Located in a competitive north Indianapolis submarket, this 535+ unit, Class C property suffered from significant capital needs and high turnover when the receiver took over in January 2010. Total capital needs of $1.3 million included the following:
- New bridge
- Electrical meters and wiring
- Clogged sewer pipes
- New roofs
- Restoration of 50 down units
In addition to capital and turnover, other problems included:
- 2000 competing units in the immediate vicinity
- Retail/restaurant employment base limited rent growth
- High number of children and petty vandalism
- Stubborn delinquency
- Occupancy of 58%
- Market value of $4.7 million
Recognizing that improved NOI would come through a mix of reduced maintenance costs and higher collections (but not higher rents), we addressed the immediate capital needs and began to improve property operations to attract a more creditworthy resident.
While capital repairs were ongoing, an agreement signed with the local YMCA provided all children at the property with the ability to attend on-site summer camps at no cost to the residents. In lieu of 2 months' free rent then prevailing in the market, the property paid for all campers at a cost equivalent to a half-month's rent. Utilizing large playing fields in an adjacent easement, two swimming pools, and a resident event space in the office, activities were planned for the entire summer. This had the effect of reducing concessions and providing an irreproducible benefit for residents. It also attracted residents who were committed to paying on time and ensuring that vandalism was minimal. Occupancy leapt to 80% and delinquency fell to 1.0%. The note was sold after eight months in August 2010 for $8.9 million.