Turning a school into apartments in a small town with adaptive reuse project

I talked about adaptive reuse in our Rural Housing webinar.

In May of 2019 three young business owners, under the age of 35, bought the abandoned Bowtie School in Homestead PA, population 2800 people.

It took them two years to figure out what to do with the building! They finally decided to turn it into 31 apartments. It took 18 months to complete.

Bowtie School before it became apartmentsLet’s look at the Financials:

  • One of the guys lives in the area and a local told him about the building.

  • They got under contract, off market, for $175,000. After the building inspection they paid $100,000 for it.

  • In the beginning they funded it with their own money

  • One of the team who owned an audio visual business found out about historic tax credits. He worked with the National parks service and got tax incentives from the federal and state government.

  • To qualify they had to keep the hallways and exterior historic

  • Renovation cost about $3.3 million – way more than they thought it would be!

  • Mortgage is 2 mil, they pay about $12000 a month

  • They generate about a 15% return on their investment 

They’ve gone on to buy the school across the street and build 33 apartments there.

Here’s what you can learn from this story: 

  • It’s possible for even a town of 2,800 to do a lot!

  • Use pre-purchase building inspection to bring that cost down.

  • Rent as you go! Don’t wait for it all to be done. They started renting six months before the building was done.

  • Their biggest mistake: They underestimated the cost to do the renovation. It always costs more to renovate than you think.

That was just one story in the webinar. 

Did you miss the Rural Housing Webinar with Ben Winchester, Becky McCray and me? You can still sign up for it and watch it here.