It has been a hot summer for us here at Flywheel Equity - we have another property under contract!
This newsletter is our opportunity to share our excitement for multifamily investing by giving you some insights into how Flywheel is making progress on this new acquisition, how our other properties are outperforming expectations, the general state of multifamily, and more.
Enjoy!
In the Flywheel
Investment Opportunity: 51-unit in Greensboro NC
Flywheel is excited to have our next acquisition under contract! It is a 51-unit, heavy value-add, in Greensboro NC called Morris Manor:
This deal is unique in several ways. First, the seller is the original owner. In today's market most assets have traded several times even in the last 10 years which reduces the value available to new owners. Finding an asset that hasn't been sold for over 40 years is an amazing opportunity for us to step in and capture a large amount of latent value.
Second, the property has been poorly maintained with only the minimal amount of investment and rent management. This means there's an opportunity to push rents on day one, while also strategically rehabbing units to updated standards to reach maximal rent.
Finally, this property is in a very good area. The A/B/C class rating system is always subjective, but this feels like a C-class property in a B-class area. This means we have good headroom to grow rents assuming we invest in the right rehabs and improvements and can bring in a better tenant base.
We have completed due diligence and are finalizing financing, property management, and partnership details. This deal projects to be a short hold with a three to five year target period. During that time we intend to heavily rehab all units and exteriors, and reposition the property to a more affluent tenant base. Multiple property manager candidates have confirmed target rents in excess of $150/mo from the current average, which represents a great opportunity for both organic and forced value.
We are currently over-funded for this deal, but if you would like to know more, or register a backup investment, please let me know!
Acquisitions Activity
Passed on Downtown Richmond Historic Class-B Apartments
We recently visited and presented an offer on a historic apartment building in downtown Richmond called the Exchange Alley Lofts:
While the seller was initially too high for us, they have recently re-engaged. However, we are no longer actively pursuing this deal so we can focus on Morris Manor in Greensboro instead. This is an interesting development and, perhaps, points to the fact that sellers are having to be more flexible in this climate? It's anecdotal, but we are always monitoring seller sentiment for changes in the market.
Site Visits
In addition to the formal offers we have submitted, we have also traveled across NC (and VA) to visit several on-market opportunities. We are seeing some thawing with more properties coming to market, but distressed properties remain elusive. We will continue to pursue these and present any exciting opportunities to you as they come up. Stay tuned!
Education
We recently uploaded to YouTube the full video of my conversation with Rachel about how the Vance St. Apartments deal came to be. It’s a behind the scenes look at an off-market, small apartment, deal and how I got it to close despite some unusual circumstances.
I’m always happy to talk in depth about my experiences pursuing these apartments, so please let me know if you’d like to schedule a call to ask specific questions.
Current Portfolio
Vance St.
Our Vance St. apartments in Mebane NC have experienced three straight months of 100% collections, even as we raise rents by $50/mo for current lease renewals. We are planning our first full unit rehab this month and will soon get to test what our post-rehab rental market rate will be. We will post before and after pictures here so you can see what goes into these types of rehabs.
Saddlebrook
Our Saddlebrook apartments in Fayetteville continue to outperform our rental projections with a recently signed lease on an unrenovated unit going for what we projected in year two for a renovated unit! We will continue to execute our original light value-add business model, but this type of performance gives us a lot of flexibility going forward.
Multifamily News
Here are some recent articles you may find interesting.
- Between the investment upside potential and favorable demographic trends, we agree with this recent National Real Estate Investor article that explains how “garden-style is the wave of the [post-COVID] future ." READ MORE
- "Volatility in the capital markets and economic uncertainty are putting defensive sectors such as multifamily in investors’ favor." READ MORE
- According to data from RealPage, new lease signings are on the rise in most major markets and outpacing the figures for the same months in 2019. READ MORE
- As of August 6th, over 79% of renters made either a full or partial rent payment. This represents a slight increase compared to the 77.4% of people that made payments by July 6th last month. READ MORE
On the Socials
We use these platforms to share daily insights into multifamily investing ranging from multifamily news to real estate lessons learned. It is also where we update our followers on Flywheel Equity happenings in real-time.
