Management Case Studies
60,000 SF Condo Conversion
Historic Condo Conversion involving tax abatement, steam heat conversion, alley vacation, marketing and sales of condominiums in the City of Detroit, MI.
Case Study - Historic Condo Conversion
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The Challenge
- Make apartment building with negative NOI profitable
- Convert Steam heat system to tenant paid forced air
- Obtain NEZ tax abatement from city council
- Obtain alley from city and combine with vacant land to create secure parking
- Renovate building, market and sell out the Condos
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The Solutions
- Obtained tax abatement working closely with city
- Implemented heating system conversion, while maintaining building above 90% occupancy
- Vacated alley and assembled land for secure parking
- Replaced windows, roof, electric and renovated units
- Addressed environmental issues
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The Results
- Took negative NOI building to a project yielding $3.2M revenue and over $1M in profit
- %400 return on capital employed
- Achieved project profitability 18 months after acquisition
- www.1001covington.com/
220U Rehab & Lease-up
220 Unit Apartment Rehabilitation, Lease-Up & stabilization with a scattered site apartment portfolio in the City of Detroit, MI.
Case Study - Rehab, Lease-Up & Stabilization
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The Challenge
- 10 Buildings across 4 sites from East to West side Detroit
- 65% physical occupancy at take over
- Unfinished rehab project on 6 buildings in portfolio
- One building completely shut down for 3 years
- Over $300k in past A/P to resolve
- Must transition existing residents to paying for their own utilities to become profitable
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The Solutions
- Implemented effective marketing plan, complemented with effective leasing staff and practices
- Created community with ongoing calendar of events, newsletters, and use of 'community advocates'
- Re-Commissioned vacant buildings with mini-rehab
- Transitioned to tenant paid utilities
- Negotiated deep discounts on pay-offs for past A/P
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The Results
- Achieved 99% occupancy in 5 months!
- Have averaged monthly collections of $95k on a gross rent potential of $105k since stabilization in Jan '10
- Transitioned all residents to pay for their own utilities over 6 month period enhancing monthly NOI by $15k
- Took portfolio from a negative NOI to approx $400k annual NOI
Distressed Asset Stabilization
167 Unit Apartment Receivership, Lease-Up and Stabilization project in the Palmer Park Area of Detroit, MI.
Case Study - Lease-Up and Stabilization
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The Challenge
- Portfolio consists of 5 buildings built in the 1930's & 1940's scattered throughout the palmer park area.
- 45% physical occupancy & 30% economic occupancy at take-over
- Foreclosure situation with uncooperative former owner
- Over 25 units down from tremendous plumbing, HVAC and roof issues
- Limited cash available outside of operating revenues
- Drug and Insect infestations
- Outrageous water and gas bills
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The Solutions
- Took control of community with clear presence, enforcement of policy and aggressive collection techniques
- Affordably replaced over 20, 5 story drain stacks with countless supply line and fixture leaks
- Worked with local police to eradicate drug issue
- Aggressive marketing and leasing plan complemented with quality unit turns and a motivated site staff
- Implemented modern boiler controls to take down gas bill
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The Results
- Achieved 90%+ physical occupancy in 6 months, requiring over 110 move-ins
- Increased collections to 95% of rent roll in 6 months
- Brought 100% of units online including 25 down units
- Increased resident quality and created a stable population
- Minimized gas and water usage with major plumbing repair and modern control systems
- Took property from low occupancy and inconsistency to sustainability and profitability
Up-Market Repositioning
175 Unit Apartment Repositioning and Lease-Up with a 6 property scatter site throughout the City of Royal Oak, MI.
Case Study - Repositioning & Lease-Up
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The Challenge
- Portfolio consists of 6 buildings scattered throughout Royal Oak totaling 175 units
- 37% physical occupancy at take over
- Poor quality of applicant relative to sub-market
- Lack of 'appeal' to differentiate from competition
- High turn over rates
- Extensive deferred maintenance
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The Solutions
- Created unique features in each of the 6 sites enhancing property appeal to applicants
- Implemented aggressive marketing plan to upscale prospective clients
- Enhanced buildings with models, contemporary paint, upgraded fixtures and increased rent based on upgrades
- Increased quality of maintenance services
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The Results
- Averaged over 94% occupancy and less than 3% bad debt since stabilization
- Increased new lease rent by as much as $125 per month with upgraded market appeal
- Decreased turn over rate with great office and maintenance service
Receivership Lease-up & Sale
53 Unit Apartment Receivership, Lease-Up and Sale in the City of Fraser, MI.
Case Study - Receivership, Lease-up & Sale
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The Challenge
- 53 Unit Portfolio Consisting of 2 sites spread across 5 buildings
- REO property, with a goal to lease up and Sell as soon as possible
- 51% physical occupancy at take-over
- Major Flooding and Water Damage
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The Solutions
- Upon take-over, staffed property immediately
- Implemented cost effective, but aggressive marketing plan to drive leasing traffic
- Worked closely with Income Property Organization to broker the sale of the property
- Prepared property for sale by maximizing revenue, dressing up grounds and common areas
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The Results
- Take over, stabilization and sale of property achieved in 9 months
- Achieved 100% occupancy within 4 months of management take over
- Sold for nearly $30,000 per unit in June '09
Take over, stabilization and sale of property achieved in 9 months
