The Capital Stack
Our most recent acquisition, The Maple Place Apartments, was officially purchased on August 28th for $995,000. This 12-unit property is located in Holly, MI, and consists of two buildings: one with the apartments and one with the 2,500 sq. ft. pole barn. The area has a median household income of $75,000+ and an average home value of $300,000+, both of which exceed our buying criteria. Built in 1974, the property offers spacious one- and two-bedroom floorplans averaging 863 sq. ft.
How We Found It
We acquired the Maple Place Apartments from the same seller who sold us the Village Court Apartments. I use a saved search with CoStar that automatically emails me when properties in our target areas come to market. On April 4th at 8 AM, I received an email about Holly (Maple Place) and Village Court being listed for sale. After reviewing the initial numbers, I immediately called the listing agent, introduced myself, and told him I was interested in buying it.
What We Like About It
Proven Value Add
The current rents at Maple Place average just under $1,000, with the highest at $1,080. Given the current market conditions, we’re confident we can achieve $1,150 per unit. Additionally, we have the pole barn, which is leased for three years at $400 per month in the first year, $500 per month in the second year, and $1,300 per month in the third year. The market rent for this space is approximately $2,000, so once the current tenant’s lease ends, we expect a significant increase in income.
Market Experience
We have experience buying, operating, and selling properties in the Holly market. One of our recent projects was Hollyvillage, a 16-unit property that we purchased in November 2021 for $975,000 and sold in July 2023 for $1.6 million.
At the time of purchase, the average rent at Hollyvillage was $645. After investing approximately $150,000 in renovations, we achieved rents as high as $1,100. Over 20 months, we executed a business plan very similar to what we have planned for The Maple Place Apartments. Our improvements increased the property’s NOI from $74,175 to $108,635, allowing us to achieve a significant profit at the time of sale.
Our Business Plan
The Maple Place Apartments were built in 1974 and have minimal deferred maintenance. The unit interiors need light renovations and we plan to refresh the hallways with new paint, carpeting, and light fixtures. Inside the units, we’ll update by painting cabinets, replacing flooring, and addressing any necessary repairs.
Exterior improvements will include repainting the building, enhancing the landscaping, installing a new sign, and making any needed repairs to the parking lot.
The Capital Stack
We secured a $746,250 loan from a regional bank with a fixed interest rate of 6.23% for five years, along with a 0.05% fee. The equity portion of the deal was funded with $525,000 in LP capital.
How It’s Going Today
The day after closing, we met on-site with our management company to review the property plan. This week, our in-house contractors are completing touch-ups on two vacant units. We instructed the seller not to lease these units while we were under contract, allowing us to manage the tenant-sourcing process. Both vacant units will be finished by next week, and we’ll schedule professional photos immediately to begin marketing them for rent.
Major Market News
Dylan Tent– Elevating Real Estate
This month, we’re featuring our good friend Dylan Tent. Dylan’s unique approach to selling homes in Metro Detroit, using his helicopter for marketing and showings, has been getting some serious attention. His recent Real Deal feature highlights how he leverages aerial tours and helicopter landings to speed up sales and make his listings stand out in a competitive market.
Dylan’s creativity and hustle are earning him recognition, and if you’re looking to sell your home, he’s the one to call. You can connect with Dylan on Instagram @helirealtor.
Source: TheRealDeal. (2024, August 25th) Michigan real estate agent soars above competition, literally. https://therealdeal.com/national/2024/08/25/how-a-michigan-real-estate-agent-soars-above-competition/
Tips and Tricks
Terms-
NOI– (Net Operating Income) in multifamily real estate is a key financial metric that represents the total income generated by a property after deducting operating expenses but before accounting for mortgage payments, capital expenditures, and taxes. It is used to evaluate a property’s profitability and performance.
