Building Wealth Case Study

Deerwoods Real Estate Management was brought in to help renovate and manage a 17-unit apartment building in Central Denver. For the building owner, this investment was an opportunity to purchase a well-positioned apartment building in a desirable, up-and-coming urban neighborhood of Denver and work with Deerwoods to add value through physical and operational improvements.

The building purchase price was $860,000. The buyer put up $250,000 in equity and borrowed approximately $250,000 for the acquisition, repositioning, and operation of this investment opportunity. The extra funds were needed to renovate the residential units, add air conditioning for all units, update exterior stairs, replace all windows, replace boiler, improve lighting and landscaping, and to install a new roof.

The Property was built in 1948 and consisted of one building that contains 16 one-bedroom apartments averaging 450 square feet and 1 two-bedroom apartment around 600 square feet.

Renovation consisted of providing the units with new kitchens and bathrooms, granite countertops, new appliances, tile flooring, and updated cabinetry, hardware and lighting.

Once the property was acquired, rents were raised slowly per the chart below to vacate units over time. Deerwoods then renovated the vacated units once the new rent & fee structure was established, Deerwoods increased rents annually at a pace of 3% or greater.

Rental Summary

 

 

 

    Current

Projected

 Floor Plan

Units

SF

Rent

Rent PSF

Rent

Rent PSF

1bed/1bath

16

450

 $ 675

 $1.50

$950

 $2.11

2bed/1bath

1

600

 $ 750

 $1.25

  $1,050

 $1.75

Over a five year period, the property generated an internal rate of return in excess of 20%. At the end of that period, the building was refinanced and the owner investor received 200% of his capital back.

Deerwoods Real Estate Management is uniquely positioned to help current and potential building owners not only efficiently and cost effectively manage their properties, but also to realize a strong rate of return on their invested capital through well-placed improvements and renovations as well as deliberate rent payment growth strategy. Please contact us to create a strategy for your property.

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