Successful Exit in Michigan

[Stewart Beal]

In 2017 I received an email from IPO (the Income Property Organization) advertising Appleton Ridge, 628 John Anderson Court, Monroe, a 55 unit apartment complex, for sale for $2,100,000. The price was intriguing because each apartment had 1.5 baths, each was 2bdrms with 3 wall through AC units, they were of good size, and the seller had been upgrading the apartments as people moved out with all new cabinets, appliances, and ceramic tile. As you can see in the pictures, the units are way way above average for the market. I did some research on the City of Monroe and was pleased to see that there are only 12 apartment complexes in the entire city, I knew that meant these apartments would always be in high demand and I knew that construction cost would prevent any new competition from entering the market. When I toured the complex, I discovered that 11 apartment were down and in need of a $200,000 renovation project so I negotiated the price down from $2,100,000 to $1,750,000 and we struck a deal. We closed on the transaction and the first thing I did was turn the office into an apartment so the complex was 56 units (I call adding units this way the Stewart Beal special), and then we hired a contractor to bring the 11 units back online. We did go over budget on that a bit, it cost us more like $250,000 due to asbestos issues in the drywall and a unexpected sewer problem. At this point we were into the deal for $2,000,000 but had 56 solid units renting for an average of $650/mo. We managed the property for 3 years, it cash flowed really well and ran at as high as a 13 cap on our purchase price. We have increased market rent from $650/mo to $825/mo and have been consistently 100% occupied. I am pleased to say that on Monday we are selling Appleton Ridge for $3,000,000, booking a $1,000,000 profit on 3 years work.Please note I have investors and partners in this deal that contributed to its success