Investor’s IRR: 43.28%
Initial Equity: $40,000
Acquisition Price $160,000 (July 1996)
Disposition Price: $240,000 (November 2000)
Hold Time: 42 Months (3 ½ Years)
CAP Rate at Purchase: 12.50%
CAP Rate at Sale: 8.5%
710 Burbank is a special project for Signature Partners as it was our first venture into commercial real estate investing. In July of 1996, we purchased this office condo located just off Wadsworth in central Broomfield. The project was 100% occupied at the time of acquisition by four small professional office users. We personally managed the project during our ownership (including cleaning the toilets and repairing broken windows) in an effort to keep expenses down for the tenants and the return up for the investors. The Investors received periodic distributions from the performance of the asset that were north of 15% throughout the entire hold period (and ultimately realized a 43.28% internal rate of return). The project involved relatively small dollars; however, it was a great experience to test our investing methodology and learn how to best be a responsive and effective landlord. The partnership was able to keep the project fully leased until the end of the hold period, at which time a vacancy gave us the opportunity to market the building for lease or for sale to an owner/ user. We quickly found a user that was only interested in purchasing and we were able to secure a sales price that more than doubled the investor’s original equity (which made the decision easy to sell and move on to bigger and better).