L&L Portfolio, Jacksonville, NC
With a growing MSA of 250k people and rental rates on a tear, we were intrigued when we first heard about this deal. Throw in a 6% cap purchase on T12 and assume an 8 year fixed loan at 43% for 2.82% and we were even more intrigued. Package it together in a couple of very clean properties only 6 minutes away from each other in a county that is desperate for renovated units and we were in!
I'm a big proponent of transportation access and Jacksonville has 4-5 flights a day going direct to Charlotte and Atlanta. They're also about to open up a third direct route to DFW. That's huge in my opinion. With the largest east coast marine base in the country, admittedly a large portion of the economic drivers are military related. Surprisingly though, our properties boast about 15% military presence.
We've completed our due diligence walks, as we do with every property, and confirmed our initial assumptions regarding interior renovations and exterior upgrades. Our sellers are local guys who focus on retail and took this as an opportunity. They're ready to take some chips off the table and we're excited about the upside (not to mention the day 1 cash flow at 8%).
You'll notice the returns are a little higher than our usual deals - reflective of this lesser known market. This property is in a great market where there is a growing population and no new inventory. And even if you built new product, there's a limited demand for $2000/mo rents in this town. It's all about renovating existing product and hitting that sweet spot in the $1000-1500/mo range. We're about half that today. Lots of upside.
