Introduction
In September 2021, a unique real estate opportunity emerged with the acquisition of an aging building located at 2015 Elmhurst in Montreal. Spearheaded by VisionDev in close collaboration with a passive investor, this ambitious project aimed to restructure and modernize the residential complex. The primary goal was to combine energy efficiency with modern comfort while preserving the building's original framework.
Structure and Financing
A specific legal structure was established for this project, forming a corporation that brought together VisionDev and a passive investor. An initial investment of 1.4 million was allocated for the property's acquisition. The financing was supplemented by a conventional loan of 2 million from Caisse Desjardins and a 400k credit line, demonstrating both a cautious and strategic financial approach.
Acquisition and Approach Strategy
The acquisition of this building stood out for its direct and innovative strategy. Using door-to-door solicitation and cold calling techniques, VisionDev managed to secure this off-market property, thus avoiding exorbitant brokerage fees. The due diligence process was thorough, including detailed inspections, accredited evaluations, environmental assessments, an in-depth study of existing leases, and a detailed renovation plan.
Comprehensive Renovation
The budget allocated for the renovation works was 1.75 million. This project completely revitalized the building, including the renovation of 27 residential units and the transformation of a garage space into an additional living unit. Major improvements included the refurbishment of communal spaces, complete renovation of each apartment, roof replacement, facade brickwork repairs, and a total conversion of the heating system from gas to electric, thereby reducing energy consumption by 50%.
Rental Strategy and Modern Amenities
The rental strategy aimed to maximize profitability while providing a high-quality living environment. Each unit was meticulously modernized, including the renovation of bathrooms and kitchens, installation of new vinyl flooring, and the addition of recessed pot lighting. The renovated apartments were now comparable to new condo units. The inclusion of services such as high-speed internet, modern appliances, washer-dryers, and electronic locking systems for the main entrance significantly increased the complex's appeal. This strategy enabled a doubling of the average rents, reflecting the added value from the renovations.
Impressive Financial Results
Following the renovations, the complex's valuation rose to 7.16 million, generating an annual gross income of 440,000 and a net income of 311,000. This significant increase in value from 3.4M to 7.16M in just 18 months, minus the renovation costs, resulted in a net profit of 2,010,000. These results underscore the efficiency and exceptional profitability of the investment.
Conclusion and Outlook
This renovation project transformed an aged and worn building into a modern and energy-efficient residential complex, positively contributing to the neighborhood's dynamics. The lessons learned, particularly in financing, acquisition, and renovation management, will serve as a benchmark for future projects. This success aligns with VisionDev's long-term strategy, demonstrating its commitment to sustainable development and real estate enhancement.
