Project Sherbrook, Winnipeg
Creativity won this project over. Our client originally was looking at of both twin buildings on Sherbrook (side by side) and prior to the second one becoming available, the first had been a foreclosure and therefore, the building had to be sold within 10% of the appraised value. That being said, when the building was first looked at, that price would not be possible. There were a few reasons, those being price, the units themselves were clean but required renovations & there was a rent rollback required and therefore, an increase in rents was required. All of the above made the original project impossible to acquire.
With creativity, one of the questions we always ask ourselves is, how can we force appreciation? This essentially means, how can we add value, add amenities, decrease expenses and increase revenue? We determined that this building had a full basement, and it was unused, we then explored the idea of creating two units on both sides of a centre hallway. This idea originally was great, however, it came with its own set of challenges, it a was a risk, if we acquired the building and could not complete it, than our client would not be able to successfully BRRR the project and had we moved forward with the addition of units, we’d have to go through city approvals, variances, etc.
That led us, at Arete, to first “vet” the project, than negotiate with the vendors and provide the following solution; finalize our due diligence, remove most conditions, yet remain a condition which was subject to city approval for the addition of two units. We had the project conditional for 6 months and underwent the process of design, city applications, variances, and furthermore, finalizing the project with a final and rigorous review/due diligence.
We successfully achieved city support, executed a well thought out plan and received approval for two additional units in the building taking what was originally a six unit building and turning it into eight units total, taking this project impossible to possible.
The cherry on top? The twin building next door came up for sale and we were able to apply the exact same process and acquired the second one as well and assisted our client once again through the process.
To view our project details in more depth, see below 👇
Investment strategy
Acquire, renovate, add additional units (forced appreciation), stabilize, & refinance.
Property highlights
Some project highlights that we’re excited about:
Well laid out one bedroom suites, including one two bedroom suite in the basement addition.
4 parking stalls per building
We’re able to add our amenities,
Interior Courtyard - serving as greenspace
Dishwashers and full serve kitchens
Bus stop right out of the front and a side yard serving as an outdoor space for tenants (being added)
Number of doors
8 (x2 buildings) totalling 16 units
Future exit strategy
Longer term hold. We represented one of our clients in this transaction, and therefore, we’ve been told this will serve as a long term hold for them. They intend on refinancing & than holding. This is a full BRRR.
Tips
Be creative. In business, creativity in my opinion is one of the most important elements, especially in real estate. Creativity allows you to find solutions where others couldn’t, take an asset which does not work, and creatively find solutions. Both these buildings would have been impossible otherwise.
