Osceola County Commissioners bought another key parcel for the future expansion of Osceola Heritage Park, voting Monday to pay $2.2 million for an 11-unit rental community on Fortune Road.
The Keston Park complex consists of two three-bedroom/two-bath units and nine five-bedroom/three-bath units. Built in 2001, each rental unit has a private, enclosed pool.
Former County Commissioner Randy Sheive is the seller, and he will make a quick $300,000 profit on the asset he bought just seven months ago.
The county will also pay Sheive $75,000 to manage the property for the next 10 months, until all of the current tenant leases expire. In addition, he will be able to keep all of the rents collected during that time period — which start cumulatively at nearly $20,000 per month but will decrease as leases expire.
Last year the county paid $3.48 million for another Sheive-owned property, a shopping center at 1912 Fortune Road, which was later swapped with the owners of Melao Bakery for two vacant parcels at the corner of Fortune and Shake Rag roads.
“I’ve sold them a lot of stuff around that area,” Sheive told GrowthSpotter. “I sold them the land for the Houston Astros (stadium).”
Over the years, the county has been acquiring property that borders OHP to support the long-term goal of expanding the park north to Fortune Road.
Community Development Director Dave Tomek outlined the plan to GrowthSpotter last October, while the county was negotiating the land swap with Melao. He identified the 1.5-acre Keston Park as one of four privately-owned parcels the county wanted to buy.
“There’s a couple of pieces we still don’t own, so we’ll be looking at those as they become available,” Tomek said at the time. “This is not one of those things we condemn for. It’s definitely willing buyer, willing sellers.”
But Virginia real estate investor Richard Crespo, who owned the rental units at the time, said no one from Osceola County government ever contacted him about purchasing the property. Crespo had bought the community in October 2016 for $1 million, and he spent $400,000 on repairs.
Sheive said he knew the county wanted the property when he bought it in October 2017 for $1.9 million, but he said he didn’t buy it with the intent of flipping it to the county. Rather it was the back end of a 1031 exchange.
“I needed some other stuff in my portfolio, and this came in at a 10 cap rate so it was a good investment,” he said. “But I always told (the county) if they wanted it they could have it.”
He negotiated a $2.2 million sale price, which was the higher of the two appraisals commissioned for the county. Sheive said his appraisal came it at $2.5 million. He said he could have negotiated a 10-percent markup from the county appraised value, which would have raised the price another $220,000, but he elected not to.
Even though he’s profiting from the sale, Sheive said the arrangement benefits the county. He said once all the units are vacant, the county plans to demolish the buildings.
“It’s better for them to buy it from me than to buy it from Crespo,” he said. “This way they’ve got a willing seller and they don’t have to pay attorneys to go through a condemnation.”
He said that because he’s selling to a government agency in lieu of condemnation, he can invest the proceeds in a 1033 exchange, which gives him two years to place the funds.
Have a tip about Central Florida development? Contact me at lkinsler@GrowthSpotter.com or (407) 420-6261, or tweet me at @LKinslerOGrowth. Follow GrowthSpotter on Facebook, Twitter and LinkedIn.
