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LEONARD OAKS

72

units

$52,778

price per unit

7.91%

cap rate

“My wife and I wanted to thank you for assisting us with the sale of our apartment complex in Grand Rapids Michigan. Your hard work and determination to ensure that things went as smoothly as possible were greatly appreciated. Throughout the entire process, your professionalism and knowledge of the rental property industry, and commercial properties in general, played a tremendous part in putting this sale together and keeping it together through closing. Once again, thank you for your fine service.“

 

-Tewelde G. Bahta & Haregu Beretekeab

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Challenge

The NAI Wisinski of West Michigan Multifamily Team was approached to market a 72 unit apartment community. The property is well located in a middle income neighborhood in relatively close proximity to downtown Grand Rapids. However, the property condition had declined over the years and included significant deferred maintenance. As a result, the property had gained a negative reputation in the market. The seller had limited capital available to put back into the property. Therefore, the task was to find a well capitalized investor who was willing to take on a substantial rehab commitment without a tremendous near term upside potential.

Action

Using our knowledge of the market area, and of the positive trends occurring in neighborhoods located in close proximity to the vibrant Central Business District, we were able to demonstrate that the property has strong future appreciation potential. While the immediate neighborhood has not experienced the gentrification and price appreciation that is currently happening in other neighborhoods near downtown, the property is located in a stable, working class area that offers the convenience of a short 5 minute drive to the CBD, at less than half the housing cost. Our rent data helped support the notion that the near downtown neighborhoods are all experiencing above area average, positive rent growth as a side effect of the soaring rental pricing in the CBD, which has effectively raised the rent ceiling for the entire metropolitan area.

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Result

A well capitalized, local investor purchased the property as an all cash sale. The NAI Team was able to achieve a considerable sale price that exceeded the seller’s initial expectations. The purchase was made based around the understanding that the first ring communities near downtown Grand Rapids have shown strong performance and value enhancement potential. The ever increasing vitality of the CBD has generated a growing demand for housing in and near its vicinity, especially at an affordable price point.