UNITED STATES
CASE STUDY Sherman Thompson Towers
Project Summary
• 275 North 3rd Street, Ironton, Ohio 45638
• Originally built in 1978
• 151 Units – Senior / Disabled
• All Section 8
• 10 story, elevator-serviced building
Strategy at Acquisition Upon acquisition in 2014, we planned to immediately apply for 9 % LIHTC through Ohio Housing Finance Agency( OHFA).
Capital Event On 15 June 2016, OHFA awarded Sherman Thompson Towers 9 % Tax Credits. This was our second submission for tax credits. The asset was sold for $ 6,400,000.
Projected Purchase Date: December 2015 Purchase Price: $ 5,700,000 First Mortgage: $ 4,300,000 Total Equity: $ 1,337,180 Projected Sales Price: $ 6,360,000 Projected Cash-on-Cash: 9.25 % Projected IRR: 13.57 %
Actuals Sale Date: June 2017 Actual Sale Price: $ 6,400,000 Actual Cash-on-Cash: 9.96 % Actual IRR: 16.84 % have invested directly into single-family houses( SFH) in Atlanta, Georgia. Their SFH properties have all increased in capital value on average around 5 – 6 % per year. However, cash flows( due to higher than normal maintenance and misused expenses) have left these investors with only marginal returns of 5,5 to 7,5 %. This excludes hedging any returns made on dollar currency growth versus the rand.
What if I told you that you could invest a minimum of $ 250,000 and obtain a minimum internal rate of 10 %, with an exit plan in place from three to five years? What if your return was even higher and that you didn’ t have to lift a finger, able to sit back, collect rent while delivering consistent double-digit dividend returns until exit?
Who is Millennia Housing Capital?
Millennia is rated # 1 in the entire US for management in affordable real estate housing category, and once we take ownership our superior management helps increase the occupancy and lowers the costs to enhance the Net Operating Income( NOI) of the asset. They have been doing this since the mid 1980’ s; they currently own over 27,000 units in 26 states.
The barrier of entry for investing has been made incredibly easy by having a reliable and trusted partner such as Millennia Housing Capital( MHC). They are based in Cleveland, Ohio and put massive attention to detail in the due diligence process of securing the right investments.
How does affordable housing investments work?
• Millennia Companies, with over 1000 dedicated employees, identifies, acquires and rehabilitates affordable multifamily assets, defined as full or part Housing Assistance Payments( HAP) contracts.
• They ensure low risk / high reward, as the U. S. government supplements the rent.
• Millennia’ s superior management comes into place, occupancy is increased, costs are lowered and property is stabilized and ready for a LIHTC sale.
• This sale is to a tax credit buyer, usually a bank that needs Community Reinvestment Act( CRA) credits. This creates a profitable exit for the investors, usually two to four years.
• Millennium acts as the sponsor and obtains a loan from a lender for 75 % loan to cost( LTC).
• That means Millenia needs 25 % of the total LTC to close, of which Millenia puts up 20 % and the opportunities for investors is the remaining 80 % of the 25 % of equity. Loan to cost is the total price for acquisition and rehab.
• The government has about 5 million people on guaranteed rent and it would be a political nightmare to ever think about stopping these programs.
For more information please email your name, cell number and email address to info @ reimag. co. za in South Africa who will put you directly in contact with RJ
SA Real Estate Investor Magazine OCTOBER 2017 49