A short drive around the Town of Jackson will illustrate the absence of large multi-family developments. This can be explained by the overall lack of vacant parcels of land and/or the current Town zoning which does not allow large scale development in many areas. Further, over the years, many older apartment buildings have been converted into condominiums where each unit is owned individually.
Therefore, this 12-unit multi-family apartment building presents a truly unique opportunity for investors looking for a good return and a steady cash flow. The Raver’s Apartment complex offers six 2 bed/1.5 bath units and six 1 bed/1 bath units, all with great views of Snow King Mountain. (The two bedroom units have nice south facing decks.) The building sits in a convenient location on the corner of Snow King Ave and Millward, close to hiking trails, skiing at Snow King, and located only several hundred feet from a START bus stop. Built in 1973, the building has been very well maintained with several improvements in 2013 including a new roof, new windows, and new sliding glass doors.
South facing decks with views of Snow King
The building is fully occupied and currently generates $126,000 in annual gross rents. Based on historical expenses of roughly $30,000 per year (which includes property taxes, water/sewer, trash removal, insurance, maintenance and repair, business licenses and a property management fee), the current list price of $2,150,000, equates to a 4.5% capitalization rate (return).
Where the opportunity lies however, is in the fact that the current rents are quite under market. Currently the 2 bedroom units rent for $1,000 a month, where the going rate for similar units is closer to $1,200 – $1,400 a month. Similarly, the one bedroom units rent for $750 a month. It is very difficult to find any 1 bedroom units in Jackson for under $900 a month. Tenants are on month-to-month leases and when brought up to market, the property should generate just over $165,000 per year, which could push the cap rate up to above 6.00%. Note that these numbers conservatively assume purchasing the property at the current list price. Obviously the return would be even more attractive if a buyer was able to negotiate a discounted purchase price.
Click HERE to view the full listing with more information and more photos of the property.
Please contact me if you are interested in reviewing my cash flow analysis for this investment (in excel). I’m happy to walk you through the model and discuss the numbers as well as set up a time to view the property.
