Investing in multifamily deals can often feel theoretical or based solely on numbers on a spreadsheet. However, it’s crucial to consider the intangible aspects that can significantly impact the success of a project. In this case study, we will explore the key highlights, challenges faced, and lessons learned from the Aspen Heights project in Fort Smith, Arkansas.
Key Highlights:
- Purchase price of $4.7 million for the property, originally named Oakbrook.
- Rebranding the property as Aspen Heights to improve its reputation and appeal.
- Strong underwriting with conservative assumptions and sensitivity analysis.
- Cost basis of $35,000 per door, indicating an attractive investment opportunity.
- Qualification for agency debt, securing a Freddie Mac loan.
Challenges Faced:
- Operating in a smaller tertiary market like Fort Smith, Arkansas, which may be unfamiliar to many investors.
- Dealing with maintenance issues and functional obsolescence related to mansard roofs.
- Navigating a new property management relationship and adapting to their systems and processes.
- Limited availability and slower speed of contractors in the smaller market.
- Unforeseen gas line issues that were not disclosed by the previous owner.
Outcome of the Project:
Despite the challenges faced, the Aspen Heights project proved to be a resounding success. It was sold within one and a half years, achieving or exceeding the original five-year business plan, which aimed to double investors’ money. Doubling the investment in such a short period is considered a significant achievement.
Real estate investing involves navigating various challenges and opportunities. If you’re interested in learning more about multifamily investments or exploring potential projects, consider reaching out to our team. We can provide valuable insights and help you make informed investment decisions.
Remember, investing in real estate requires a comprehensive understanding of the market, diligent research, and a reliable support network. Stay informed, be adaptable, and seize opportunities when they arise.
