Author: Jeff Klam

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Colton-Fox 1 Bed + Den Reno

Embarking on a challenging journey, we took on the renovation of a unit that had seen better days. With years of water damage in the bathroom and walls coated with tar and dirt, the task was daunting. Our goal? Transform this neglected space into a desirable living area.

The unit was in a state of disrepair, with holes in the walls, cigarette butts littering the floor, and a layer of grime coating the cabinets. An attempt to wash the walls quickly proved futile – the tar and dirt were here to stay.

This was an incredibly tough unit to turn around. The bathroom had been given many years of water infiltration and negligence for the need of a major reno. The walls of the whole unit, as well as the cabinets were coated with tar and dirt. We were a little overwhelmed by the complexity of smoke and tar and what would be the best way forward.

The unit had holes in the wall that were not properly patched, cigarette butts next to the walls and just disrepair and dirt. We tried to wash the walls to see if that would be a solution, short answer – NOPE.

We had a couple options, 1) try to use multiple layers of primer hoping that it would seal in the tar and dirt. 2) tear down the drywall and replace drywall in the whole unit. 3) Drywall over the current filth but just adding one more layer of drywall. 4) float drywall compound over the tar and dirt, sand it smooth, then prime and paint.

We went with option 4, we thought option 1 would not be a long-term solution and option 2 would be extremely costly. We debated between drywall versus compound and our trade – Justin at Gilchrist Brothers Interiors convinced us that option 4 would seal the tar and dirt in and still be a cost effective option. So far so good.

The bathroom needed a complete gut, right down to the studs and beams.

Completely rebuilt the floor, and then mold free drywall. Then a layer of complete waterproofing, followed by tile. What a difference.

The layout of the apartment was not useful. There was one incredibly large bedroom, with one huge closet. We added one wall, two closets and a built in desk in the den. We also added a breakfast nook, with a four-piece kitchen which we think turned out phenomenally.

The unit started coming together, looking more like a place I would want to live. All the big stuff took time, the plumbing in the bathroom was completely gutted and redone, the bathroom was completely redone, the unit didn’t just get a polish it really has a new lease on life.

We knew this unit was going to be a bit of a struggle. But seeing where it started to the finish line shows that some vision and work can make a big difference. Now to get it rented and move the value of the building higher!

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Uncategorized

Colton-Fox Building Year End 2023 Update

2023 has been the year to improve this mixed use investment property.

Commercial Units

We have an ongoing issue that we need to make our investors aware of. While they are still paying rent, we have been sued by Dorians Greek Taverna. The issues revolve around them refusing to accept the lease as written, making demands for space they are not entitled to and objecting to paying CAM costs which are supported by actual invoices. We consider the suit completely without merit. We have counter-sued for damages and to remove them from the building. We are confident that we have no legal liability exposure and that we will prevail, but these kinds of issues take time to resolve.

Also unfortunately commercial tenant Local Losers failed in April 2023, but we are pursuing compensation for the balance of the lease. By time the new tenant is operating and paying rent we will have lost about a year’s rent on the 3222 space.

We can however now happily announce that Go Grill will open at the Colton-Fox Building, target April 2024. This franchised fast casual restaurant offers healthy, quick and very tasty meals. Guests select their vegetables and proteins from a self serve bar, the food is weighed and then grilled in front of the guest with the addition a favorite sauce.

While the temporary reduction in commercial revenue is not great, the new lease has built in escalation which was not present in the previous leases. In the long run this will result in a higher valuation for the building.

The other commercial tenants are operating well.

Residential Units

In the early part of the year we improved the residential hallway and stairway with new paint, new brighter energy efficient lighting, unit numbers and peepholes, and classed it up with the addition of some modern art.

Turnover gave the opportunity to renovate and refresh studio Suite 3 in April 2023 with a whole new kitchen, new appliances plus dishwasher and over the range microwave for the first time, carpet, curtains, paint, LED lights and other enhancements. Strong demand for rentals in Vernon and the renovation allowed us to moved that unit from $710.50 a month to $1200 a month.

In September we were finally able to get Suite 5 vacant and start renovating. Suite 5 is the largest apartment in the building at 739 sq ft. but had the lowest rent at $615, with landlord paying the utilities. It also needed the most renovation due to a disintegrating bathroom floor, extensive cigarette smoke damage and other tenant caused damage.

