Waller Group is proud to present the 36-unit, 91.7% occupied value-add Valley View Apartments property in Lamberton, MN. There are 15 unfurnished units (14 are 1 bed; 1 is 2 bed) and 21 furnished units. Parking is plentiful and there is some other income upside charging for parking, although some work is required restriping and repaving (current ownership received quotes ranging from $38k – $52k). There are laundry facilities on every floor (brand new coinoperated). The roof was replaced in 2009. Current ownership has spent 433,826.66 from 2018 – 2021 on capex with projects including: repainted exterior/interior, new boilers, fire systems, landscaping, electrical, plumbing, furniture for furnished units, added new windows, flooring, lighting, and appliances. New leases will be paying for electricity, which has the capability of substantially reducing utility expense on the property, which currently accounts for 44.8% of total utility expenses. Traveling nurses are a large part of the MTM leases, and their average stay is 9-18 months.
Current rents are 86.0% of top of the market rents (based on survey of rent comparables). New ownership has the opportunity to implement interior unit upgrade program with black or stainless steel appliances, upgraded flooring, and upgrading plumbing & fixtures. Current rent comparables achieving top of the market rents in the submarket contain full size W/D units, but contain dated interior finishes, so there may be additional room to set top of the market rents beyond where they currently stand. Additionally, there is the opportunity to implement additional income fees through implementing a ratio utility billing system (continuing the conversion of new leases to paying for electric and billing back for water/gas), late fees, pet fees/deposits, lease violation fees, month to month fees, and parking fees. Another cost saving opportunity would be utilizing water conservation opportunities such as updates on faucets, showers, and low flow toilets, which can save up to 20% on water bills.
Current ownership is achieving $101,879 in annual NOI. New ownership, based upon area rent comps, can raise rents up to $107 / unit, which is a $0.16 / sqft rent bump. With this bump, new ownership can achieve an annual NOI of $167,646.
Property management currently consists of 1 on-site manager (Dan – $23/hr for 20-25 hrs/wk) and 1 maintenance tech (Rob – 15 years at subject property). Proforma financials were underwritten with a 4.0% management fee.