Ashley Terrace is a 176 unit apartment complex that was purchased as part of a 4 member partnership with the intent to be converted from apartments to individual condominiums. We felt that with quickly rising pricing in the Metro (an especially in Henrico) we could provide an affordable level of housing for central Henrico. The property was purchased in 2006 from its original owner who had built and operated it since the late 1960’s.
I remember walking onto the grounds of Ashley Terrace and thinking that these were 176 housing units that we could purchase for under $40,000 per unit but had to be worth at least double that if sold individually. I was wrong, the number was closer to $100,000.
Since no one had really attempted to do this in Richmond (as far as we knew), we had no existing business model upon which to base ours and no banking institution we could go to who had experience in conversions. We hit the streets in search of funds and convinced Franklin Federal that this was a good idea. They agreed to not only fund the deal but to create a renovation fund to help us get started (the units needed anywhere from $6,000 to 15,000 in renovation with new kitchens, baths and other upgrades) and off we went.
Before the market crashed in 2008/9, we were able to sell roughly 1/3 of the units at Ashley Terrace yet managed to pay off roughly 60% of the loan. We intentionally managed the complex to maximize revenues as both apartments and condos, meaning that we had a protective hedge strategy baked in if storm clouds arose (which they absolutely did) and were able to take advantage of the market transition back to rental property.