as a consultant to negotiate tenant buyouts.
West 147th St investors raised and budgeted capital to undertake five $25,000-per-unit buyouts, estimated to raise the ten-year IRR to 20%. Danconia achieved these buyouts at vastly lower cost:
Size |
Buyout Amount |
Rent Increase |
Two Bedroom |
$15,000 |
400% |
One |
$10,000 |
200 |
Two |
$15,000 |
400 |
One |
$10,000 |
100 |
One |
$10,000 |
100 |
Danconia subsequently oversaw landscaping and unit renovation projects that resulted in aggressive free market rent increases.