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desert jewel

Levered IRR - 62.77% | Equity Multiple 2.80x | Asset Appreciation - 67%


 

Building Description

Unit Mix:  1 BR, 1 BA (2)  and 2 BR, 2 BA (9)

Number of Units:  11
Building Size: 8,989 SqFt
 

Lot Size: 0.76
Acre Year Built: 1960

 
 BEFORE
 

Strategy

  • Evict delinquent tenants
  • Complete rebranding and renovation of property:
    • New brand name and signage
    • Complete exterior overhaul, including new accent colors, re-paving, flood repair, and desert landscaping (reducing utility costs)
    • Contemporary, elegant interior design
    • Electric car gates
  • Market to young professionals
 

the opportunity

  • Single story garden-style apartment community
  • Located in a desirable city block with three other properties acquired and managed by Red Rock Equities
  • Potential to reduce management costs and services by treating property as a combined unit complex
  • Growing submarket (demonstrated by increase in occupancy levels above those of the metropolitan area)
  • Significant Value-Add/Reposition potential through extensive renovation
  • Opportunity to purchase at a fraction of replacement cost
 
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Results


 

Desert Jewel was fully operating and stabilized 9.5 months following its acquisition with impressive rental rate increases of up to 20% over the previous owner average rent. The specific submarket rental rate has increased by only 8% over the same period.

We continued operating the building and increasing rent for another year, achieving rental rate increases of up to 36% over the previous owner average.

Cash-on-Cash return for the last 12 trailing months of our ownership was 22.90%.

Desert Jewel was sold in January 2016 for $795,000, reflecting a Levered IRR of 62.77% to our investors, and an Equity Multiple of 2.80x to their initial investment over two years.

 
 
 

Deal Metrics


 

At Purchase

Purchased December 2013
Purchase Price $475,000

Price per Door - $43,182
Price per SqFt - $52.84

Avg. Rent at Purchase - $583/Mo.
Occupancy Rate - 90.9%

Renovations - $11,790
Total Investment - $146,790

 

At Sale

Sold in January 2016
Sale Price - $795,000

Rent Increased to $795/Mo. (highest)
Occupancy Increased to 100%

Unlevered IRR - 62.77%
Trailing 12 prior to sale, Cash-on-Cash - 22.9%