September 2019 Multifamily Update

There’s a lot of activity in Augusta’s Multifamily Market!  We’ve already reported that there are over 1500 apartments in development around Augusta, and Damon Cline published an article with even more projects and details two weeks ago.  Click here to download the Costar Multifamily Report, which has some great information about vacancy rates, rental rates, and the overall economy.  Below we’ve included listings from the MLS, Costar and Crexi if you’re looking to buy or want to keep up with the market.  Many of these properties trade off-market, so give us a call if you’re looking for off-market opportunities.  

 

Subscribe to our Multifamily Newsletter–click here! 

 

MLS Multifamily Search (Mostly Duplexes & Quads)

Augusta Market Multifamily Costar Listings

Georgia Costar Listings

South Carolina Costar Listings

North Carolina Costar Listings

Georgia CREXi Multifamily Inventory Export

SC CREXi Multifamily Inventory Export

NC CREXi Multifamily Inventory Export

 

Recent Notable Sales:

926 West Apartments, McKinley Inc. to McDowell Properties for 26.5M, $94.6K/Unit

Crane Creek Apartments, Southeastern Development to PASSCO Companies, $58.0M, $193K/Unit, 5.73% CAP

Ironwood Apartments, LIV Apartment Partners to Graycliff Capital Partners, $51.9M $185K/unit, 5.4% CAP

Metropolitan Augusta to Lexerd Capital – Sold Aug 26th, Terms not disclosed (and not yet public record)

 

What are your thoughts about the Multifamily Market?  Overheated?  Just getting started?  What activity are you seeing?  What do you think about rental rates?  We’d love to hear your comments! 

Downtown Augusta’s Luxury Apartment Boom

Downtown Augusta is experiencing a luxury housing boom.  Over 1500 luxury apartments have just been delivered, are under construction or in planning in and around Downtown Augusta:

    • Ironwood, Downtown North Augusta, 280 units Website
      • Ironwood apartments are adjacent to SRP Park–the Greenjacket’s stadium, with an upscale hotel and retail space, connected to Hammond’s Ferry subdivision. 
    • Residence at Riverwatch, Riverwatch Pkwy: 260 Units Website
      • These apartments were delivered in 2018, adjacent to the Costco Regional Shopping Center, and will walking distance to Topgolf.  
    • Beacon Station, Wrightsboro Rd: 220 Units  Website
      • These apartments are adjacent to the Medical College of Georgia, and a landmark as one of the first market rate apartment projects to be built in the Laney-Walker Neighborhood.  
    • King Mill, Broad Street: 250 Units
      • This is a luxury apartment complex that will be built in the King Mill utilizing historic tax credits and connected to the Augusta Cyberworks.  
    • Train Depot, Reynolds Street: 140 Units
      • The city of Augusta is partnering with BLOC Development to bring these units to market. 
    • Historic Cotton Warehouse, Wrightsboro Rd, 190 Units
      • Burt Development of Albany, GA, bought these in February of 2018.  
      • Plans for Historic Tax Credit development
    • Ivey Apartments, Fenwick Street, 165 Units
  • What do you think is driving the growth downtown?  Do you have any more details about any of these projects?   Have we forgotten any upcoming multifamily projects? What impact will 1500 luxury apartments have on Downtown Augusta?
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Update: Damon Cline at the Chronicle published a great story that goes into more detail on this.  Link

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3 Multifamily Deal Analysis Considerations

I hear a lot of questions regarding underwriting multifamily deals.  I underwrite a few deals a week and have made lots of mistakes, and thought I’d share some thoughts and a few excel models.

  • Basics: At a minimum, in my opinion, an analysis for small multifamily should include some general information, a rent roll, an operating statement, financing information, and outputs.  I generally like to have two year’s actuals and a pro-forma.  The pro forma is built from the rent rolls.
  • Simplicity: Also, I completely agree with Peter Lynch of A Simple Model–financial models should be as simple as possible.  I also don’t believe that you should use another person’s model–you need to build it yourself and understand it thoroughly.  I’ve seen waterfall models and syndication models that would take an average person weeks to link together.  A mistake or two in that scenario would mean disaster!
  • Cascading Models:  I think it’s generally a good idea to have a simple “napkin” model that can help you determine if a deal pencils in general.  If it works, run it through a slightly more complex spreadsheet.  If that works, get it under contract, get your due diligence documentation, then run it through a more sophisticated model–one that you can print out and present to a lender or potential partners.  This will save massive amounts of time underwriting deals that won’t work.
  • Below are links to a simple model I’ve put together, and more complex models from other websites and blogs.

