Open to Accredited and Sophisticated Investors (per Sec. 506b requirements)
Open to both cash investments and existing IRA/401k investments
First come, first-served basis (with preference given to higher investment amounts)
Fill out the form at the bottom of this page to put in your soft reserve.
Download the Investment Summary for more information about the deal.
MARKET INFORMATION – PHOENIX MSA
- Historic low vacancy rate: 5.0%
- 12-month asking rent growth: 15.1%
- Rents below national average (despite high growth)
- Rent-to-income ratio: median rents are ~20% of median household income
- Economy has greatly diversified since great recession
- 72% of pandemic job losses recovered by March 2021
- Businesses expanding operations in Phoenix
- Amazon opened 11 fulfillment & last-mile sites in 2020 and opened 95,000-sf office in Tempe
- TSMC building $12 billion semiconductor factory (>1,600 jobs)
- Zoom opening R&D center
- New data centers for Microsoft, Google, & Apple
- Growth in insurance, financial, medical, & service industries
SUBMARKET INFORMATION – NORTH/CENTRAL PHOENIX
- Historic low vacancy rate: 5.0% (3.6% for mid-tier properties)
- 12-month asking rent growth: 13.5%
- Forecast average asking rent growth: 6.1%
- No new construction underway – insulated from risk of new supply/construction
- Most properties are 2 & 3-star low-rise garden-style (like Cornell!)
- Phoenix light rail transits the submarket – still expanding (economic growth driver)
- Common employment:
- Call centers
- Customer service – General Dynamics, Wells Fargo, & Blue Cross
- Shopping centers/malls
PROPERTY INFORMATION – CORNELL APARTMENTS
- 51 units in 2 stories (48 original units plus 3 recently-added units)
- Original 48 units are all 2/2 and 3/2 (3-bedroom units are rare in the neighborhood) – great for families
- Newer units include two 1/1’s and one studio
- Previous boiler/chiller systems replaced by individual roof-mounted HVACs and hot water heaters ~15 years ago
- Individually metered for electricity (except new units – on house power and pay additional utility charge)
- Flat foam roof system
- Swimming pool
- Gated walking access to property with security system
- All units upgraded with hard-surface countertops (granite/quartz)
- All units have in-unit washers/dryers (comps in the area do not have them)
- Flooring is a mix of vinyl and tile
- 1-mile median household income is over $55,000
- Property management has been poor and rents and utility charges are below market
THE OPPORTUNITY – CORNELL APARTMENTS
- Make it safe: improve lighting, gates, and security system
- Make it nice and clean: re-brand, exterior paint accents, improve pool area & courtyards, standardize/improve interior renovations
- Maximize value:
- Bring in more professional property management
- Increase rents and utility charges (RUBS) to market
- Unit rents are on average $140 below market rent (comps don’t have washers/dryers or granite/quartz counters)
- Opportunity to create two more 1/1 units
- Create private patios for 1st floor units for proven $50 rent premiums
- Water conservation
INVESTOR CLASSES AND PROJECTED RETURNS
Class A Limited Partner: Preferred class — paid before both Class B Limited Partners and General Partners
- Minimum investment: $50,000
- Cash flow distributions: 12% annual preferred cash on cash returns – paid monthly
- No equity at sale. At sale, investors’ initial investment capital is returned to them, along with their share of cash flow due.
- Depreciation: Does not share in depreciation.
- This class is the least susceptible to economic uncertainty and has the highest expected returns from cashflow, but has no opportunity for equity growth.
Class B Limited Partner (traditional passive investor)
- Minimum investment: $75,000
- Preference given to those investing at least $250,000 who want to 1031-exchange at sale into another deal
- Cash flow distributions: 80/20 straight split paid quarterly (80% to Class B investors, 20% to GPs).
- Equity at Sale: At sale, investors’ initial investment capital is returned first. Remaining equity after costs of sale is split 80/20 with the GPs .
- Depreciation: Shares in depreciation with the GPs on an 80/20 basis.
To indicate interest, please complete the form below. Please note that this opportunity is open to accredited and sophisticated investors only with whom we have a pre-existing relationship.
Completing this form does not lock you in, nor does it guarantee you a spot in the deal.