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Multifamily Properties


Hughes Apartments
Our company purchased this property in early 2012 from a local broker. The complex was in the middle of a rehab. We performed our due diligence on the area and property along with financial analysis and a deal was made with favorable terms. We needed $75,000 to close so we offered the current owner an option to become a debt partner or equity share partner in the property, he liked what he could receive as a passive partner so he was able to put his proceeds back to work earning a good return over the next 5 years.  There were two value plays we noticed during our analysis: below market rents & the downtown revitalization of the city. Because the owner was willing to sell before the full rehab was complete he would not be able to realize market rents. So the first step in our strategy was to finish the updating and rehab process and increase rents by 5-10% which we did. This gave us a value in the 1st year. A total cost of $80,000 in capital improvements were made on the property including new roof, painted exterior doors, new toilets, new hardwood & tile flooring throughout all apartments, and new a/c –heating units in the 1 bedroom units.  The next step relied on the area of downtown Owensboro, after evaluating the market before the purchase we found there was a plan to expand and revitalize the downtown river front area. Since the purchase we have been proved correct with the major construction of several new projects started in early 2012. This has since increased the desire for downtown living resulting in high occupancy levels as more people migrate downtown. Purchase Date:                    2012                                                                                                 Equity Required:                  75,000                                                                                                     Cash on Cash%:                   13%                                                                                       *Summary- Cash Flow was distributed to our investment partner every quarter during the hold period. He received from the cash flow a carve out equal to 8% return on his investment while we kept 5%. The property was then refinanced in 2016 to return our partner’s principal. As of right now we currently still own the property for the cash flow.
Mattingly Drive Properties
The company; as one of its first projects purchased this block of properties in 2007 at a discount well below replacement cost and market value based on similar well managed properties. These duplex properties are a class B assets built in 1979 by a local builder who passed away in early 2000. The properties then fell in the hands of his widow, she was unable to maintain the up keep on the properties and in turn they suffered an extensive amount of deferred maintenance. This created an opportunity for a value add situation and is a perfect example; on a small scale of what ASP looks for. These properties required over $40,000 in equity to acquire, within our first 4 years we realized a cash on cash return of 25% per year thus recouping our initial equity. The strategy for these properties were to take care of all differed maintenance and capital improvements while implement unit upgrades.We then were able to slowly raise rent rates. Our current plan has been to hold because of the strong monthly cash flow while the market continues to appreciate. These assets are set for a 10 year hold with resell in year 2017.                                                                                                                                       Purchase Date:                    2007                                                                                                       Equity Required:                 $42,000                                                                                                 Cash on Cash%:                   25% (2008-2012).

 

Covert Avenue Duplex
The company purchased this property in 2009 at a steep discount well below market value. This duplex property is a class B asset The property was owned by an elderly lady who only used the property for her mother to live in, when her mother passed she decided to sell. When we purchased the property it was completely vacant and needed some rehab and upgrade work. Our initial plan was to rehab,lease and flip this multifamily to another investor. After we implemented the rehab we were able to charge a premium in rent for the area. The return on investment was greater than anticipated and by year 3 we had recouped our initial equity. Our current strategy is to hold for 5 years while the strong cash flow pays down the mortgage.The property value has appreciated more than 50%.                                                                                                                                                                                                                                                                                                                   Purchase Date:                    2013                                                                                                       Equity Required:                 $13,000                                                                                                 Cash on Cash%:                   29%