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