EXPLORE VALUE-ADD OPPORTUNITIES IN REAL ESTATE INVESTMENT

One cold Saturday morning eight years ago, with great anticipation and excitement, I arrived at a scene that immediately dampened my mood, and filled me with both repulsion and nausea for the rest of the day. When John, my client, had called a few days before, to set up a tour of an old building he had recently purchased, there had been no indication of how bad the status was. All he had said was “Hey Benard, there is a structure I’ve bought that needs some improvements. Let’s meet on site this weekend to go through what we need to do.”

I had been doing this kind of work for John for a few years prior, he usually took me along for the building inspection before he made the purchase. On such visits, I would carefully walk through the building checking for any signs of structural damage, poor workmanship and anything that would compromise the integrity of the building. We had avoided so many wrong purchases in that way.  That’s why I was horrified during this particular inspection. This was clearly the worst of all buildings we had inspected, and it is the only time we were doing the inspection after the purchase had been completed. Have you ever been in a position where you need to deliver bad news to someone, but you can’t because it is already too late? Any negative comments at this point didn’t make sense because this was already our problem, and we needed to focus on how to get it better.

During this first visit, there were parts of the building where I could barely breathe because of the dampness and congestion in the air. The plumbing system was a mess with open sewer pipes, broken manholes and toilets that couldn’t flash. The dark corridors with cracked floors, spider webs hanging off the ceilings. So many things were wrong with this building. If John had not already paid for it, I would not have given it a second look. I quickly wrapped up the walk-through and promised that I would be back at a later date with my team to do a thorough investigation before I would provide an estimate for the works required. In truth, I just wanted to get out of there as soon as possible.

On our return, this time with a little more composure, we were able to spend time in each part of the building. After carefully assessing the extent of the defects, brainstorming possible solutions, designing strategies for repair works, we planned on how to deliver the cost news to John. It was discovered that the building had even more serious defects that had to be dealt with, but this time we were more determined to offer solutions rather than just identifying problems. After what seemed like an eternity of an inspection, we were able to craft a plan on how the structure would be restored. Within a few days, the proposal was submitted.

When it was accepted, we prepared for the execution phase. This was one of the most challenging projects I had ever worked on. Rectifying structural defects, repairing a sewerage system which was in use at the same time, getting rid of dampness in rooms, waterproofing the basement, making architectural changes to spaces, plus many other adjustments that we had to come up with. By the time we were done, the place was unrecognizable. I couldn’t believe this was the same disgusting building I had visited a few months before. The transformation was amazing. Brightly lit corridors welcomed you to spacious aerated rooms. The floors were immaculate, giving a sense of unbound safety. The plumbing system worked perfectly fine, with new toilets and tiling. There was no sign of the previous dampness in walls, and even the basement felt livable. A fresh coat of paint on the exterior made the building look brand new. Up to this day, whenever I visit, I can’t help thinking about how the current users will never know how bad it was before.  When I talk with John about how the different investments are doing, I am always delighted to hear that this is by far the highest performing asset of all his real estate investments.

Before you turn down that opportunity of a building being sold for a good price, take some time and sit with professionals to explore value-add opportunities in real estate investment. Simple alterations can go a long way in unlocking hidden value, thereby creating massive wealth for the investors. To know more about investing in Uganda’s Real Estate industry, visit https://www.barosgroupltd.com/

About the author;

Benard Sonko is a real estate investment manager and founder of Baros Group Limited. For comments and inquiries, you can reach him on +256742140251 or info@barosgroupltd.com