Hollyvillage Apartments is a stabilized 16 unit apartment building located in Holly, MI. The units are all two bedroom one bath, approximately 900 square feet with a washer and dryer in each unit. There are 35 parking spaces for the apartment building, and 8 of the upstairs units have balconies. The property is 100% occupied grossing $13,760 per month.
The apartments were built in 1973 with a brick foundation and siding on the second level. The roof was replaced less than 5 years ago, and the balconies had a major renovation last year. Each unit is separately metered for water and electricity, so the tenants pick up those bills. The only utility the owner has to pay for is common electric and trash. Each unit has its own washer and dryer for the tenant use (landlord owned) which is a huge amenity compared to what is available in the immediate area. Each entrance to the building has 4 units, two above and two below grade.
The Opportunity
The average rent at Hollyvillage is currently $860 per month, which is under-market by about $140 compared to what is currently being rented at the property. Proven rental increases through interior renovation have taken place in 10 of the units at the property. A +- $10,000 upgrade, including vinyl plank flooring, new paint, new kitchen appliances and counters, new tub, toilet, and counter in the bathroom have pushed rents to $995 based on the last three leases. The remaining 6 units have an average rent of $772, so the +-$60k to finish these units will increase the rent by over $16k per year, which is a 27% return on investment.
The property has third party property management that can be retained once purchased. This will ensure that the property continues to run smoothly and operate as it has been. The property management company has also been managing the renovations, so retaining them would ensure the same quality and pricing as they have been achieving.
Location
Holly, Michigan is located in Metro Detroit just outside of Fenton. Surrounded by lakes, Holly is a 5 minute drive to the i-75 corridor which has access to millions of jobs. Linden is also a short drive to Fenton, Michigan which has dozens of popular retail, restaurants, and grocery stores which are attractive to everyone. Fenton is a destination for people who enjoy the outdoors as it is a short drive to several golf courses and nature preserves. Economically the average household income within 3 miles is north of $95,000. The average home costs over $298k in linden which is a 7% increase from 2021.
The average rent for a 2 bedroom apartment (similar style to Holly Village) within a 5 mile radius is $1,118. Even after the renovations, there is $150 a month in organic rental growth to increase the already renovated units. Increasing all of the units to $995 a month will increase the value of the property by $500,000, and if the rents get up to $1,150, the property will increase in value by over $1,000,000.
