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Darcorp - Commercial Real Estate Investments and Services DARCORP Pleasant Woods Apartments, Dallas TX
Pleasant Woods Apartments - Reasons to Invest
  • In these difficult economic times, highly leveraged multi-family properties have mortgage notes that are coming due and owners are not able to refinance these properties. Without available financing, owners are being forced to sell. Refinancing is particularly difficult when the properties are underperforming.
  • A typical method assessing the value of a multi-family property is with an “Income Approach.” Assets are valued by a multiple of their net operating income (“NOI”). When a property’s NOI is underperforming, this has a direct impact on reducing the value of the property. If NOI were to be improved through proper stabilization, an immediate increase in equity could be gained.
  • Many underperforming properties are a result of poor management of the property without clear policies and procedures allowing for unqualified tenants, lenient enforcement of rules, and lost rental income. An attentive management team with a goal oriented leasing and marketing strategy can improve the occupancy and increase the long term stability of a property.
  • Underperforming properties can be the product of neglected maintenance resulting in below market rates. Following property renovation, rents may be raised to market rates, which results in an increase to the NOI.
  • In the current market, the buyer pool is limited due to lack of available credit, which is causing sellers to further discount values.
  • The Texas employment and economy are outperforming the rest of the nation.
  • Investing in multi-family properties can be a hedge against inflation.
    • Rental rates adjust upward with inflation in most cases.
    • Borrowing at fixed rates can work as a hedge against inflation.
  • Tax benefits may be available for the income earned from owning apartments and deductions for depreciation and expenses may be beneficial in shielding income from FICA taxes and deferment of capital gains taxes. Prospective investors are urged to consult their own respective tax advisors with respect to their own respective tax situations and the effects of this investment thereon.
  • Due to the tight availability of credit, a large number of distressed properties, and a lack of qualified buyers, it is the opinion of Darcorp that a window of opportunity exists and that now is the time to buy value add multi-family properties.