Grand Prairie 332 Unit Multifamily Complex Returns 25% to Investors
With strong cash on cash, this asset was held for 10 years and generated a 6.4x multiple for investors in which $100,000 invested returned $640,000 over the 10-year holding period.
How It Was Done
In 2007 The PPA Group purchased this 332-unit complex which was highly distressed due to poor management and undercapitalization. While in a submarket the property was operating at a 70% occupancy and we identified it as a strong contender for growth and appreciation. The amenities were in poor working order, there was a high skip rate, and tenant satisfaction was very low.
Upon purchasing the property, we made significant improvements to the exterior and amenities. We painted, improved landscaping, and made sure all the amenities were in good working order. To improve relations and bring in more tenants we partnered with a non-profit allowing them to use our club house to hold English as a Second Language (ESL) programs for mothers and young children. This gave us tens of thousands of dollars in free publicity, brought in additional tenants, and improved overall tenant relations. We also renovated units and created a child center.
The result of our efforts was a 2x increase in Net Operating Income (NOI) after just the first year. Our award-winning property management company, CLEAR Property Management, continued this trend of growth over the years resulting in steady cash flows to our investors. This was done by implementing our time-tested system of improving marketing, cutting costs, raising rents, and increasing the overall value of the property.
The resulting strong cash flow allowed us to hold the property for a longer than our typical hold period of 10 years. Over that period, we produced a total Internal Rate of Return of 25% and a Multiple on Invested Capital of 6.4x to our investors.
Past performance is no guarantee of future results. Properties referenced above were sponsored deals of Upside Avenue’s parent company, The PPA Group. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All securities involve risk and may result in partial or total loss. Full Disclaimer