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1 Offering Memorandum
Mesquite Village509 Avenue S | Post, TX 79356
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Offering ProceduresOffering Procedures
• Letter of Intent• Resume and/or Business Letter Indicating Recent or Current Assets Ownedand Purchased• Transaction References• Banking References• Source of Equity for Acquisition
Property ToursProspective investors are encouraged to visit the subject property prior tosubmitting an offer. Please DO NOT contact the on-site management or staffwithout prior approval. All property showings are by appointment only. Pleasecontact us for more details.
Sales ConditionsInterested prospective investors should be aware that the owner of the propertyis selling the property in as-is, where-is condition with all faults, if any, andwithout representations or warranties of any kind of nature, expressed orimplied, written or oral.
Offer Due DateThe Owner will review all offers as they are submitted.
CommunicationsAll communications, inquiries and requests, including property tours, should beaddressed to the listing agent.
Lisa AndersonDirector of Operations & Marketing(806) [email protected]
Grant Roehm, Realtor(281) [email protected]
Greg Brownd, CCIM(806) [email protected]
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Table of Contents
ExEcutivE Summary 4
ProPErty ovErviEw 5
valuE add Summary 10
location ovErviEw 12
Financial ovErviEw 18
ownEr FinancialS 19
FivE yEar caSh Flow 20
undErwriting notES 21
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Executive Summary
• One-story brick construction duplexes
• Limited supply of market rate product
• No current rent concessions
• High occupancy
Property Name: Mesquite VillageAddress: 509 Avenue S Post, TX 79356Number of Units: 24Year Built: 1976Sales Price: $845,000Capital Improvement Allowance: $50,000Building Size: 20,086 SF
PROPERTY HIGHLIGHTS
PROPERTY OVERVIEW
Mesquite Village Apartments is a 24 unit complex made up of 12 brick, one-story duplexes. The property currently has high occupancy and there are no concessions so that indicates that there is room to increase the rents. Electricity and water are separately metered and tenants pay all of their utilities. There is a limited supply of market-rate multifamily units in the area. Most of the interior units have been updated and have had new flooring installed. The roofs were replaced in 2016.
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PROPERTY OVERVIEWProperty DetailsUnit MixExterior PicturesInterior Pictures
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Property DetailsTax Information Garza County CADYear of Construction 1976Units 24Parcel Size 2.84 AcresStyle GardenFoundation Concrete SlabFraming WoodExterior Brick and Wood Roof Pitched composition, replaced in 2016
UtilitiesElectricity Paid by TenantWater and Sewer (City of Lubbock) Paid by TenantTrash (City of Lubbock) Paid by Tenant
MechanicalHVAC Individual UnitsElectricity Individually MeteredHot Water Individual UnitsFire Protection Smoke Detectors
LaundryWasher/Dryer Connections Connections in Each Unit
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Mesquite Village | 509 N Avenue S, Post, TX 79356
Property Overview Unit Type No. of Units Avg. SF Asking Rent per Unit Rent/SF
Units 24 1 Bed / 1 Bath 6 600 $495 $0.83Year Built 1976 2 Bed / 1 Bath 18 800 $595 $0.74
Totals / Avg. 24 750 $570 $0.76
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EXTERIOR
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INTERIOR
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VALUE ADD SUMMARY
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Value Creation Summary
Get Rent Premiums on Upgraded UnitsInvest $2,500 to do phase 2 of interior renvovations to get a $45 rent premium.
Add Covered ParkingInstall covered parking and get $25 rent premiums.
Add Backyard FencesBy adding backyard fences for tenants with pets, you could get a rent premium of appoximately $25-50.
Rent Washers and Dryers to tenantsEach unit has it's own washer and dryer connections so owner could invest $600 to get a washer and dryer, and rent them out to the tenants for $45/mo.
www.henrysmiller.com
Value Add Potential
ImprovementInitial Investment Monthly Additional
Potential Cash Flow Additional Capitalized
Property ValueTotal Per Unit Total Per Unit
Rent Premium on upgraded unit $60,000 $2,500 $1,080 $45 $152,471Covered Parking $24,000 $1,000 $600 $25 $84,706Backyard Fences $36,000 $1,500 $600 $25 $84,706Rent Washer/Dryers to tenant $14,400 $600 $1,080 $45 $152,471
Total Value Add Potential $134,400 $5,600 $3,360 $140 $474,353
Total # of Units 24Cap Rate 8.5%Annualized ROI 30%
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LOCATION OVERVIEW
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Post, TXPost, Texas was founded in 1907 by cereal magnate Charles William Post.
Post today is the county seat of Garza County. It is nestled three miles below the Cap Rock, 40 miles Southeast of Lubbock, on Highway 84. Through the community’s dedication to its rich history and its commitment to the future, Post was awarded a “Texas Main Street City” designation in 1987. Numerous downtown buildings have been restored that house gift shops, clothing stores, speciality shops and restaurants.
Within 30 minutes of Post are two lakes, White River Lake to the North and Lake Alan Henry to the South.
