The Capital Stack
16-units Plymouth, MI.
The soon to be Plymouth Gardens (currently operating as “Holbrook place”) is a 16-unit boutique style apartment community located in Plymouth MI. This property is apart of the Suburban 36 portfolio we currently have under contract. Once we close on the portfolio we plan to change the name to Plymouth Gardens. You can read last week’s newsletter for more information on the entire portfolio https://sheffercapital.com/blog/suburban-36/.
About Plymouth Gardens
Plymouth Gardens are single story, private entry apartment homes. We are choosing the name Plymouth Gardens to highlight the beautiful garden surrounding the community and each unit’s entry. The property contains 12 2-bedroom units (725sf) and 4 1-bedroom units (625sf). Each unit has private laundry. The unit’s interiors have seen many renovations and most units already have granite countertops and modern vinyl plank flooring. The property is currently 100% occupied. The current rents are ~25% below market rate. Once we purchase the property we will continue with light unit renovations and immediately increase rents to market rate.
Plymouth Michigan & Downtown Plymouth
Plymouth Michigan is centrally located between Detroit, MI and Ann Arbor, MI. Plymouth residents enjoy a convenient commute to numerous major employers in Detroit and Ann Arbor. Plymouth has a median household income over $119,000 a year. The average home price in Plymouth exceeds $425,000.
Residents of Plymouth Gardens enjoy living within walking distance to downtown Plymouth. Downtown Plymouth offers many popular restaurants and over 75 specialty shops. Nestled amid historic Plymouth is Kellogg Park which holds many famous seasonal festivals and weekend events.
The Capital Stack
Check out last week’s newsletter https://sheffercapital.com/blog/suburban-36/ for more detailed information on the Capital Stack for this property. We are ecstatic to be purchasing in the Plymouth market for ~$135k per unit. The best part is the owner has agreed to seller finance the project with unbeatable terms (see last week’s newsletter).
Major Market News
|Plymouth Luxury Apartments |
Directly across the road from Plymouth Gardens is a large apartment complex, Starkweather Lofts. This property is a luxury community and includes many high-end finishes. They are currently achieving ~$2,100+ for a two-bedroom unit and ~$1,850+ for a 1-bedroom unit. Starkweather Lofts has larger units and nicer finishes then what we have planned for Plymouth Gardens. Using this as our competition we are able to increase our rates to projected $1200 for 1 beds, $1400 for 2 beds and still be at a significant discount to the newer product. Current rates and occupancy at Starkweather help us in our analysis of the overall market despite using “gut check” from simply knowing how nice of an area Plymouth is. Check out Starkweather Lofts here: https://www.starkweatherlofts.com/.
|Tips and Tricks|
Purchase in well established areas: A big strategy change we are taking moving forward is to purchase property in areas that are a top 2 choice for people to live. Previously we have bought properties in markets that could be a 3 or 4 which is 99% price driven. We can get a better “on paper return” in less established markets, but for our long term hold strategy these A and B (top 2 choice to live) are going to hold much stronger from a macro economic standpoint. Residents in these areas area also already conditioned to higher rents which generally leads to taking better care of the property as well.