Deal Of The Week

24 Units: Deal Of The Week 01-21-21

Eric Wilson
January 21, 2021

Highlights: This property is located in Fort Myers/Naples MSA within the city of Estero. The property is less than a quarter mile from the Route 41 corridor, one of the State’s fastest growing commercial zones. The complex was built in 2008 and sat vacant due to the market collapse until it was purchased from the bank by its current owners in 2012. The unit mix is an attractive blend of twelve 2 bedroom/ 2 bath units and twelve 3 bedroom/ two bath units with total square footage of nearly 1100 square feet per unit. The demand for units of this size and design combined with superior location has led to a nearly continual 100% occupancy rate over the past eight years of operation. However, as we often see, the current management has chosen not improved the units to keep pace with newer complexes that have been constructed in the area. To maintain occupancy the management has not increased rental rates over the past four years. The result is that Net Operating Income is rapidly decreasing as operational expenses increase with no increase in Gross Rental Income thus motivating  the current owner to seek an exit.

Repositioning: The property will be acquired for $3,763,000 based its current condition and cashflow. We will invest $220,000 into property improvements. Each unit will receive new flooring, paint, quartz counter tops, ceramic backsplashes and new plumbing and electrical fixtures, upgraded stainless kitchen appliances and high efficiency toilets. The grounds will receive improved signage, updated landscaping and exterior paint. These improvements will bring the complex to a level equal to that of the comparable properties in the area and the larger unit size will provide a market advantage of the competition which will allow us to release at a market rental rate. This will increase NOI by $43,200 and translate into an increase in market value of nearly $700,000.00.

Targeted Returns

Cash On Cash: Year 1 10.98% to Year 5 16.64%

IRR: 24.08%

Equity Multiple: 2.85x

These securities are being offered under an exemption provided by SEC Regulation D Rule 506(c).  Only accredited investors who meet the SEC Regulation D 501 “accredited investor” accreditation standards and who provide suitable verification of accredited status may invest into this Offering. Any historical performance data represents past performance.  Past performance does not guarantee future results. Current performance may be different than the performance data presented. The Company is not required by law to follow any standard methodology when calculating and representing performance data. The performance of the Company may not be directly comparable to the performance of other private or registered funds or companies. The securities are being offered in reliance on an exemption from the registration requirements, and therefore are not required to comply with certain specific disclosure requirements. The Securities and Exchange Commission has not passed upon the merits of or approved the securities, the terms of the offering, or the accuracy of the materials.

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