Case Study- Lockwood Heights
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Lockwood Heights
(Midwest Multifamily)
These units generate a monthly rent premium of $129 over non-renovated units, resulting in an initial ROI of 15%. In the near term, our strategy is to upgrade all non-renovated units as they become available. The exterior capital improvement plan is progressing on schedule and within budget. Approximately 75% of our planned improvements are now done.
Quarter 3 milestones included installing new monument signage at the property entrance and addressing deferred maintenance items such as parking lot repairs, stairwell and landing fixes, and selective brick masonry work. For quarter 4, we intend to furnish a new leasing model and implement additional brick masonry repairs.
If you have any questions, please reach out to your advisor or contact Regan Smith at rsmith@prevailiws.com
Investor Return Summary*
- IRR Targeted: 21%
- 3 Year Average Cash on Cash::Â 7.85%
- Proforma Hold: 3 Yrs
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Investment Snapshot
- Initial Project Cost: $35,500,000
- Equity: $13,070,000
- Initial Loan: $22,430,000
- Minimum Investment: $50,000
- Average unit (SF): 959
Property Information
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- The purchase price of $154,455 per door ($161 psf) is substantially lower than market replacement costs.
- This 202-unit multifamily property is currently 96% occupied and over the last 30 days, the current owner has increased rent by more than 9% on 20 lease renewals. Year over year rent growth in the area has been 20.75%.
- The current owner has invested $10,526 per unit over the last 12 months in upgrades and improvements. Our plan is to invest an additional ~$13,000 per unit to complete internal upgrades that will support further rent increases to market.
- Belle Grove is located in Richardson, TX close to hundreds of thousands of jobs. Single-family homes in the area have appreciated more than 20% in the last year and the complex is just south of the ‘Canyon Creek’ neighborhood with home values ranging from $450k- $1MM+.
- Within a 3-mile radius, there are 38 properties that are all 96% occupied. There is only 1 new complex under construction in the area, and Belle Grove’s post-renovation rents will be ~$500 less per unit than the new complex rates.
*These are all preliminary estimates, with no guarantee of performance, and involve risk.