Waller Group is proud to present the 39-unit value-add Park Avenue Apartments in Park Rapids, MN. The property has 3 physical addresses: 113 3rd. 117 3rd, and 210 Park Ave.
This unique property is a school converted into apartments, offering 39 fully renovated units. At 113 3rd, Unit 8.5 is the current office and could potentially be a studio. Unit 17 (currently being used as storage) is directly above the office and can be converted to a studio as well. Both unit 8.5 and 17 are on common electricity. The recent renovations include upgraded appliances, cabinets, LVT (Coretec) and hardwood floors, LED lighting, and low-flow toilets. The plumbing and electrical systems were completely redone at the time of conversion, ensuring a modern and efficient living environment for residents. With the exception of baseboard electric and through-the-wall air in most units, the property features 7 gas furnaces in common areas, and 7 individually metered gas furnaces inunit (of 7, there are 4 central heat and air systems). There are 2 W/D facilities within the building.
The current utilities are as follows: Water: Owner paid-all new and renewal leases include $35/mo water, Gas: Owner paid for common area furnaces (Metered to units with gas furnaces), and Trash: all new and renewal leases include $10/mo trash.
New ownership has the opportunity to implement interior unit upgrade program with the conversion of more rooms into apartment units, restoration of the gym, and restoration of many other amenities the former school has to offer like the auditorium and lunch room.
Current ownership is achieving $233,098 in annual NOI. New ownership, based upon area rent comps, can raise rents up to $119 / unit, which is a $0.15 / sqft rent bump. With this bump, new ownership can achieve an annual NOI of $271,332. Additionally, new ownership has the opportunity to increase ancillary income by implementing a ratio utility billing system to bill back for water, gas, and trash valet fee. Another additional income opportunity would be to install W/D hookups and charge $50/ month. This does not include the potential renovation programs this property has to offer.
The property is currently managed by current ownership’s property management company. Proforma financials were underwritten with a 7.0% management fee.