Closing out a year in which it also acquired a competitor, a local real estate investment firm ended 2019 on a high note with a 75-home portfolio purchase.
Cava Cos., previously known as Cava Capital, closed last month on multiple transactions for 75 houses previously owned by entities tied to Ron Hunt, owner of Richmond-based Genesis Properties. The purchases, made through a Cava entity called “RVA75 19 LLC,” totaled $5.5 million.
Principal Frank Cava said the deal was presented to the company after another portfolio purchase in 2018, in which his company paid nearly $3 million for 29 homes owned by developer and businessman David Dagenhart Jr.
As was the case with that deal, the Hunt properties consist primarily of rental houses scattered across Richmond that Cava said will be improved and converted to for-sale homes. He plans to put between $50,000 and $150,000 into some of the homes, with easier units hitting the market by the end of this month, and those requiring more work over the next year or two.
“We’re probably going to bring these all to market, because there’s a lack of inventory and we see an opportunity to bring these to the market from an inventory standpoint,” Cava said.
“Some of them we’ll take to other investors, some we’ll put on the MLS the way they are, some we’ll go in and clean up to add value,” he said.
Post-renovations, Cava said the 75 homes would total as much as $13.6 million in after-repair value, adding to the company’s inventory that includes more than 50 other houses that are being improved, more than 150 rental units and 60 vacant lots.
The portfolio purchase capped off a year in which Cava also acquired Arch Capital Partners, a Chesterfield-based real estate firm led by Adam Furman.
Terms of the Arch Capital deal, which closed Aug. 1, were not disclosed. A probationary period ended in November, Cava said.
The acquisition brings Furman and another full-time employee into the Cava fold, along with Arch’s book of business, marketing websites and campaigns, and client and prospects database. With Cava, Furman assumes a role of acquisitions manager.
Cava said the deal adds to his company’s overall sales output and provided Furman and his team with more resources, such as property and capital management, and access to capital that Arch lacked.
Furman said joining forces allows him to focus on the customer-facing side of the business that he prefers over the ownership side.
“The more I got to know (Frank) and see the innards of his company, the more comfortable I felt with saying there’s certain aspects of the business that I’m not great at, they’re not my strengths,” Furman said. “I figured if we joined forces together, I would have the systems and support and also the knowledge base that he has to really increase what I enjoy doing.”
Cava said his company has a busy year ahead, with a goal of bringing several hundred properties to market in 2020. Of those, he said about 80 percent would be priced below $300,000.
“On the transition from rent to own, we see a major need there, so we’ve been stockpiling individual building lots and lower-priced inventory that we can repurpose, renovate and bring a really nice product to market,” Cava said.
The company’s inventory includes higher-priced product, including properties in the city’s West End priced upwards of $500,000. The 75 properties in its latest portfolio purchase include homes in Northside, Church Hill, Forest Hill and other neighborhoods.
Cava said the company closed 240 deals last year, putting its gross sales volume for 2019 at $8.35 million. The company, which rebranded from Cava Capital early last year, is based at 1806 Summit Ave. in Scott’s Addition, where it moved from the old Markel headquarters building in 2018.