I am a limited partner on a 72-unit apartment community. I invested with a team of operators that has over 1600 units under management. This property is located in the strong market of Springdale, Arkansas which boasts a population increase of 73 percent from 2000 to 2017and ranked the 5th fasted growing economy in the U.S. The Jones Center, the Arkansas Children’s Northwest Hospital, and other municipal infrastructure improvements are attracting hundreds of jobs.
Since closing the property in December 2020, I received my first distribution along with my K1, which is essentially a tax document that allows me to receive a tax deduction on my 2020 tax return because of the cost segregation study that was conducted on the property which resulted in accelerated depreciation.
The business plan on this property includes upgrading 36 of the units, converting the office into an additional unit, and onboarding a professional property manager.
Here are a few other highlights from the first few months on the project:
1. Our property manager has successfully increased occupancy to 97%, brought all new leases to market, and pushed market rents by another $25 across the board on non rehabbed units.
2. One CAPEX project that was completed is the installation of the laundry room HVAC unit. A new entry sign has been approved, and we are also working toward getting bids on a security system.
3. Our cost segregation study is complete which is a commonly used strategic tax planning tool that allows companies and individuals who have constructed, purchased, expanded or remodeled any kind of real estate to increase cash flow by accelerating depreciation deductions and deferring federal and state income taxes.
4. We have already hit our projected rent growth for the year in month 3 without any improvements to the interior.
