In November 2011 I toured a 29 unit apartment building located at 156 Estabrook in San Leandro with my clients. It was a very special day because I presented them with a closing gift of a new iPad 2. I came up with the idea of giving the IPad as a closing gift at a signing a few weeks ago, you can read about it in my iPad closing gift blogpost. The day was exciting because I had the gift with me and I had been waiting for the right time to present it to them.
Not only was 156 Estabrook a fantastic apartment building in a great central San Leandro location, but Rosa was clutching her new IPad 2 throughout the entire showing just waiting to go home and play with it. It was fun letting her know which Ipad2 apps were my favorite and talking about how incredible the tablet is. This 1031 exchange process was going very well after slogging along for a few months. I was intensely focused on my clients goals “get us out of our apartment building at 2701 High Street in Oakland and into a better location in a building that has cash flow.”
I have put in over 36 hours, researching and strategizing, showing and underwriting properties on behalf of my clients Luis and Rosa. 2701 High Street was a very challenging property to manage because of high turnover and undesirable tenants. After successfully helping them sell that property, the work began on finding an upleg for them.
The process of completing an exchange out of their 32 unit building in Oakland and into a much nicer property in San Leandro took a full year of solid work on my part. But it was very rewarding and worth all the effort. The search for Luis and Rosa’s replacement property started with hunting on loopnet every day for a high quality property in San Leandro California, closer to where they live. I realized quickly that I had to do more for my clients than simply wait for a property to drop in our laps. And because I had no exclusive right to represent them, I ran the risk of having another apartment broker find them a better property before I could.
Many other brokers were suggesting that they buy a triple net property (NNN) instead of an apartment building. The pressure was on but I knew I would succeed if I stayed true to my core values of honesty, integrity and hard work. I honestly did not feel that a NNN deal was right for them as It presented some challenges and additional risks. Instead of taking a passive approach I decided to be proactive. I began by scouring over our database of over 2500 large apartment buildings in the East Bay. With the help of my team Phil Williams, Link Corkery and Devon Corkery at Property Counselors Link Corkery, Inc., we located seven properties in San Leandro that fit the profile needs of my clients.
I immediately wrote a very nice letter to all the owners explaining that I had a client in San Leandro who was in a 1031 exchange and asking if they would consider an un-solicited offer on their property up to about $3.2 million. I indicated how much money we had for a down payment and a few personal items of interest about the family. Two days after I sent the letter to all the san leandro owners on our list I received a call from a gentleman named Terry who is a major apartment building owner in the South Bay. He was direct and to the point, he said that he got my letter and he would consider selling his building for slightly more than our target price of $3.3 million. He said “I get hundreds of these letters but this sounds like a perfect fit”. Needless to say I was excited to have found an open door and I went to work requesting financial documents, underwriting the apartment building, and setting up tours and meetings.
We sat down with Terri’s team at Vasona management in Los Gatos who manage the building and also provide outside management services to other owners. We met with Jeorge and Killian in their office in Los Gatos. I was extremely impressed with the professionalism of Terry’s team. The group really knows how to manage property. They had all the information at hand, knew every capital improvement to the building and wasted no time in facilitating the showings and supplying documents. I look at commercial real estate for sale in the San Francisco Bay Area every day. A big part of my job is to drive around and study the market, preview apartment buildings and tour them whenever possible. So its safe to say that I have become an expert on Bay Area apartment buildings. I have probably reviewed, toured or evaluated nearly 500 buildings over the past 3 years. Sometimes you can just tell when a property is going to be good or bad just by driving up to it. From as far away as a full city block, I could tell 156 Estabrook in San Leandro would be a high quality property. I was not however expecting to be blown away by what i saw.
It started with the completely redone facade complete with matching awning, tile staircase and simple professional landscaping. We were greeted by a warm professional on-site manager named Lee who knew everything about the property and was as well equipped as the quaint leasing office that Vasona had designed. 156 Estabrook is a fantastic example of how to own and manage an apartment building. Because the owners have taken such good care of the property it made it much easier to do business with them. All the parties involved seem to know that the pricing would be firm and the negotiations straightforward. Keeping an apartment building in great shape filled with quality tenants adds in-calculable value and creates a ripple effect throughout the ownership cycle.
Close a deal with Nick Myerhoff and Property Counselors Link Corkery, Inc. and get a free Ipad 2 at close!