Suite 5 has been converted from a 1 bedroom with a storage closet into a still generously sized 1 bedroom + large den each with new proper 4 ft closets, making the unit much more valuable. We created a built in desk, plus added storage over the closets and desk, using the 10 ft ceilings to our advantage.

The unit received new paint after repair of all the drywall damage and skim coated all the walls to solve the tar problems. The enhanced kitchen includes a new peninsula (using recycled cabinets from Suite 3) with live edge eating bar. It now has a dishwasher and microwave range for the first time. The harvest gold stove and old white fridge were replaced with stainless steel appliances found at a bargain. The bathroom was completely rebuilt from the joists up and now features a tiled shower. New carpet tile in the bedroom and den, new LED lights and three ceiling fans, baseboards and trim, and extra built in storage over the new closets. We expect to have Suite 5 complete by end of 2023 and expect to rent it for around $1700 a month plus utilities.

Several water leaks and problems uncovered in the Suite 5 bathroom reno lead to the decision to completely replace all plumbing on the upper/residential level. While this is a substantial and costly improvement, with a commercial unit vacant and Suite 5 bathroom under renovation this was the best time to complete the work. The plumbing was a mix of copper and caste iron, which we found to be in the last years of usefulness and starting to fail. The problems that would have arisen from not changing these out now would have been years of leaks and potentially sewage dropping into the commercial units.

The replumbing also allows the installation of coin laundry just steps from the apartments, a great addition to the property.

We are very happy with the renovation progress. While it involves some short term vacancy during renovations, all this work increases long-term cashflow and leads to a higher valuation for the investors.

We negotiated higher rent on another suite and have continued to increase the rents on the remaining 2 residential suites by government allowed percentages each December. In May 2022 Residential Rent was $3,350 but by January 2023 we expect to be at about $5,100 per month which is 152% higher residential rent. Beyond that we still have 3/5 units prerenovation with the original tenants so there is still room for improvement.

Financing Activities

We pivoted to a combination of GP provided funding as needed and a good low rate vender carry mortgage, but the mortgage needs to be renewed or replaced in April 2024. There are indications interest rates will decrease in 2024 so we are weighing our options carefully to find the best path forward for our investors.

Due to heavy reinvestment into the Colton-Fox building, the smaller mortgage obtained, and lost revenue due to vacancy it does not make sense to do distributions at this time. 2024 should have increased monthly cashflow and therefore our plan is to push out those cashflows to the investors as and when it makes sense considering the refinancing efforts.

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News

Wildfires in the Okanagan.

511 Church
Click on the link to head to Addy to invest in this conversion.

Dear fellow addy investors:

As you may have seen in recent media reports, wildfires are affecting various areas of the Okanagan. Rogers Management Group and addy would like to reassure you that our projects in Vernon and Oliver are not under threat. Both are located in the center of  their respective communities and are very unlikely to be threatened. 

Restrictions on the use of all temporary accommodation by tourists are in effect in and around the Okanagan to allow evacuees the best opportunity to have places to stay. While the Okanagan is amazing for tourism under normal circumstances, please stay away for now unless you absolutely need to be in the Okanagan. 

Heavy smoke is impacting services and transportation. For example, mail delivery in Oliver was stopped yesterday due to air quality issues. Kelowna International Airport suspended all normal operations to concentrate only on firefighting efforts. Firefighters and equipment from across BC have been mobilized to fight structure fires in West Kelowna  

We have suspended some planned renovations temporarily so as not to tie up trades or accommodations unnecessarily. This short delay will not adversely impact the projects or timelines. If anything impacts the properties we all invested in we will update you.

In the mean time, our support goes out to all impacted Okanagan residents and all the firefighters working tirelessly to protect the communities of the Okanagan Valley  

Cameron Rogers

Rogers Management Group

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Alternative Investments

How do you buy a church exactly?

Oliver United Apartments is a project to build much needed rental housing into a 100 year old historic church at 511 Church Ave, Oliver BC. The building was the first church in Oliver, founded the same year as the town itself. Many years ago when the town renamed some streets Church Ave was named for the building. It stands a block off Main Street/Hwy 97 in the center of the community famous for wineries, fruit and sunshine. 

