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.
Cash On Cash: Year 1 10.98% to Year 5 16.64%
Equity Multiple: 2.85x
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