City HighlightsCity Information
• Major oil production and service companies
• Extensive cotton production and ranchland
• Supports staff for 1,800 bed prison facility
• Close to Lake Alan Henry
• $50 million spent on new facilities for Post ISD in 2017
*Source: Post, Texas Chamber of Commerce
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Giles W Dalby Correctional Facility“On May 1, 2019, the Federal Bureau of Prisons (BOP) notified Management & Training Corporation of the award of a ten-year contract...”
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FINANCIAL OVERVIEWHistorical & Proforma Fiancials Owner FinancialsFive Year Cash FlowUnderwriting Notes
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Historic and Proforma Financials
Dec T12 Dec T6 Dec T3 ProformaRental IncomeGross Potential Rents $ 164,160 $ 164,160 $ 164,160 $ 172,800 *Less: Vacancy $ (19,729) $ (13,205) $ (7,358) $ (8,640)
Effective Rental Income $ 144,431 $ 150,955 $ 156,802 $ 164,160
App Fees $ 560 $ 640 $ 480 480 T3Late Fees $ 4,775 $ 6,020 $ 5,300 5,300 T3Misc. Other Income $ 2,150 $ 1,600 $ 1,400 1,400 T3Gross Operating Income $ 151,916 $ 159,215 $ 163,982 $ 171,340
Operating ExpensesAdmin $ 5,290 $ 3,449 $ 3,913 $ 4,800 *Advertising $ $ $ $ 600 *Landscaping $ 1,375 $ 650 $ 600 $ 1,375 T12Maintenance & Repairs $ 29,204 $ 28,110 $ 28,661 $ 19,200 *Management Fee $ 6,500 $ 6,000 $ 6,000 $ 6,854 *Payroll $ 8,226 $ 10,200 $ 12,300 $ 8,226 T12Insurance $ 7,662 $ 7,662 $ 7,662 $ 8,400 *Property Taxes $ 9,723 $ 9,723 $ 9,723 $ 13,833 *Cable & Internet $ 1,226 $ 991 $ 994 $ 1,226 T12Electric - Common $ 1,411 $ 1,268 $ 1,577 $ 1,411 T12Electric - Vacant $ 837 $ 349 $ 328 $ 837 T12Water, Sewer, and Trash $ 1,382 $ 889 $ 500 $ 1,382 T12Replacement Reserves $ $ $ $ 7,200 *
Total Operating Expenses $ 72,836 $ 69,290 $ 72,258 $ 75,344
Net Operating Income (NOI) $ 79,080 $ 89,925 $ 91,725 $ 95,997
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Owner Financials
Income December T-3 Annualized % of GPR Per Unit Pro Forma % of GPR Per Unit
Gross Potential Rents $164,160 100% $6,840 $172,800 100% $7,200Less: Vacancy -$7,358 -4.5% -$307 -$8,640 -5.0% -$360Net Rental Income $156,802 95.5% $6,533 $164,160 95.0% $6,840App Fees $480 0.3% $20 $480 0.3% $20Late Fees $5,300 3.2% $221 $5,300 3.1% $221Misc. Other Income $1,400 0.9% $58 $1,400 0.8% $58Total Operating Income $163,982 99.9% $6,833 $171,340 99.2% $7,139
Expenses December T12 % of GPR Per Unit Pro Forma % of GPR Per UnitAdmin $5,290 3.2% $220 $4,800 2.8% $200 *Advertising $0 0.0% $0 $600 0.3% $25 *Landscaping $1,375 0.8% $57 $1,375 0.8% $57Maintenance & Repairs $29,204 17.8% $1,217 $19,200 11.1% $800 *Management Fee $6,500 4.0% $271 $6,854 4.0% $286 *Payroll $8,226 5.0% $343 $8,226 4.8% $343Insurance $7,662 4.7% $319 $8,400 4.9% $350 *Property Taxes $9,723 5.9% $405 $13,833 8.0% $576 *Cable & Internet $1,226 0.7% $51 $1,226 0.7% $51Electric - Common $1,411 0.9% $59 $1,411 0.8% $59Electric - Vacant $837 0.5% $35 $837 0.5% $35Water, Sewer, and Trash $1,382 0.8% $58 $1,382 0.8% $58Replacement Reserves $0 0.0% $0 $7,200 4.2% $300 *Total Expenses $72,836 44.4% $1,041 $75,344 43.6% $3,139
Net Operating Income $91,146 55.5% $5,792 $95,997 55.6% $4,000
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Five Year Cash Flow
Income December T-3 Annualized
Pro Forma Year 1 Year 2 Year 3 Year 4 Year 5
Gross Potential Rents $ 164,160 $ 172,800 $ 177,984 $ 183,324 $ 188,823 $ 194,488 Less: Vacancy $ (7,358) $ (8,640) $ (8,899) $ (9,166) $ (9,441) $ (9,724)Net Rental Income $ 156,802 $ 164,160 $ 169,085 $ 174,157 $ 179,382 $ 184,764 App Fees $ 480 $ 480 $ 494 $ 509 $ 525 $ 540 Late Fees $ 5,300 $ 5,300 $ 5,459 $ 5,623 $ 5,792 $ 5,965 Misc. Other Income $ 1,400 $ 1,400 $ 1,442 $ 1,485 $ 1,530 $ 1,576 Total Operating Income $ 163,982 $ 171,340 $ 176,480 $ 181,775 $ 187,228 $ 192,845
Expenses December T12Admin $ 5,290 $ 4,800 $ 4,896 $ 4,994 $ 5,094 $ 5,196 Advertising $ - $ 600 $ 612 $ 624 $ 637 $ 649 Landscaping $ 1,375 $ 1,375 $ 1,403 $ 1,431 $ 1,459 $ 1,488 Maintenance & Repairs $ 29,204 $ 19,200 $ 19,584 $ 19,976 $ 20,375 $ 20,783 Management Fee $ 6,500 $ 6,854 $ 6,991 $ 7,130 $ 7,273 $ 7,419 Payroll $ 8,226 $ 8,226 $ 8,391 $ 8,558 $ 8,730 $ 8,904 Insurance $ 7,662 $ 8,400 $ 8,568 $ 8,739 $ 8,914 $ 9,092 Property Taxes $ 9,723 $ 13,833 $ 14,110 $ 14,392 $ 14,680 $ 14,973 Cable & Internet $ 1,226 $ 1,226 $ 1,250 $ 1,275 $ 1,301 $ 1,327 Electric - Common $ 1,411 $ 1,411 $ 1,440 $ 1,468 $ 1,498 $ 1,528 Electric - Vacant $ 837 $ 837 $ 854 $ 871 $ 888 $ 906 Water, Sewer, and Trash $ 1,382 $ 1,382 $ 1,409 $ 1,438 $ 1,466 $ 1,496 Replacement Reserves $ - $ 7,200 $ 7,344 $ 7,491 $ 7,641 $ 7,794 Total Expenses $ 72,836 $ 75,344 $ 76,850 $ 78,387 $ 79,955 $ 81,554
