Sarasota Basis & Positioning Review

Situation

A family office evaluating a $4.2M acquisition of a 16-unit multifamily in Sarasota. The value-add thesis showed rents 18% below market and occupancy at 81%. The family office had 30 days to complete diligence and close. River was engaged to validate the thesis.

Approach

River reviewed rent comparables (confirming the 18% gap), conducted physical condition assessment (identifying $340,000 in deferred maintenance not in the offering memo), and analyzed insurance costs. Including the deferred maintenance and current insurance, the actual acquisition basis needed to be $3.7M to preserve the base-case return. River presented a 3-case model with corrected inputs and a recommended renegotiation offer.

Execution

River reviewed rent comparables (confirming the 18% gap), conducted physical condition assessment (identifying $340,000 in deferred maintenance not in the offering memo), and analyzed insurance costs. Including the deferred maintenance and current insurance, the actual acquisition basis needed to be $3.7M to preserve the base-case return. River presented a 3-case model with corrected inputs and a recommended renegotiation offer.

Outcome

The family office submitted a revised offer and closed at $3.85M — avoiding a $350,000 basis mistake that would have compressed the return below their hurdle rate. River continued as owner's representative through the renovation phase.