Summary of the Deal:
1. Proven rental history, 100% occupied, with a wait list.
2. Below market rents - approximately $35 to $50 below market, and the ability to raise is enhanced by the fact that PGP owns a neighboring property (Granville Commons) and is raising rents there.
3. Budget includes hiring a maintenance tech who can more professionally handle tenant issues, serve as an informal leasing contact, and the cost can be shared with Granville Commons.
4. There have been no new apartments constructed in Granville County in the last 5 years, with none in the pipeline - zero new supply gives existing owners great pricing power.
5. Units have been well maintained - little to no deferred maintenance needed, but would plan on doing some improvments - mainly parking lot and signage.
6. Lock in a very low interest rate for 10-years, with one or two years of interest-only.
7. Purchase cap-rate approximately 7.60% , which makes the cash-on-cash returns (10-11%) - very attractive for multi-family.
This is a solid B-class property, located in an area with a strong local employment base (state and federal agencies), which will benefit from growth in Durham. There are also two large projects underway that will significantly impact Butner and southern Granville County, click on the button below for more information on those.