| CREOP

Stacey Ann is a 48 unit apartment building located in Detroit, Michigan. The property is positioned in the Harmony Neighborhood, off of Schaefer Hwy just south of Fenkell. Stacey Ann consists of one building, with 48 gated parking spaces in the front of the building. There are 48 units that are all 1 bedroom 1 bath, approximately 785 square feet. One of the units is currently being used as a leasing office. The property is 98% occupied charging over $31,100 per month in gross potential rent.

Of the 48 units - 21 have been turned with light renovations, and one is currently being turned. Light renovations include new carpet and paint, vinyl flooring in the kitchen when needed, and appliances when needed. Newly turned units are achieving a rent premium of about 8% on what the current average rent in the property is, which is about a 13% return on investment, on an average unit turn of $4,000. The last unit to be leased in the building was at $723 per month, and the average rent per unit in the property is at $670 per month.
Stacey Ann received a brand new roof in 2018. The property is served by two boiler's and two hot water tank (110 gallon and 80 gallon, 199,900 BTU). Heat is provided through baseboard heat, each unit has a thermostat that controls the temperature in their unit. Each unit also has built in wall AC unit, that is powered by a socket in the unit. The owner pays for water and gas, the tenant pays for electricity as each unit is individually metered. There is one laundry room that has 3 sets of washers and dryers, on a contract from CSC. Each entrance to the building is locked at all times - as the tenant has to have a key to get in. Each unit has a buzzer inside of their unit to let their guests in the property.

The property is currently 15% under market rents from what this location is offering for turned units. Increasing the rent by 15% (about $25 to $100 per unit) would increase the gross potential rent by approximately $60,800, which is over $869,000 in value based on a 7% CAP rate. The cost to turn the remaining 27 units, at an average of $4,000 per unit is around $108,000. This is a projected 56% return on investment, based on the current turn costs of current ownership.
The next owner would highly benefit from self management - as currently the management costs of running the property are about 24% of the income. The management company has done a fantastic job maintaining the property, it is just hard to have a lower expense ratio with a 3rd property management company on 35 units.

The property would benefit highly from joining the PILOT program, which stands for Payment In Lei Of Taxes. With the PILOT program in place, you restrict the income to your tenants to either 120% of the average median income ($96,960), 80% of the AMI ($64,640), or 60 % of the AMI ($48,480) in trade for only paying 8% property tax of your net rents, 4% or 1%. All of the rents are currently below what would be allowed per the AMI brackets. Depending on which program you use for the property this could save you up to $25,000 per year in property taxes.