Net Operating Income $ 91,146 $ 95,997 $ 99,630 $ 103,387 $ 107,273 $ 111,291
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Underwriting NotesCurrent / Actual
Income All Income Items Underwritten Trailing 3 through December 2019Other Income - Underwriting Trailing 3 through December 2019
ExpensesAll Expenses Underwritten Trailing 12 through Decemer 2019
Pro Forma / Year 1
IncomeMarket Rent - Pro Forma Rents with growth at 3.0% annuallyVacancy/Credit Loss - 5% of Gross Potential Income Other Income - Increased by 3.0% annually
ExpensesAll Expenses grown by 2.0% annuallyAdmin - Adjusted to industry standardAdvertising - Adjusted to industry standardMaintenance & Repairs- Adjusted to $800 / unitManagement Fee (4.0%) Insurance - Adjusted to industry standard Real Estate Taxes - Current Mileage Rate of 2.9% times 60% of expected sales priceReplacement Reserves - added $300 per Unit
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All materials and information received or derived from KW Commercial its directors, officers, agents, advisors, affiliates and/or any third party sources are provided without representation or warranty as to completeness , veracity, or accuracy, condition of the property, compliance or lack of compliance with applicable governmental requirements, developability or suitability, financial performance of the property, projected financial per-formance of the property for any party’s intended use or any and all other matters.
Neither KW Commercial its directors, officers, agents, advisors, or affiliates makes any representation or warranty, express or implied, as to accuracy or completeness of the materials or information provided, derived, or received. Materials and information from any source, whether written or verbal, that may be furnished for review are not a substitute for a party’s active conduct of its own due diligence to determine these and other matters of sig-nificance to such party. KW Commercial will not investigate or verify any such matters or conduct due diligence for a party unless otherwise agreed in writing.
EACH PARTY SHALL CONDUCT ITS OWN INDEPENDENT INVESTIGATION AND DUE DILIGENCE.
Any party contemplating or under contract or in escrow for a transaction is urged to verify all information and to conduct their own inspections and investigations including through appropriate third party independent professionals selected by such party. All financial data should be verified by the party including by obtaining and reading applicable documents and reports and consulting appropriate independent professionals. KW Commercial makes no warranties and/or representations regarding the veracity, completeness, or relevance of any financial data or assumptions. KW Commercial does not serve as a financial advisor to any party regarding any proposed transaction.
All data and assumptions regarding financial performance, including that used for financial modeling purposes, may differ from actual data or perfor-mance. Any estimates of market rents and/or projected rents that may be provided to a party do not necessarily mean that rents can be established at or increased to that level. Parties must evaluate any applicable contractual and governmental limitations as well as market conditions,vacancy factors and other issues in order to determine rents from or for the property. Legal questions should be discussed by the party with an attorney. Tax questions should be discussed by the party with a certified public accountant or tax attorney. Title questions should be discussed by the party with a title officer or attorney. Questions regarding the condition of the property and whether the property complies with applicable governmental requirements should be discussed by the party with appropriate engineers, architects, contractors, other consultants and governmental agencies. All properties and services are marketed by Lubbock in compliance with all applicable fair housing and equal opportunity laws.
Confidentiality & Disclaimer
