The Canovo Report - Just Closed - 54 unit in North Salt Lake/Bountiful, UT - SUBS

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Just Closed! Orchard Lane Apartments in North Salt Lake/Bountiful, UT….

We are excited to announce our most recent acquisition of Orchard Lane Apartments - a 54-unit, B-class, value-add multifamily community. We want to congratulate all of our passive investors who joined us in this deal!

If you missed out on this one but would like to be notified of future passive investing opportunities, you can book a brief passive investor intro call here.

We’ve included some detail about this acquisition below.

Happy Investing,

David Robinson

> This was an off-market acquisition. Seller was a true mom and pop owner. They have owned and self manage for a decade of have kept rents extremely low ($750+ below market rent/unit). The seller knew all the tenants by name and were very reluctant to raise rent over the years. This was a forced sale due to divorce.

• Purchase price $9,150,000 (169K per unit)  

• As Stabilized Appraisal $12,730,000 ($3,580,000 over our price)

• 2022 Sales Comps $270k – $297k/unit (40% below peak pricing)

• $720k average home list price on MLS (1 mile radius)

• In place rents are 35% of AMI (extremely affordable)  

• Bountiful is 98% built out with strict single-family zoning laws (insulated from new supply)

• 7.75% year 2 stabilized UYOC (unlevered yield on cost).  

• Well-maintained property all plumbing electrical and water heaters have already been replaced and 90% of HVAC unit replaced.

The takeover transition is now in effect. Our property management company was able to begin third-party management of Orchard Lane for the sellers a few months ago, which will make our transition much simpler and easier.

We plan to start the exterior paint and work as soon as possible. Our paint contractor has indicated that they can accommodate us on their schedule as soon as the weather cooperates and things dry out.

We are ordering all the materials for the kitchen and bathroom remodels now. They will be shipped from Vietnam, and our interior contractor estimates that the worst-case scenario could take 20 weeks, but it is likely to be much sooner.

We plan to immediately increase rents up to market. We believe the timing could work out well for all 54 residents to receive brand-new units while simultaneously bringing rents to market. We believe that even at market rents, there is no cheaper place to live, and we are unlikely to have a mass exodus. However, even if 100% of residents vacated, Davis County is currently seeing lease-up properties averaging 13-15 leases per month. For this small 54-unit property, it would be a short four-month lease-up. We have an eight-month interest reserve to be conservative.

We will be providing monthly updates to our investors on operations and renovations by the end of each month. Upon stabilization, we will begin distributions to investors.

We are excited about the potential of this deal.

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David Robinson

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