When we closed on our Fort Payne, AL 72-unit asset a few weeks back (part of a larger portfolio buy), the average rents were $806 with the maximum rent being $845. Going in, we were confident that it would be rather simple pushing rents 50%... hence our 40%> IRR projection.
Flash forward to today and we are leasing them, with ease, at $1,249. Thats a 50% jump from what they were filling at a few weeks back and is proof of the significant value potential of this asset. These were even pre-leased before we were done with renovations and before we had any photos!
Yes, renovations help, and our teams deliver excellent results in that department - but equally important is the fact that Fort Payne was a "hidden-gem" market that many overlooked. It has very low apartment supply and is growing at a steady pace. Combine that with strong employment metrics (great mix of different industries, including numerous fortune 500 companies) and favorable income demographics, you have an area that is perfect for real estate investment - at least in our mind!
A big reason we tend to shy away from the larger cities is we've never come across apartment complexes in which you can jump rents 50% in rapid fashion. It's just not possible - as usually that apartment has changed owners multiple times in the last 5 years and you are competing with so many external variables (over supply, strong competition, more susceptible to interest rate changes, etc).
Glad to see this project off to a HUGE start! If you are ever in northern AL, i'd strongly suggest taking a trip through Fort Payne... it's such a cool town! Plus, the band Alabama is from there, which is a plus!
https://fortpayne.org/
Casino & Charitable Gaming Developer, Chief Development Officer, Concept Developer, Hospitality Leadership
3moGood read!