Summerstone Apartment Homes

• – New ownership has the opportunity to conduct an interior unit upgrade program with black or stainless-steel appliances, upgraded flooring, upgraded plumbing/fixtures, upgrading/repairing the parking lot, and added full size W/D to the 5 units that lack W/D units.
• – New ownership, based upon area rent comps, can raise rents up to an average of $232 / unit, which is a $0.30 / sqft rent bump.
• – Opportunity for increased NOI through expense reduction, for example, the current insurance expenses for the property are high due to nonpayment from the borrower and the inclusion of additional flood coverage that is likely not necessary.
• – The Alief Submarket has experienced 4.9% 12-month effective rent growth.
• – The property is located a strong school district with 1-mile medium HH income of $44,477
• – The Alief neighborhood is mostly blue-collar/working-class with a population over 106,000. Alief ranks as one of the most affordable submarkets in the metroplex and is fortified by an inelastic base of renters-by-necessity.

Property Description

Waller Group is proud to present the 96.7% occupied, 242-unit, light value-add, Summerstone Apartments in Houston, TX. The subject property amenities consist of swimming pool, playground, laundry facilities, controlled access, in-unit W/D appliances (except for 5 units), outside storage, and private balcony/patio (in select units). The property is available because the current ownership is looking to retire.Current ownership is achieving $1,409,087 in annual NOI. New ownership, based upon area rent comps, can raise rents up to $232 / unit, which is a $0.30 / sqft rent bump. In addition to an opportunity for increased rents, new ownership can drive increases to ancillary income through increased implementation of other income sources, like monthly parking fees, and through the improvement of the current utility reimbursement system. Current ownership charges a flat fee of $75/month for studios and $100/month for the 4 other unit types. New ownership has the opportunity to re-implement a Ratio Utility Billing System (RUBS), which can be more efficient and lead to a higher portion of the utilities getting reimbursed. With the rental bump and the increases in ancillary income, new ownership can achieve an annual NOI of $1,961,018. In addition to these increases to top-line income, new ownership has an opportunity to increase Net Operating Income (NOI) through expense reduction. For example, the current insurance expenses for the property are high due to nonpayment from the borrower and the inclusion of additional flood coverage that is likely not necessary.New ownership has the opportunity to conduct an interior unit upgrade program with black or stainless-steel appliances, upgraded flooring, upgraded plumbing/fixtures, upgrading/repairing the parking lot, and added full size W/D to the 5 units that lack W/D units. Current rent comparables achieving top of the market rents in the submarket contain full size W/D units, but contain dated interior finishes, so there may be additional room to set top of the market rents beyond where they currently stand.The property is self-managed by the owner and her family. The property is operated by a property manager ($18/hr), a part-time leasing agent ($10/hr), and 3 maintenance techs (1 at $21/hr and 2 at $16/hr) but could be reduced to more in-line with our proforma. Proforma financials were underwritten with a 3.0% management fee.