The second monthly update for the Houston apartment complex has arrived and I'm pleased with the way things are going. As they thought last month, they were able to get the occupancy up another percentage point to 94%. And this is even with the rent increases they have implemented, which they say are being received favorably by renters. They still believe they can get it up to 95% or 96% over the coming months. I guess the improvements that are being made are appreciated by the tenants. Those improvements so far include resurfacing and striping of the entry parking lot and new signs with the new property name (both of which were completed last month), and a new water feature at the front entry, which should be complete at the end of this month.
On the financial front, the improvements completed so far have come in under budget. Additionally, we successfully appealed a property tax assessment, resulting in a savings of just over $40,000 compared to the budgeted amount for taxes.
One thing that I would like a bit more explanation on is the management's decision to not move forward with the plan to install a playground area. They have decided there are not enough children in the complex to justify it and management is looking at other amenities to add instead of a playground. But I seem to recall reading or hearing during the due diligence phase of this investment that tenants with children tend to be more stable renters and move less. So while there are not many kids there now, maybe a playground would attract more families. I would think that those would be the type of renters we want to attract. On the other hand, maybe the current tenants are there precisely because there are few kids in the complex and bringing more in would alienate them. Since it's not my area of expertise, I'll have to trust that management knows what they are doing on this one.
Friday, August 15, 2008
Multi #1 Monthly Update
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4 comments:
Maybe the unit mix is more oriented toward families w/o kids and/or singles.
If there are way more 1/1 or 2/1 than 2/2 or 3/2 then the property is not oriented towards families thus the playground may not be too effective.
That's a good point.. The property has 206 1/1 or 1/1.5 units and 118 2/2 units, so it does make sense that families would make up a smaller percentage of tenants.
I also posed this question to management and they said the current tenant mix is good and it doesn't make sense to try to force a change. There are also lots of existing grass and courtyard areas, so families aren't really discouraged at this point.
I am glad to see that you are doing so well. Owning and managing an apartment complex sounds really fun. I have been reading your blog for months now, because I have always wanted to invest in real estate. I have helped a few friends but for some reason I never can do it myself. Now I am ready, I have a great idea. You know alot about hard money, what is the best way to raise some?
Jason Dragon
http://blog.capitalactive.com/
Learn to identify good deals and then find some. If you can do that, the hard money will be easy to find.
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