How I Underwrote a $10M Office-to-Residential Conversion in Colorado

I underwrote a $10M office-to-residential in Colorado.

Sponsor paid $66/SF - one-third of replacement...

- 48 units at 50% LTR ($1,500–$1,700/mo)
- Sponsor 50%+ equity, debt pre-approved
- Target $14.8M stabilised value 
- $5.4M equity created at day one
- Zero competing studios in submarket
- Construction permits Q4 2026
- Positioned for medical tourism

Upside comes from low basis, supply gap (zero studios), and dual LTR/STR model capturing professional tenants and tourism demand.

To fund deals like this, I ask 4 questions:

1) What stage of risk are we in?

- Capital locked and debt pre-approved
- Demolition is already underway
- Permits Q4 2026, construction starts immediately
- Sponsor $1M+ committed, 50%+ equity, PG

2) What makes the location work?

- Zero competing studios
- Colorado Academy, Swedish Medical, CU Denver
- Red Rocks 7.5 mi, Front Range skiing 30min drive
- US-285 commuter base stabilises LTR demand

3) How is the downside protected?

- $66/SF entry vs. $120–150 replacement cost
- Sponsor majority equity + personal guarantee
- $500K contingency reserve above all project costs
- Conservative 4.75–5% exit cap assumption

4) Can we control the exit?

- In-house construction and stabilisation
- Investor board seats, veto on >15% CapEx variance
- 48–60 month hold window (refi or sale flexibility)

My only concern: Denver has absorbed a lot of multifamily; if supply catches up faster than demand, rents soften and value creation stalls.

Medium fit for Institutions
Strong fit for Family Offices
Strong fit for Private Credit

If you allocate to real assets, let's connect 👋