2437 Morena, San Diego
Purchase-$1.575 million. 12/2012
Sale-$3.0 million. 12/2014
Estimated Improvements- $625k
Estimate Gross Profit- $800k
This is a more ballsy and complicated add value deal b/c there were no comps for the finished product, but for the investing entity, it could have been relatively low risk for several reasons:
1. Instead of a business being a tenant and paying rent, one entity (biz #1) could simply pay rent to another entity (building owner, biz #2). The ownership group of both biz #1 & biz #2 could be the same or at least close enough where all parties benefit.
2. If the property doesn’t sell, rents produced by the property cover most expenses until it does sell.