Houston Multifamily Equity II Offering On Yieldstreet

The crowdfunding investment platform Yieldstreet launched an offering for a multifamily property in the Houston suburb of Spring, Texas. 

Park45 Apartments is a six-building, three-story, Class A garden-style living community 30 minutes north of downtown Houston. The property comes with amenities, including a 24-hour fitness center, a swimming pool with an outdoor grilling area, a dog park, conference rooms and a billiards room. The complex has a total of 180 units, with 150 of them built in 2018 and an additional 30 in 2021. 

The new owner, July Residential, purchased the property in March for $34 million. The firm is opening up this $9.7 million equity offering in order to implement a value-adding investment into the property that will yield investors a projected 14% to 16% internal rate of return (IRR). The property's previous owners lowered rents during the pandemic to keep occupancy high. The new capital expenditure program will seek to improve the property allowing for a rental rate increase to match market rents. 

The capital expenditure program will focus on improvements to the common areas and interior upgrades in each unit. In total, $638,000 ($3,500 per unit) is being allocated to the project. The current average rental rate is $1,208. July Residential projects it will increase the rate by an average of $120 per renovated unit. 

Spring is located in the fifth-largest metropolitan area in the country based on population, and housing is in high demand, so maintaining the high occupancy rate should be no issue for the new owners. July Residential projects base-case rent growth to be 4% over the first three years and 3% in each of the following years. 

Cash flow for investors comes from two income streams: Payouts for rents received that are expected to begin in the fourth quarter of 2023 and from the property's appreciated value at the time it sells at the end of the expected five-year holding period. 

• Minimum investment: $15,000
• Target IRR: 14% to 16%
• Target equity multiple: 1.8x-2x
• Target cash yield: 2% to 8%
• Target investment term: five years

July Residential specializes in multifamily assets in high-growth markets that offer high value-add potential. The group is an affiliate of El-Ad Group, a development firm with over $2 billion in assets under management. 

Most recently the group sold a 14,000-unit real estate portfolio for over $1.75 billion. Park45 Apartments marks its second offering through the Yieldstreet platform. 

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