Deal Of The Week

26 Units: Deal Of The Week 1-7-2021

Eric Wilson
January 8, 2021

Highlights: The property was built in 1974 and went through a complete structural remodel in 2010. It is comprised of 8 buildings nestled in a quiet neighborhood in Leesburg. Each unit is a one bedroom, one bath layout with a private rear patio. Leesburg is a thriving city located in the Orlando MSA and is one of the fastest growing communities in Florida. The site is minutes away from the Villages, one of the nations largest 55 and over communities, and is within a mile of shopping, dining, and entertainment. The area is known for its many large spring feed lakes and hammock oaks making it one of Florida’s prime retirement communities.

Repositioning: The property will be acquired $1,800,000. An additional $150,000 to $200,000 will be invested into unit upgrades, improved signage, and landscaping. The current owner has done little to maintain the property but because of the demand occupancy has been 100%, however the current rental rate is well below the market average. We do the upgrades immediately to improve curb appeal. We will then focus on unit improvements that will be coordinated with lease terminations so we will be able to maintain cash flow during the upgrade process. Fortunately, the newest lease is 6-month-old so this will allow us to reposition all the units within 7 months. By adjusting the rental rate to market level, we will increase Net Operating Income by $38,000 in year one which will translate into an increase in value of over $500,000.

The Numbers:

Targeted Returns

Cash On Cash: Year 1 10.50% to Year 5 16.25%

IRR: 22.00%

Equity Multiple: 2.80x