The supply of urban living spaces has not kept pace with the growing demand in Atlanta. As such, urban dwellers and developers have gravitated toward new approaches. Developments with hotel-sized rooms, build around a series of more elaborate common area amenities have become particularly popular. Similarly, prominent Silicon Valley investors have recently backed up start-ups focused on co-living, in which renters rent by the room, or bed, and share common spaces. In both instances, there is an economic arbitrage opportunity to earn more rent than the traditional approach of renting by the one unit on a one-year lease. By improving the common areas and upgrading the looks and feel of the property, we believe we can command a higher rent per tenant while also reducing the operating costs with upgrades in efficiency.
Metros Capital acquired the property for $1,200,000 with a loan from Hamilton State Bank for $942,500, at an interest rate of 4.0625%. Metros Planned to spend $244,000 renovating and upgrading the property.
Capital Improvement Plan
- Capital improvements will focus on renovating the common areas to facilitate a high tech co-living environment
- The exterior of the building will be modernized, as well as the addition of a Rec Room for tenants to socialize and relax.
- Utilities will be upgraded to meet higher environmental standards, reducing annual utility expenses by nearly 40%. These improvements will also lower maintenance costs by 33%. All in all, the efficiencies gained from these upgrades should improve NOI by approximately 144bps.