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September 24, 2018

Auction buy builds on Biddeford's growing prominence

Courtesy / Tranzon Auction Properties
Courtesy / Tranzon Auction Properties
61 Bacon St. in Biddeford sold at auction to an investor who sees opportunity in the city as an up-and-coming community and in the building's middle-income tenant base.

The purchase of a 10-unit apartment building, at 61 Bacon St. in Biddeford is viewed by the buyer as a great prospect for a return on investment in a market that's far more affordable than greater Portland.

But the property, which was bought at auction, will require additional investment in renovation.

Nathaniel R. Hull, in his capacity as Chapter 7 trustee for the bankruptcy estate of QAD Investments Inc., sold the property to Jill Wheaton for $645,000. Wheaton was represented by Jason Miller of King and Miller at Portside Real Estate Group in Falmouth. The auction was handled by Michael Carey of Tranzon Auction Properties in Portland. The transaction closed Aug. 23.

Auction properties can be tricky, said Miller, who helped Wheaton review a number of them.

"You might not even have the opportunity to see the building," Miller said. "You don't get great information, you don't have the building's history, there's no inspection, you have to put down a large deposit — so it's a leap of faith and essentially taking on whatever issues might come with it."

Miller said he sees Biddeford in particular as a top investment opportunity in southern Maine.

"Portland is pretty saturated and costs are high, so it's tough to find cash-flowing property in Portland," he said. "Biddeford is more affordable and has more opportunity. And Biddeford in general is growing. You have [University of New England] in town, which helps with prospective tenants. And you've got the redevelopment that's going on there. If you drive through Biddeford, there are so many great restaurants and local shops now.

"It's really nice to see what's going on there. So I think that, as more people move there and invest money there and start businesses there, and with the proximity to Portland and even to Portsmouth, that's really making Biddeford the new hot spot. It's been slow to come and I don't think it's going to happen over night. But 10 years from now, I can see Biddeford being as attractive as anywhere else in southern Maine."

'Cobwebby basements'

Wheaton had high praise for Miller.

"He was tireless," she said. "I emailed him, 'I dragged you through at least 25 cobwebby basements' and he emailed me back and said, 'Patience is my superpower.' I would never work with anyone else. He and his partner Bridget are incredibly supportive."

Wheaton is a Maine native who lived in California, but returned to Maine a decade ago. Her early career was spent in corporate finance. She's now part of the business coaching team for motivational speaker Tony Robbins, working mostly from her home in Portland's East End, but also traveling with him across the country and as far as Australia and Singapore. She owns a three-unit residential building in Portland, where she lives, renting out the other two units.

"I'd been looking for another property for a while, but I got a little disenchanted with the market in Portland," she said. "In Portland, very little makes sense from an investment perspective for me right now."

So she started looking elsewhere and six months ago signed up with a couple of websites that advertise real estate auctions. Although she visited other properties, the Biddeford property's was the first auction she attended.

"I said, 'I'm going to bring my checkbook so I can pay to play," Wheaton said. "The adrenaline is flowing. It's really an interesting experience, and a fun one."

She liked the property, she said, partly because the building was in good shape structurally and also had interesting details. At one time, the first floor was a hardware store and the upper floors were a warehouse, she said.

"At some point, it was chopped into apartments," she said. "When you look beyond the drop ceilings, it's got these high ceilings and a funky vibe. So I saw a lot of potential."

Another great aspect of the building, she said, is the tenants. Her own quote best explains a kind of epiphany she had:

"During the walk-through, I really fell in love with some of the tenants," she said. "Bacon Street is considered kind of a gritty area of Biddeford. Biddeford is considered up-and-coming, but this neighborhood might take a little longer. But these were just really sweet families and their kids, people who are working hard to make a great life for themselves and their families."

"I looked at the other folks who were planning to bid," she continued, "and more or less they were developers who would either hike up the rent or force people out to do something else entirely."

The building is fully occupied, with an adequate cash flow that make the property self-supporting, she said. Tenants are middle-income families and individuals, and she plans to keep rents in that same bracket.

The building has 12 units, but only 10 meet legal occupancy requirements. Overall, the bones are good, but electrical and plumbing systems need to be updated. Wheaton said she expects to invest perhaps $150,000 to $200,000 over the next two to three years for rehab.

"One thing that appalled me during the walk-through is that there's one hot water heater for all of the units," she said. "The people on the fourth floor said they accepted that most of their showers will be cold. So I said, 'No way!' That's one of the first things we'll be tackling – updating the plumbing and the water heater.

New windows and doors, and cosmetic work, are also needed. Work is underway.

"We're knee-deep into it right now," she said. "Fortunately there are no emergency situations. We have our list and are pecking through it month by month."

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