Case Study: High-Return Triumph at 4 Eighty West Parker Apartments

Investing in real estate isn't for the faint of heart, but those who stick it out during the tough times often reap substantial rewards. A shining example of this is the journey of TriArc with its first acquisition, the 4 Eighty West Parker Apartments, a 137-unit, 1973 garden style property, purchased in September 2016.

Located at the nexus of West Parker and Hwy 45 North, the property’s mix of cedar plank and brick siding, along with its flat and pitched roofs, presented a unique charm, albeit above the market value. The location’s low competition from other properties added to the investment's appeal.

TriArc had a moderate renovation vision for the property. A $7,000 overhaul per unit aimed to resurface counters, install plank flooring, and replace appliances. Beyond individual units, the company planned to refurbish the office, expand the pool area, increase parking facilities, and elevate the curbside appeal of the property.

However, no investment journey is devoid of challenges. As renovations commenced, wood rot was found to be more extensive than initially estimated. Additionally, the property was burdened with drainage issues, which escalated renovation complexities. A temporary increase in local crime necessitated an unexpected expenditure on surveillance, with the sudden onset of a global pandemic adding to the trials and tribulations.

In light of these challenges, TriArc made a strategic decision to focus its capital expenditure (Cap Ex) money on preserving the physical structure from further deterioration and adding value to the units. A portion of the unit improvements were taken on by operational cap ex, freeing up some of the budget for additional exterior needs.

Concurrently, TriArc managed the property profile wisely. Immediate attention was given to removing problem residents, and priority was given to those current residents who were ready for a renovated unit and willing to pay a higher rent. This proactive management allowed the property to navigate its way through the financial complexities and the challenging landscape.

Despite the trials, the 4 Eighty West Parker Apartments emerged as a triumph in real estate investing. Net Operating Income (NOI) saw a substantial increase of 35%. Within two years, 70% of the funds were returned, and the property is set to exit in 2021 after five years, with a projected investor return of 21.8% Internal Rate of Return (IRR) and a 2.1x equity multiple.

The story of the 4 Eighty West Parker Apartments is a testament to the potential of real estate investments when coupled with strategic planning, diligent management, and resilience in the face of unforeseen challenges. TriArc’s strategy and flexibility turned what could have been a poor investment into a winning property, setting a high bar for future real estate investments.

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