The Perks of Rent-Stabilized Properties: Liberating Cash Flow

Purpose

Multifamily properties produce significantly higher returns when they undergo partial or total de-regulation. This is usually achieved through unit repossession and enhancement:

• Tenant buyouts (17.5% rent increase)
• Further investment ($1 rent increase per every $40 invested)
• De-regulation is achieved when permitted rent reaches $2,000.

The Unique Edge

Danconia’s unique edge is its buyout experience. Danconia routinely negotiates with rent-stabilized tenants before a property’s purchase, in order to gauge buyout possibilities and assess their costs.

West 147^th St and St. Felix are multi-family residential buildings, both with a largely rent-stabilized unit mix. In this case, Danconia stepped in post-purchase as a consultant to negotiate tenant buyouts.

Buyouts

West 147^th St investors raised and budgeted capital to undertake five $25,000-per-unit buyouts, estimated to raise the ten-year IRR to 20%. Danconia achieved these buyouts at vastly lower cost:

Value-Added Management

Danconia subsequently oversaw landscaping and unit renovation projects that resulted in aggressive free market rent increases.