UPDATED: May 14, 2018 5:53 PM — A Sarasota-based affordable housing operator paid $3.424 million on Friday for a motel-turned-apartment complex in west Orlando, with another $4 million in immediate investment planned to change the asset's profile.
The 4.6-acre property was formerly a crime-ridden weekly 214-room motel operating under different names in recent years, and lies at 4919 W. Colonial Drive, just east of an intersection with C.R. 431.
The buyer was an affiliate of One Stop Housing, a family-owned multifamily investment group that has more than 1,800 rental units in Sarasota and Manatee counties.
Elevation invested another $1.2 million in renovation work since, according to principal Owais Khanani. It converted the motel to apartments last year after earning an endorsement from the U.S. Department of Housing and Urban Development (HUD) to offer federally subsidized rents to low-income tenants.
One Stop Housing's founder, Harvey Vengroff, told GrowthSpotter on Monday his company does not pursue subsidies from government for its affordable housing, and generally doesn't keep HUD tenants long-term.
About 50 of the property's units are currently on HUD-sponsored leases that Vengroff will allow to time out. He said the property was "about as bad as it could be" at time of sale, and that Elevation principals did not fully invest in exterior lighting and renovations in the last two years.
Khanani said the property was now in "much better shape than when we bought it two years ago," and that tenancy was near 60 units at time of sale. A majority of the units were inhospitable and awaiting renovation work.
"Our business model is different, we don't work with any subsidies," Vengroff said. "We buy hotels that are outdated and convert them to studio apartments at market rate, generally $700 per month including utilities. We make them safe so the tenants are able to move ahead in life."
Vengroff said he anticipates starting a thorough renovation within the next two weeks budgeted near $4 million, to include new plumbing, electrical, sprinklers and kitchens in each unit.
This is One Stop Housing's second multifamily investment in Greater Orlando within the past six months. It bought a 300-unit property in Kissimmee in late 2017, and has a 400-unit property on Orange Blossom Trail under contract with closing scheduled for June. Following that it would have 914 apartments in the area.
An 11,000-square-foot restaurant building separate from the former motel is also on the property, which has remained closed since Elevation bought it.
Vengroff said his goal, after the apartment renovations are complete, is to convert half of the building into classrooms for tenant outreach programs and lease the other half to a restaurant operator.