Presley Realty Simple Spreadsheet

Enodo Spreadsheet

Vertex Spreadhseet

Nelson CPA Spreadsheet

A Simple Model Spreadsheet

What are things you’ve learned underwriting projects?  Do you have questions about financial modeling?  Do you have a great model you’d like to share with others?  

Four Considerations for first-time Multifamily Buyers

Are you considering making an investment in a rental property?  Here are a few considerations to help you, whether you’re thinking of buying a Duplex, Triplex, Quad, or even something much larger as your first investment. 

  • Get good legal advice
    • I can’t stress enough how important it is to find an attorney that you trust who has experience dealing with commercial real estate to advise you in legal matters related to your investments. Your attorney will advise you with questions relating to incorporation, review of purchase and sale agreements, they will close your transactions, and advise you if a lawsuit or issue arises with your rental properties. 
  • Hire a broker to help you evaluate your options
    • For your first transaction, it is a good idea to find a broker you trust to help you find deals and run numbers for you. This is especially important in markets such as Augusta, where duplex deals don’t last very long on the market or trade off-market.  Also, it’s important to have someone who can help you navigate the underwriting process.   
  • Hire a professional property manager
    • It is definitely a good idea to hire a professional property manager to handle your first deal. This also means that likely you will need to add an additional expense to your budget that the seller didn’t have if the property wasn’t professionally managed.  It is always a good idea to interview a few managers, and have a good understanding of how their fees work.  
  • Solid marketing and promotion to lease up your units
    1. Professional pictures, a floorplan, even a 3-d tour—these are things that help listings to stand out and move quickly. Ask your property manager about them, and you may even need to help them put the marketing package together.  Look at your competition—what are other apartments doing to attract tenants? 

If you’re looking to make an investment, what are questions that you have?  If you’re a seasoned investor, what are things you wish someone had told you?

 

This Blog Post: https://presleyrealty.com/four-considerations-for-first-time-multifamily-buyers/ 

Washington Post Article: https://www.washingtonpost.com/business/2019/08/07/what-first-time-landlords-need-know-before-buying-that-rental-home/

National Real Estate Investor Article: https://www.nreionline.com/multifamily/three-keys-avoiding-first-time-multifamily-investor-pitfalls-2019

Teresa  Bradley-Banta’s Blog Article: https://theresabradleybanta.com/5-tips-for-first-time-multifamily-real-estate-investors/

Augusta Crane Creek Apartments sold for $58 Million

Passco Companies announced its purchase of the 300-unit Crane Creek Apartments in Augusta, GA for $58,000,000.  According to Costar, this property traded off-market at a 5.73% Cap Rate with a 5% vacancy at time of sale.  The sale price equates to about $193,333 per unit.   

 

Passco plans to make a a number of improvements to the already luxurious property including LED lighting, Nest thermostats, and energy-efficient toilets and shower heads.  

(more…)

How Opportunity Zones are Being Used by Startups

Opportunity Zones are a new tax investment vehicle similar to a 1031 Exchange that allows tax deferment on acquisition of real estate and also on investments in businesses.  This opens the door for small startups to raise funds for their ventures.  Remember that all of Downtown Augusta, Downtown Aiken, and many other city centers in the CSRA are designated as O zones.  

 

See the Forbes Article below for details on how Opportunity Alabama is doing this, as well as an article in Medium by Alex Flachsbart–Founder & CEO of Opportunity Alabama.  Also see Enterprise’s overview of OZone program. 

 

Forbes Article: https://www.forbes.com/sites/cognitiveworld/2019/08/07/opportunity-zones-ai/#2a445e2b6a14

 

Medium Article: https://medium.com/@info_24727/putting-the-opportunity-back-in-alabama-ef305a8b26a

 

Enterprise overview of O-Zones: https://www.enterprisecommunity.org/resources/policy-focus-opportunity-zone-program

 

#opportunityzone #downtownaugusta #cre #investaugusta #multifamily

Black Homeownership falls to new low as housing affordability worsens

Affordable housing is growing as a major issue across the US, partially due to a lack of workforce housing, and partially due to zoning restrictions which restrict smaller lots or higher density. Mobile Home Communities, once a fixture of affordability in most communities, are near-impossible to develop and I’ve heard from multiple sources that a new mobile home community hasn’t been developed in the southeast in the last 15 years.

 

“The gap is growing, in part because renters across the U.S. face a shortage of properties they can afford to buy as starter-home prices soar, year after year. In the second quarter, the homeownership rate for all Americans fell to the lowest since 2017, and the number of new homeowner households grew by only 585,000, a third of the year-earlier level and the fewest since 2006.”

 

Question: What’s your experience with affordable housing? Or have you had zoning challenges to an affordable or dense project you wanted to develop?

 

https://www.nationalmortgagenews.com/…/black-homeownership-…

 

#affordablehousing #zoning #cre #multifamily