Costa Alegre

Arise Capital is excited to announce the sale of our Costa Alegre Apartments! This building has quite a bit of sentimental value as it was the first building we syndicated. Purchased in 2018 with just our families as investors, we were lucky enough to negotiate some great seller financing terms. We paid $1,080,000 for 11 units and an on-site office, or $98,181 per unit.

The previous ownership had a lot of long-term tenants at below market rents, as well as a drug dealer living and dealing out of the property, so the owner just wanted to get out and in a hurry. Our down payment was just over $300,000 and upon closing we got right to work improving the tenant profile and negotiating with the problem tenants.

Within a year and a half we had all new tenants and drastically improved the operations of Costa Alegre. At the end of 2019 we decided to refinance and were able to pull out all our initial equity and then some, in total we were able to get over $330,000 back to investors.

It’s been a great building, but it was built in 1958 with smaller units and has had quite a few maintenance issues so as our loan was coming due it was time to let it go. We closed in the middle of May 2024 for a sale price of $2,150,000, thus adding over a million in value in six years.

In terms of returns from cash flow, refi proceeds, and sale proceeds, investors received a 337% return on equity invested in a six-year timeframe. We’ve never been fond of using IRR’s as we prefer equity multiples and cash on cash returns, but for those interested in IRR’s, we achieved a 47% IRR.

Thanks for reading and stay tuned for the next Arise Capital investment opportunity.