How To Do A Value-Add Real Estate Investment Deal In Missoula

Summary of A Commercial Value-Add Investment Deal in Missoula Montana

• > 24% Cash on Cash Return for Investors
• 36-Month Hold
• Flex/Warehouse Space
• Value-Add via the addition of multiple long-term triple net leases

Sterling Commercial Real Estate Advisors represented the investment group that took this commercial value-add investment deal located at 3102 W Broadway from an under-utilized storage space to a desirable investment property for the next real estate investor.

JUST SOLD! 3102 W Broadway Flex/Warehouse Investment Property  This flex/warehouse building is 100% leased to three tenants on triple net leases at an approximate 7.0% cap rate. With staggered lease terms and quality tenants, the rents from this property should provide owners with a consistent stream of income for years into the future. Warehouse space in Missoula is in extremely short supply. This property is also located in Missoula’s Opportunity Zone.

As a value-add real estate investor, “adding value” or “forcing appreciation” of a property can come in many forms. From a simple facelift remodel to a more complex square footage addition, physically changing the property is the most common way to add value.

Far less common is adding value via lease improvements. In this case, adding value was accomplished by exchanging a single below market rate, month to month lease for three triple net market rate leases, all 3 years or longer. Minimal capital expense was required to divide the space into 3 separate suits. In addition Sterling Commercial Management Group was retained to proactively manage the property and enhance the lease terms. As a result of improving the leases, the properties’ value increased by more than 45%.

As with most investments not everything went according to plan. After planning to complete the project in 12 – 18 months, it was completed in just over 36 months. That being said, investors still achieved above projected returns.

Sterling CRE Advisors helps businesses, investors and developers buy, sell and lease commercial and investment real estate across the state of Montana. If you would like to understand how you can add value to your commercial investment, don’t hesitate to call Sterling CRE Advisors – 406.203.4547.