Buying a church is quite unlike buying a residential or commercial property. Motivations and processes are completely different. 

In addition to being a place of worship, key life events like weddings, baptisms and funerals are celebrated in churches. For many members the building serves as the center of their social and volunteer circle. They may have met their spouse at a church social or hung out with their best friends while running a soup kitchen every week for years. And then there is the time and money invested and resulting sense of ownership members feel. Feelings can run pretty strong around churches. 

RMG has unique insights and experience with church transactions. Cameron Rogers has been involved in building, managing and leasing churches as a volunteer for many years. Jeff Klam served as CFO for a group of churches in BC where he bought, sold, leased and managed church properties. RMG can understand and find common cause with the church members who want to bless the community. 

When approaching the Oliver United Church to buy and redevelop it RMG asked questions like: What is motivating the congregation to sell? What are they planning to do next? How many committees and boards have to approve the contract? How do the members feel about the sale? How can we ensure the building continues to serve a constructive use for the community? How can we honor 100 years of service and history?  

The acquisition of this particular property was pretty interesting. 

RMG learned the remaining members of the congregation are elderly and unable to continue maintaining the property in the long term. They were looking for a solution that would help the community. RMG crafted a unique deal with a nearly year long close and a fixed term lease back for part of the building, while adding rental housing to generate revenue.

This arrangement allowed the congregation to celebrate their 100th anniversary in December 2022 using the whole building including the kitchen and church hall. Then RMG closed the purchase and reduced the size of the sanctuary to create a more intimate space, along with a rearranged foyer that now serves the place of the fellowship hall. 

About 3/4 of the church will be converted to six units of rental housing during 2023.  When the congregation is unwilling or unable to continue they will move out and RMG will convert the rest of the space to two more rental suites, not later than 2027. 

Everyone agrees that rental housing is desperately needed in Oliver BC. There is always demand as more people move to the south Okanagan but the town is constrained by the Agricultural Land Reserve from spreading out. 

This church was one of the first public buildings in Oliver so RMG’s preservation of the exterior including the stain glass windows and bell tower will be meaningful for the whole community. 

Carrying on the Oliver United Apartments name is a reminder of the 100 year history of the Oliver United Church, a gesture much appreciated by the church members.

You can also play a part in preserving this historic structure and profit from the change of use to housing by investing in Oliver United Apartments via the addy platform. 

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News

Colton Fox Studio Reno #1

Anticipation, like waiting for fresh cookies to come out of the oven, or seeing the first snow of the season when you have forgotten how much you hate shovelling snow because enough time has past.

The best way forward with our investment in the Colton-Fox building is when we can renovate the 5 residential units and move new tenants in at market rates. Increasing the revenue on an annual basis of $4,800-$6,600 per unit depending on what the rental contract will be signed at adds value to the building.

We started by gutting the 27 year old cabinets, carpet, and appliances.

Next was making sure the unit was cleaned, and the smoke was completely out of the unit. The ceiling and walls were primed and then painted. Wow, what a difference some paint makes.

Kitchen and bathroom flooring came next. And then moving right into building out the kitchen. We really improved the flow and usability of the kitchen by putting in a corner, adding a dishwasher and microwave range hopd and replacing the apartment size fridge and stove with full size appliances. Also added a ceiling fan with light and replaced all the lights with LED fixtures.

You gotta work work work!

Well we put in the work and now the unit if finally complete. Now to finalize some paperwork and get the tenant finalized. But here it is, final product.

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Uncategorized

Colton-Fox Maintenance Q1 2023

All things need a little polish and a little shine, when you are ready to turn 119 you might need even a little more love.

The more passive conventional part of the ownership plan is to collect rent for cashflow, build equity and enjoy long term appreciation. The active part of the ownership plan is to invest in upgrades for the residential portion to drive increased property value independently from the general market trends.

This is the residential hallway before and after our first reno push. Adding a little art really classes the place up.

Hallway before

Hallway after paint and lighting.

