Class A Multifamily in Tallahassee, Florida

[Mark S.]

I'm considering investing in a class A multi-family syndication in Tallahassee, Florida.  Obviously the pitch deck is made to promote the area - employment, rent growth, etc.  Wondering if anyone living in / investing in this area has any thoughts on class A multi-family in this space.  

Sponsor is purchasing for about $180K/unit.  Built about 15 years ago.  Plan is mostly interior upgrades to boost rent by targeted $250/month.  Rent comps show similar properties with rent premiums of about $250-$450.  

Project performance projections look mostly strong; wondering if I'm missing anything that's glaringly obvious to those more familiar with the market.

[Mike Conner]

I'm not a large multifamily investor but I have lived in Tallahassee and went to college here since 2000. The population has not increased a large amount but the quantity of large multifamily apartments that have been constructed is mind boggling. Almost every week I see a new ($100+ million) apartment building being constructed. I work in construction with a developer and talk with City/County permitting staff all the time about the over supply of apartments. We can't believe they are all being filled to capacity. I have seen a few of these apartments turn to some type of section 8 where the residents have an income limited to stay since they are subsidized by the government. A lot of the apartments that were the hot spot when I was in college, have now have switched ownership 2 or 3 times. They now have all these reduced rent signs, move in bonus etc, as newer nicer properties are being built closer to FSUs campus. Not sure if that's just marketing or the properties are struggling. I'm guessing the property you are talking about is one of these apts that once was a hot spot and is now struggling to attract renters. Maybe it will be a good investment but I would be cautious about the rent rates with all of the pressure from competition.