Recently completed 40 unit duplex and 4-plex Property. Currently the units are 100% occupied. The units were designed and built to be energy efficient and low maintenance. Ceramic tile throughout the units and brick and vinyl veneer outside. Tenant mix is stable and mostly professionals. The Property has excellent and immediate access to Highway 59 and Interstate 30. This Property offers investors an opportunity to generate stable returns and upside.
Financial Analysis
I am waiting on the current Income Statement from the Accountant and will provide them as soon as they are available. I have sold three other developments for this builder/operator and have gone thru three different MAI Appraisals in the process of selling those units.
The current rent roll is $45,100 per month. There are 31 units leased out at $1,150 per month and 9 units leased out at $1,050 per month. As the $1,050 units have their leases expire (one year leases), then the rents will be increased to $1,150.
The units current are 100% full and maintain a high occupancy rate. The two car garage is a big selling feature and the operators usually do have a waiting list.
Here is a pro-forma annual Income Statement. I use the exact same expense ratio as the MAI appraiser uses, 33% of Gross Annual Income. I also use a 5% occupancy since that is what the Appraiser uses. The expenses are very consistent year to year.
Pro-Forma Income Statement
Annual Gross Income at curent rent roll $541,200
Less: 5 % Occupancy Adjustment (27,060)
Adjusted Gross Income (AGI) $514,140
Less Operating Expenses (33% of AGI) (169,666)
Operating Net Income $344,474
The Cap Rate equals $344,474 divided by the asking price of $5,250,000 which is a 6.56 Cap Rate.
