Today, Brandon Kaufman of Kaufman Hagan Commercial Real Estate joins me to talk about another exciting listing he has. This is a turnkey, 24-unit apartment building in a great part of Fort Collins. All of the details can be found in the Offering Memorandum.
- Listen to the podcast “#343: Commercial Listing: 24-Unit Apartment Building in the Heart of Fort Collins” on the Denver Real Estate Investing Podcast
- Watch the YouTube video (at the bottom).
- Read the blog post. Note, the blog is an executive summary. Get the in-depth breakdown from the podcast or video.
Residents Love that the Outside of the Building Matches the Inside
This is a well-maintained, gorgeous property. The owners did a great job with the landscaping, paint, roof, and the cool mural you’ll want to check out. Even the parking lot next to the property is in good shape.
The outside is representative of the inside, too. Residents appreciate their spacious units that are well kept.
Another nice feature of this building is that the units live like a home. The building is mostly 3-bedroom apartments, but there are a variety of 1, 2, and 4 bedroom units, too.
Invest in a Great Part of Town
This building is in a great part of town. It’s less than a mile from Historic Downtown Fort Collins and the CSU campus. However, there aren’t a lot of students in the building, which allows the owner to get true market rate deals.
In Fort Collins, the average median home price is $500K. A lot of residents don’t want to put $100K into a home but do want a nice place to live that feels like a home. With individual furnaces and heaters, as well as in-unit washers and dryers, this building gives them that opportunity.
Just south of the building is a popular park that’s maintained by the city. Next to that park is an undeveloped parcel of land that comes with the building. It’s zoned for single family or duplexes, and the owner could either sell it off to a developer or develop it themselves. Right now, it’s a nice amenity for the residents.
Fort Collins has been voted the #1 place to live in America multiple times by multiple outlets. It’s an incredible area that’s great for students and long-term residents alike. This building gives residents all of the experiences that make Fort Collins a great place to live.
Since there are so few transactions in the apartment market, there’s a lot of attention any time one comes on the market. There were only 7 deals traded last year below 100 units, and even less the year before. People who buy here hold on, and in that way, they create a legacy asset for their kids or grandkids.
The building is listed at $6.5M, and it has a 4.25 cap rate. Brandon can provide local debt quotes for buyers who want to push leverage.
The building has well-maintained roofs and windows. In terms of CapEx projects, most of the large things have already been taken care of—even unit renovations. There are a few things an owner could do to improve the units, such as adding a backsplash or upgrading bathroom vanities. Overall, it’s a clean building that just needs time to season in order to increase rents.
However, owners will make money from day 1 and have room to push the rents. Right now, every 1-bedroom is below $1K a month, and 3-bedrooms are at $1600, even though the market rate is $1800. Owners just need to continually season the property in order to get rents to the higher rates.
Who Is the Right Buyer for this Property?
This is a great opportunity for an investor who has $2M they need to place in an exchange. After working hard managing their last asset, this is the chance to put their money into something clean that will make more money for them. This is an attractive deal for the price, especially with renovations already completed.
At this price point, investors are competing with syndication pools. Kaufman Hagan’s goal is to create the largest buyer pool for the property. All of the details are in the OM, including pictures and debt quotes.
Kaufman Hagan is marketing properties differently than the average commercial brokerage, and this is just one example. They want to create the best scenario to represent each individual property.