The Elaine Lofts are located in Detroit, Michigan in the Techtown neighborhood. The property consists of 25 apartment units which are 100% occupied, grossing over $42,000 per month.
The property was renovated down to the studs in 2020 / 2021 with every detail being updated, along with a penthouse loft being added to the roof. These high end lofts have premium finishes such as quartz countertops, stainless steel appliances, slow closing cabinets and walk-in showers. The lofts have 9' ceilings and are bright and airy, and the brand new exterior windows are black giving the building a sleek appeal. All of the units have individual HVAC units and hot water tanks, and the forced heat / AC is controlled by a digital dial. The AC units are located on the roof of the building. All of the lofts are individually metered for electric - the landlord pays for water, and the tenants pay for the rest. There is a keyless entry from the front of the building that is accessible from the tenants smart phone - preventing lockouts, and the ability to let guests in from their loft. There are 25 parking spaces for tenants that is included in the rent. Each loft has their own laundry machine.
The Location
Tech Town, Detroit is home to numerous large employers in the manufacturing, warehouse, automotive, Health, and Government industries. Companies such as Ford Health Care, Quicken Loans, Blue Cross Blue Shield, and the Michigan State Government occupy millions of square feet all within a mile of The Elaine Lofts. The building is also surrounded by several million dollars of planned future developments that include hospitals, apartment buildings, warehouses, and industrial space.
Across the street from the Elaine lofts is a planned development of 433 apartment units along with retail, commercial, and co-working space. The site known as the Fisher Body Plant is estimated to cost $134 Million and will help the growth of Tech Town, along with provide walkable retail to the tenants at the Elaine Lofts.
The Investment
The property has been stabilized since the beginning of 2021 and is providing excellent cash flow. Given that the lofts went through an entire gut renovation within the last year, the property requires very little maintenance, and is very efficient when it comes to utilities because everything is brand new and efficiency driven. The entire building has spray foam insulation, which provides the utmost heating and cooling efficiency.
The property has an OPRA tax abatement that started in 2020, and lasts through 2032. The OPRA freezes the taxable value on the property for the entirety of the period (11 years left) keeping the property taxes extremely low, which maximizes cash flow.
Value
The Elaine lofts have been priced at a 6% CAP rate, which translates to +-10% cash on cash return with in place cash flow. Over the past 12 months since lease up, rents have increased in this area by 5% - 10%, which will allow the investor to increase their cash on cash return to 10%+. The property is currently not collecting any "other income", and a RUBS system can / should be put into place in order to capture water fee income. This is standard in the Detroit Market and renters expect this. This high end, low maintenance investment will continue to appreciate as the area develops and rental rates push higher. This is the perfect asset for an investor to step into a turn-key investment, and produce a strong cash on cash return.
