The Daily Transcript
By Thor Kamban Biberman
01/14/21 - Gafcon, Inc. and real estate economist Alan Nevin have formed a partnership to rehabilitate and sell what are currently deteriorating apartments in the region.
The plan is to take existing Class B and C apartments with between 75 to 250 units and repair them to a level where they can make a substantial return on investment. "Southern California is dotted with mid-20th Century-era, garden-style, multifamily housing complexes that are not only showing their age, but can also be out of compliance with safety regulations," the companies said in a joint statement. Gafcon and Nevin are joining up "to help property owners realize the financial potential these complexes hold through a unique renovation process that weighs risk and gains before the first wall is knocked down or hammer is lifted." The process starts with a no cost initial financial and physical assessment of the complex.
In addition to a rough order of magnitude cost estimates on anything from out-of-code balconies and railings to kitchen upgrades, this analysis also predicts market return on the renovation investment -- something the team said is often missing from most major-scale renovation projects. These assessments will help property owners determine which upgrades and repairs will yield a return on investment in the form of rent increases, lower tenant turnover, reduced maintenance costs, and lower utility costs for tenants. They will also determine whether or not an apartment complex is worth keeping. "There's a huge number of apartments that were built in the 1960s and 1970s," said Gafcon chairman and CEO Yehudi Gaffen. He said the problem with these complexes, including many built in the 1980s, is they have incredibly low capitalization rates if they are even available at all. That makes the properties much more difficult to renovate in a cost effective manner. "That's why we're making appeals to legacy owners," Gaffen said, adding so few apartment properties are on the market "there needs to be a way to help owners reposition their units."
Gaffen, who is helping lead the team redeveloping Seaport Village into Seaport San Diego, said he has been involved in the renovation of some 20,000 apartments and condominiums. He has given up working on condominiums, saying the sector became too litigious. He has never lost his enthusiasm for well-located apartments that need some work, however. Read More>
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