The last apartment deal Tom describes in this short is the most scared he’s ever been making an investment. The complex, Long Acre Ponds, sits outside St. Louis, technically in Illinois. It was built on top of an old coal mine where the land had subsided about eight feet, leaving ponds between the buildings.
The old mines were dug with roughly 12-foot seams of coal, leaving columns of coal to hold up the roof. Over decades those voids fill with water, the columns deteriorate, and the ground sinks. We bought the property after the prior owner had already faced the subsidence problems, made the repairs and gone into foreclosure. The purchase price was $21 million, against an appraisal of $40 million at the time. Scary deals can still work out when the price, the repairs and the management line up, but only after serious due diligence. Not every deal does.
Key points
- Long Acre Ponds is a multifamily complex in Illinois, near St. Louis, built over a subsided coal mine.
- The prior owner had already dealt with the subsidence repairs and then gone into foreclosure.
- Ticker Tape bought the property for $21 million; it was appraised at $40 million at the time.
- A scary fact pattern can still be a good deal at the right price, but only with real due diligence.
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