Multifamily Investment Property in St. Louis’s Metro East
Dan Lester is living the American dream.
Having begun his career as a mechanic, Lester opened Lesco Enterprises, a pre-owned car dealership and auto repair shop, in 1987. As Lesco grew, Lester was eventually able to stop leasing from someone else. He purchased property for the business in Cool Springs, MO, near West Florissant and I-70.
In 2009, he continued to diversify. He learned about a nearly 12,000 square foot multifamily investment property for sale at 1901 State Street in Granite City, IL.
The building was booked solid with tenants, promising an immediate source of income on day one. The bottom floor was ideal for a new business idea he had — a showroom for selling used appliances. Positioned in the business district and close to a bus stop, the location was right. He purchased the building as an investment for the future.
With Lester as landlord, tenants enjoyed a full-service lease, and Lester determined not to raise the price as long as he was the owner.
Though Granite City went through tough economic times (the city’s top employer, US Steel, had stopped production in 2015), the building stayed leased. For Lester, it served as a reliable investment for many years.
A Set-Back Turned into an Opportunity
Unfortunately, in 2016, the building suffered from a fire. Though no tenants were hurt, the building was devastated. It needed a complete overhaul if the tenants were going to move back in.
Though it was not an ideal situation, Lester decided to turn it around to improve his property’s value and his tenant’s experience.
He took the insurance payout to remodel the building, inside and out.
- He updated the roof.
- Had the exterior professionally tuckpointed.
- Painted the interior and exterior.
- Installed brand new carpet.
- Updated the bathrooms with modern sinks, toilets, and bathtubs.
Additionally, he covered up the cinder block walls, framed in the apartments, and put in drywall. The building became more beautiful, matching a steadily redeveloping downtown area.
Making a Dream Come True
By 2017, Lester was ready to cash out and transition into retirement. Lester had a specific goal. He wanted to move to Thailand.
Having spent vacations there many times, he had fallen in love with the culture, people, and way of life. He wanted to find a way to spend the rest of his years in the South Pacific.
He sold the auto repair shop and pre-owned car dealership. Then, he contacted Jake Shepley of Hilliker Corporation, who listed 1901 Granite City for sale. Together, they went to work looking for a buyer.
It wasn’t easy at first. Granite City real estate was moving slowly, and investors were looking for a high capitalization rate of return (cap rate). Shepley and Lester had to price strategically if they were going to attract an investor.
For the first year, they didn’t see any serious buyers. However, the city had a boost when its primary employer, US Steel, restarted production. Bringing back 800 workers in 2018, Granite City became a more attractive place for investors.
Soon, they heard from Kelvin Lai of Eugene Investments. Based in Atlanta, Lai has several holdings in the St. Louis area. He sent his local property manager and appraiser to tour the building several times.
They were impressed by Lester’s recent renovation, the quality tenants, and the town’s rising employment numbers.
Lesco, represented by Jake Shepley, sold 1901 State Street in Granite City, IL to Eugene Investments. Combined with the proceeds from the sale of his business, Lester is making plans to move to Thailand this year.
Where Are You in Your Commercial Real Estate Lifecycle?
Hilliker’s brokers are here to guide their clients into profitable decisions wherever they happen to be in their Real Estate Lifecycle.
- STARTUP — Are you looking to make your first lease or purchase? We’ll help you make quality decisions that will work well for your current needs. We take the long view, however, and look to set you up for success.
- GROWTH & MATURITY — As business owners tire of paying rent, they often want to buy their own building. We help business owners purchase commercial property. Then, we set them up for success through our tenant acquisition, lease negotiation, and property management services.
- EXIT — Is it time for you to cash out? Or roll your current real estate into a hands-off investment? Hilliker, in partnership with our Westwood Lease Advisors, offers services to help people just like you make your transition into retirement.
Wherever you are in your Business Lifecycle, we want to help. Give us a call today.