Kirkwood Apartments - Value Add Investment - Detroit, Michigan

[Ben S.]

Investment Info:

Large multi-family (5+ units) commercial investment investment in Detroit.

Purchase price: $1,645,000
Cash invested: $475,000

Our firm acquired this property with significant deferred maintenance to be addressed, but with rents ~$200 per month below market. We are mid-stream through a value add process which will enhance the quality of life for our residents and increase the value of our asset through unit upgrades, common area and amenity enhancements, and ultimately rent increases.

What made you interested in investing in this type of deal?

This asset is located proximate to a major hospital system as well as a large university. The rents were substantially below market and we identified significant arbitrage opportunity through select unit and common area upgrades, leading to rent increases and reduced operating expenses. We acquired the asset with bank debt and will refinance with non-recourse agency debt, returning significant capital to our LP investors and setting the stage for stable cash flow thereafter.

How did you find this deal and how did you negotiate it?

This opportunity came to us off market through a trusted broker relationship.

How did you finance this deal?

We syndicated 90% of the required equity to place next to our own 10% investment, leveraging the remaining capital requirement with bank debt.

How did you add value to the deal?

- Unit upgrades
- Addressed deferred maintenance
- Increased below market rents
- Filled vacant units
- Instituted professional management systems and processes