Building Description

Lot Size: 0.76
Acre Year Built: 1960

Strategy

• Evict delinquent tenants
• Complete rebranding and renovation of property:
  • New brand name and signage
  • Complete exterior overhaul, including new accent colors, re-paving, flood repair, and desert landscaping (reducing utility costs)
  • Contemporary, elegant interior design
  • Electric car gates
• Market to young professionals

the opportunity

• Single story garden-style apartment community
• Located in a desirable city block with three other properties acquired and managed by Red Rock Equities
• Potential to reduce management costs and services by treating property as a combined unit complex
• Growing submarket (demonstrated by increase in occupancy levels above those of the metropolitan area)
• Significant Value-Add/Reposition potential through extensive renovation
• Opportunity to purchase at a fraction of replacement cost

Desert Jewel was fully operating and stabilized 9.5 months following its acquisition with impressive rental rate increases of up to 20% over the previous owner average rent. The specific submarket rental rate has increased by only 8% over the same period.

We continued operating the building and increasing rent for another year, achieving rental rate increases of up to 36% over the previous owner average.

Cash-on-Cash return for the last 12 trailing months of our ownership was 22.90%.

Desert Jewel was sold in January 2016 for $795,000, reflecting a Levered IRR of 62.77% to our investors, and an Equity Multiple of 2.80x to their initial investment over two years.