Monarch Villas – 130 units

This gorgeous inner-ring suburb of Atlanta is in a highly sought after oasis for Georgia residents. It has the premier school district that families with a median household income of $114K (3-mile radius) crave.

The problem for the existing residents and those who desire to move there is that there is an inflexible approach to new developments. 

They are between a rock and a hard place because the median home prices are in excess of $650K. 

We will be the owners of a foundationally secure, half-renovated property in a high-demand area with a giant step between renting and owning, even for those who can afford Class A/B+ multifamily rents. 

We will renovate 80-90% of the remaining units to capture the massive and proven rent upside. We will also lightly enhance the amenity set to elevate the resident experience and bring it in line with the best the area has to offer.

There is a temptation with relatively stable properties such as these to get “creative” for the sake of ego, but we will do no such thing. Instead, we will run our same successful Boardwalk Asset Management Playbook with our same superstar Atlanta-based PM.

The focus is on higher renewal rates, more resident referrals, and less turnover (all powered by resident satisfaction).

Our past results in this area with this plan speak for themselves and I encourage you to reach out to me (Omar) for reports from investors of our current Atlanta properties to hear just how well it has been going.

We love predictable systems… and once you see the returns, you probably will, too!

We are using low-leverage agency debt. Then supplementing with preferred equity. This ensures that we mitigate any near-term debt maturity risk as we will have solid, long-term debt to weather any new economic developments.

Additionally, we are buying a rate cap to hedge against rising interest rates.

With this structure we can refinance/exit without significant prepayment penalties in a very short period of time.

Our base case is a 5-year holding period. Typically, we are looking to exit between years 1-3. This means that if we get fixed-rate debt, exiting in 1-3 years becomes a big hurdle because of the onerous prepayment penalties that eat significantly into investor returns.

You can hear about how we have employed a similar strategy to two other Atlanta properties:

At Equinox at Knight we just refinanced for the 2nd time in less than 3 years. Our investors received significant equity back, tax-free. Post-refinance, investors keep enjoying double-digit cash-on-cash while their underlying equity grows every year.

At Brighton Farms, we refinanced into a floating-rate agency loan. This resulted in investors getting ~30-50% of their capital back in less than 2 years. They will also get higher cash-on-cash returns while their underlying equity grows year-over-year.

Since the refinance dollars are tax-free, sophisticated investors can choose to re-invest these dollars into additional transactions with Boardwalk to accrue additional tax write-offs, increasing cash flows, and higher capital appreciation.