Location: Bakersfield, CA
Property Type: Multifamily
Number of Units: 78
Acquisition Date: December 30th, 2009
Status: Sold by Gelt, Inc. on March 30th, 2015
Gelt acquired the Vernon Vista apartment community on December 30th, 2009 for $3,900,000 from GSF Properties. Gelt Invested $1,300,000 and assumed two Fannie Mae loans, with interest rates in the mid to high 6% range, which were maturing within two and half years from the acquisition date.
Upon takeover, we identified and evicted a number of tenants that were not paying rent and underwent an intensive exterior renovation of the property. Below is a list of the deferred maintenance items and capital improvements that Gelt completed upon takeover of the property:
? Repaired irrigation system which reduced excessive water bills and resulted in significant utility savings
? Rebuilt failing patio walls
? Replaced rotted wood siding and fascia
? Fabricated a metal hand rail for the entry steps to all of the ground floor units where a former wood railing was rotted and missing in spots
? Replaced a number of the original HVAC units
? Installed plants to create lush landscaping and did extensive tree trimming and removal
? Resurfaced the driveway and parking lots
? Painted all buildings and changed the color accents of the entry doors
? Renovated and added amenities to the property including a new management office, gymnasium, and free WiFi in the pool areas
? Upgraded laundry facilities to state-of-the-art, water conserving washers & dryers
? Installed security cameras system in the pool and public areas
After completing the renovations, Gelt commenced the refinancing of the two existing loans. A new loan for $3,800,000 was procured at an interest rate of 4.7% fixed for ten years with a thirty-year amortization. After paying off the initial loans, the excess proceeds were used to repay investors? equity. About $200,000 of the funding was reinvested in the property, significantly improving the classification of the asset.
On the advertising side, Gelt began a grassroots marketing campaign, connecting with local businesses and establishing a social media presence for the property. Professionally designed collateral materials and signage were created and displayed with enhanced floor plans depicting furniture layouts. Additionally, a professionally staged model unit was furnished for prospective residents.
With all Gelt?s changes in place, the property performed exceptionally well over the 63 month hold period, consistently achieving 96-100 percent occupancy with strong tenant satisfaction and retention. Vernon Vista was nominated for the 2012 Beautiful Bakersfield Award for ?Best Commercial Remodel? and achieved the best performing property year over year in GSF?s (the property management company) entire portfolio in Bakersfield consisting of over 2,200 rental units.
The property was sold on March 30th, 2015 for $6,630,000, netting investors a 100% cumulative return on their investment over the 63-month hold period.