New long lasting LED lights pretty much doubled the brightness in hall and will save some operating costs. Painted ceiling white, walls with Cloverdale Paint’s Ocean Crest, trim Midnight Magic and Doors Oxford White. Cleaned and repainted all the ceiling vents. Replaced suite door Kirf and sweeps. For the finishing touch, changed out the old sticker door numbers to nice aluminum screwed on numbers. Installed a couple paintings. Replaced entry door closer and handle too. Scrubbed floors down good. Better looking hallways should lead to better tenants in the long run and hopefully more tenant pride and respect for the building. Also no point refurbishing suites only accessed off a dingy hallway, so we start in the common areas.

This is a great start to how the year and we will be able to renovate one apartment after July when we have scheduled a tenant to move out. Future updates coming soon…..

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News

Colton-Fox Building 2022 Recap

What a year! We found a building with 4 commercial tenants and 5 residential apartments. We made an application to make a crowd funding raise through AddyInvest. Rogers Management Group invested with 1061 investors through Addy, raising $550,000, for the purchase of the investment property in downtown Vernon, British Columbia.

The building was built in 1904, and was the home of R.E. Berry Drugs. The building has been home to many businesses over the years; a grocery store, barber shop, pool hall, leather shop and restaurant.

One of the interesting facts about the building is they built the building around a furnace, calling it a revolutionary heating system in 1904. It was a forced air heater where the system was in the basement and was originally a firewood based burn system but was converted to coal with a feeder mechanism.

The building still has good bones but will need continued maintenance. This year we were able to update some of the plumbing and do a bit of electrical work. While there is more to do We were able to make a distribution back to the investors of the Colton-Fox building through AddyInvest.

Here is to a new year and continued success through Real Estate investments.

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News

Colton Fox Bldg Plumbing Update

The Colton Fox Building continues to show its age. We understood there would need to be updates to the plumbing over time. The building was built in 1904 and so over time different materials have been used and things have been cobbled together. A pipe collapsed in the basement and so there was some backup and a new solution was needed. We called upon our plumber of choice in Vernon, Branch Plumbing, and they were able to bypass the collapsed pipe and the problem is no longer there. Thanks Branch Plumbing for coming to our aide and getting our Tenants back to living and working in Vernon.

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Podcast

Adaptive Re-Use Explained

Ever look at something truly old and out of date? Think to yourself that, as you look at the object and say how can this be made into something that we can use today? There are many Youtube videos of bringing something well made and wiping off all the old and adding some new so that the object works again. The object just needed some care, and expertise to be brought back to its intended use. But what happens when you need to change how something is used? How do you get an object designed for one use to be able to work for another? The exercise is a big game of “what if?”

The what if we were able to get that company to come here. Or what if we could change the shape to this? Many questions and finally something comes up that seems to make the most sense. Next your energy and momentum go from option to this is truly a possibility.

Many businesses do this out of necessity. They think of an idea, start the process of making it a reality, but there is a point where they look at a space to work and they see the future sitting there in their head. They then go about making that a reality.

When you see opportunities, you look for solutions. Sometimes those solutions are not what you first believed were possible. The key is to learn. Understand the area you are finding an option for. Talk to as many people as you can to find out what would work in that market.

We bought a church in Oliver, British Columbia. We originally were working out the details of the sale with the idea of moving from an assembly space to a sales space and a learning and functional space that would have been used by an opportunity workshop, a government funded program that helps mentally disabled kids and adults. We knew the building was for sale and saw an opportunity to create a wonderful space for this local business that really helps the community and helps people. We looked at the space of the church and could adaptively reuse the space in another form that helped the community. For a few reasons this endeavor did not work out. So what do you do? You work out the next adaptive use. You pivot from one idea and look for another usable idea.

Rogers Management Group is based in British Columbia, and so we know there are cities and large areas with significant housing needs. This allows us to look at options of creating more housing. Our plan B is to meet the needs of Oliver with providing additional housing by converting the assembly use space into apartments.

Turning open spaces and defined areas into something different takes a different talent. But the most important aspect is being able to take opportunity and bring that together with community needs. Then you can adapt and conquer.

This is by no means a complete project yet, and if you would be interested in more information or the progress of this project please contact Cameron Rogers or Jeff Klam. We will share ideas and progress, but you can also invest in this project or similar projects. Just reach out and talk with us.