Income Property Organization is pleased to present Barwin Place Apartments, which consists of 48 units, and is located in Mt Clemens, Michigan.
The City of Mt Clemens is a downtown district in Macomb County and also serves as the county seat. As of the 2014 census estimate, the city of Mount Clemens had a total population of 16,408, while Macomb County as a whole had a population of 860,112. The median household income was most recently reported at $35,691 and the median home value is estimated at $89,873. Mount Clemens is located along the waterfront of Lake St. Clair, which has led to revitalization of the surrounding area. The city gives easy access to major freeways, including I-94 and M-59.
This stable community offers tremendous public resources to its residents, including Metropolitan Beach Metro Park, the Art Center, and The Crocker House. With Lake St. Clair being so easily accessible to the community, many recreational activities take place on and near the water, which welcomes boaters, golfers, bikers, walkers, tennis players, and picnickers. An active agenda of art fairs, firework displays, boat cruises, parades, and festivals keeps the residents full of life all summer long.
Barwin Place is located at 188 Hubbard St. at the intersection of N Highland St and Gallup Ave. As a result of this exceptional location residents have an abundance of employment, higher education, dining, shopping and entertainment options surrounding the community. Most notably is the property’s proximity to Downtown Mount Clemens (1.1 miles), Mount Clemens High School (0.9 miles), Meijer (1.2 miles), The Mall at Partridge Creek (4.6 miles), Selfridge Air National Guard (6.4 miles), Oakland University (5.0 miles), Wayne State University (5.0 miles), Macomb Community College (5.0 Miles), MSU College of Osteopathic Medicine (5.0 miles).
The 48 unit Barwin Place Apartments were built in 1969 and consist of garden-style apartments constructed of brick with a high-pitched roof. The property contains a very attractive unit mix of four 500 ft.2 studio units, twenty-four 650 ft.2 one-bedroom units and twenty 800 ft.2 two–bedroom units. Notable for investors is the excellent condition of this asset and the numerous upgrades it’s received, such as four new hot water heaters, 48 new American Standard-Cadet 3 toilets, 8 new front and rear entry doors, 4 new mailboxes, exterior painting for all 4 buildings, new hall ceilings light fixtures throughout and numerous unit upgrades including 46 wall sleeves for the air conditioning units, approximately 7 a/c units, 5 refrigerators and 5 stoves replaced per year.
Barwin Place Apartments currently has 20-units that are on a project based Section 8 contract. The current contract runs through April 2033. There are an additional 15-units on Section 8 vouchers, bringing the total number of subsidized units to 35. The utility breakdown of this property includes tenant-paid electricity and heat with electric-baseboard heating. Water, sewer and hot water at the property are the responsibility of the Landlord.
Barwin Place is performing at a high level of operations with physical occupancy at 94%. However, even in light of this stellar level of performance upside still remains for a multifamily investor. Based on our carefully conducted rent comparable study, it was determined rents are considerably below market when analyzed under both the price per square foot and Street Rent metrics. Our study found that one-bedroom units are a staggering $118 below market average Street Rents and two-bedrooms are approximately $166 below market. Such a delta between existing and market rents provides a new owner with the unique opportunity to greatly improve this asset’s cash-flow position without making any financial investment in the property. For example, if a new owner were to increase average rents on one and two-bedroom units by a mere $35 per month it would increase this asset’s value by over $250K.
From an underwriting standpoint, our Pro Forma is based on actual 2016-2017 Operating Expenses, and we have also included a professional management fee, a Replacement for Reserve. Income was projected with the use of average rents, which does not factor in the previously mentioned “upside” of a rental rate increase. We have also included a vacancy and bad debt factor that is consistent with current property trends. Barwin Place is being offered to the market as new debt opportunity, allowing for an operator to lock in a 10-year deal before the all-time low interest rates begin to rise. Based on the asking price of $2,165,000 the Barwin Place Apartments offering represents a compelling 7.24% cap rate on Pro Forma NOI.