SFR acquisitions

Acquisition Summary:

Property Detail: 3BR 1BA Brick
Acquisition Date: August 30, 2024
Acquisition Price: $45,000
Capital Expenditures: None for now
Current Rent: $700
Future Rent: $900
As Is Value: Approx. $60,000

Update: October 1, 2024
In just one month since acquisition, the property is already listed for rent. This quick turnaround demonstrates our ability to create value rapidly and capitalize on our in-house expertise.

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Acquisition Summary:

Property Detail: 3BR 1.5BA Bungalow
Acquisition Date: August 30, 2024
Acquisition Price: $65,000
Capital Expenditures (CapEx): $35,000
Potential Rent: $1,200
After Repair Value (ARV): 150,000

The Mutual Trust Management Advisors LP is proud to announce the below acquisition and its underwriting metrics.

• Property Address: 16234 Prest, Detroit, Michigan 48235
• Acquisition Date: August 29, 2024
• Acquisition Price: $60,000
• Capital Expenditures (CapEx): $45,000
• Potential Rent: $1,250 per month
• After Repair Value (ARV): $150,000.
  See Comp 1, a smaller bungalow with homeowner-grade finishes, sold at $160,000.
  See Comp 2, a bigger bungalow with solid improvements sold at $157,000.
  See Comp 3, a similar colonial with homeowner-grade finishes, sold at $169,800.
  See Comp 4, a similar colonial with less improvements, sold at $153,000.
• Simple Cash-on-Cash Return Projections: 8.5%

 

This is a 3 bed 1 bath, 1,369 square feet brick colonial with substantial after-repair value creations in sight. It is situated within the Hubbell-Puritan neighborhood, on a solid brick street, and is very close to a popular local fresh food supermarket, the Greenfield Market.

Nearby spots of convenience that make this property’s location very convenient to tenants and homeowners include:

• A few minutes’ drive to the DMC Sinai Hospital
• Many restaurants along McNichols
• Many school options also around a few minutes’ drive
• 6-minutes to the City’s Northwest Activities Center
• 7-minutes to Home Depot

One of the MTMA fund managers brings extensive property management expertise. By the time the Team has a property that is being presented, all the relevant details such as the repair quote, potential rent, and nearby comparables, are at the fingertips of the underwriting team, directly from the property management side.

This property was acquired mid-renovation, and the Team took over to complete the repairs.

 

Original state of the kitchen when purchased.

Many investors in the Detroit real estate market struggle with every stage of property management. The affordability of these properties often creates an appealing theoretical investment case, but effective implementation is critical to success.

Repairs have always been costly, and managing the workmen was already challenging—but both became even more difficult following COVID. Our Team’s strategic property manager allows the Team to estimate future values, and more importantly, follow through with the vision. Value in real estate is truly made at acquisition – that is, if you have reliable local partners.

Finally, the Fund’s underwriting metrics require that as an overall portfolio, we aim to achieve the below goals.

1. Annualized 8% Preferred Return to our investors
2. A Total Annualized Return Goal of 10-16%

According to our projections, this property will be achieving the below returns during the first year, once stabilized.

1. Rents with a cash-on-cash return of mid-8%
2. Equity creation of 40% (investment amount of $108,000 to ARV of $150,000

This property is likely to achieve a 48% first year return after stabilization.  After the tenant is placed, the natural property value appreciation and rental returns should keep the property to achieve the annualized 10% threshold.

We at MTMA would like to make sure the first year’s projections overdeliver, because the extra value may be utilized as a buffer against property performance or market volatility.

 

======  Update on December 30, 2024

The property’s repairs were completed in a timely manner, and was listed for rent for $1,200 on October 23.  The prospective tenant’s move-in date has been schedule for December 30.

The Team would like to share the after-repair photos of this property in particular to show how effective our property turnaround can be. All the photos are listed on Zillow at this time in December 2024.

Even though the kitchen was functional, the Team gave it a completely fresh and contemporary finish.

When conducting renovations, balancing cost efficiency with quality is crucial. While we aim to ensure tenant appeal and long-term occupancy, the focus remains on achieving rental-quality finishes rather than premium homeowner-grade upgrades.

Comparable 1 features homeowner-grade finishes, Comparable 2 offers similar quality with slight variations, and Comparable 3 showcases top-tier upgrades. By intentionally opting for rental-quality finishes, we estimate the after-repair value (ARV) of this property to be approximately $150,000, aligning with Comparable 4.

Zillow’s Zestimate for this property, as of December 2024, stands at $126,300. However, algorithmic estimates often lack the ability to reflect the nuanced local market insights and unique value enhancements that experienced real estate professionals can identify. This will happen often to value-add properties that are purchased outside the MLS.  To provide a more accurate assessment, we present several comparables alongside our analysis.

 

 

 

This is a unique and exclusive equity capture play with no emphasis on cash flows.

• Property Address: 18204 Cherrylawn, Detroit, Michigan 48221
• Acquisition Date: August 23, 2024
• Acquisition Price: $177,000.00
• Capital Expenditures (CapEx):  Minimal, currently rented.
• Current Rent: $892/mo. on Section 8
• Future Rent: Will apply for an immediate increase to $1,200 – $1,500
• Comparables: $300,000 (conservatively).  See Comp 1, Comp 2,  Comp 3, Comp 4
• Future Cash-On-Cash Return: at $1,400 a month, the property should be able to break-even.
• Future Equity Growth Projections: Estimated $100,000 capture at purchase, with annual growth projection of 5.5% on the starting $300,000.  This translates to 9.73% against the initial investment in the first year.  The property will hit an annualized return of 10% against its initial investment amount by the third year.  10-16% is our fund’s annual goal.

 

This property is located in the culturally rich Bagley district. In the 1960s, music icons like Marvin Gaye and Stevie Wonder lived and recorded in the area. Today, Bagley has experienced significant revitalization, making it one of Detroit’s most desirable neighborhoods.