555 East Apartment Homes
An Exclusive Ridgewood Offering
PROPERTY OVERVIEW
Winston-Salem
42 Units
Asking Price
$4,200,000
Built in 1973
THE STORY
Ridgewood Capital Advisors presents 555 East Apartment Homes…a well-positioned 42-unit multifamily apartment complex in the Northeastern quadrant of Winston Salem, NC. Located just 1 mile from the renowned Innovation Quarter, this location provides convenient access to downtown Winston-Salem.
Made up entirely of 2 Bed, 1 Bath townhome style units, 555 East is currently achieving 93% physical occupancy and an average rent of $895/unit (not including bill back fees for cable/internet, trash & pest control). With an in-place high rent of $985, underwritten projections indicate the realistic potential to grow revenue 8.14% in year 1 and an additional 9.24% once the property is market rate stabilized by the end of year 2.
Priced at $4,200,000 and eligible for non-recourse agency debt, 555 East delivers an underwritten Year 1 cap rate of 7.56% and a Year 5 stabilized cap rate of 8.8% based on modest income and expense growth projections.
FINANCIAL ANALYSIS
Underwriting Assumptions
The “At Acquisition” column indicates annualized T3 income over increased Pro Forma expenses, assumes no capital expenditures & new agency debt.
Agency debt terms provided by Green Harbor Capital indicate 75% LTV, 6.15% Rate, 30 Year Am, 24 months IO.
At $4.2M, underwriting indicates Day 1 annualized cash flow with significant increases in Years 1 & 2 as rents are brought to market.
Tenants currently pay $68/month for Cable/Internet, and $20 for trash & pest control. Other income will increase once legacy tenant leases are renewed with these fees included.
Tenants pay their own water/sewer/electricity.
14 tenants are currently on Month-to-Month leases representing the opportunity to increase rents immediately upon acquisition.
LOCATION
555 N Martin Luther King Jr Dr, Winston-Salem, NC 27101
555 East has a high walkability score offering tenants convenient proximity to their choice of shopping, grocery and eatery options. Located in the East Winston corridor, the property lies just over 1 mile from downtown Winston-Salem. Here, investors are drawn to the city’s highly acclaimed economic district known as Innovation Quarter…home to more than 90 companies and a major contributing factor to the city’s rank as the #2 Best City in America for low business costs according to Wallet Hub.
CAPITAL IMPROVEMENTS
COMPLETED
Current ownership has spent a total of $283,386 on interior renovations and $30,267 on the exterior.
Renovated units include newer appliances, new flooring throughout, new HVAC units, and fresh paint. Cabinets and countertops have been painted or replaced as needed.
Ownership renovates units as tenants vacate and has completed 30 of 42 units to date. There are currently 3 vacant units; 1 is being used as storage, and the other 2 are currently being renovated with an expected completion timeline toward the end of April 2025.
SUGGESTED
The Ridgewood team is assuming a budget of $168,000 in additional Capex to complete the remaining interior upgrades and to add exterior amenity touches. Ideas include improved landscaping and transforming the grassy courtyard into a more welcoming space by adding picnic tables, a barbecue area and possibly a dog park in an effort to improve the tenant experience and increase the property’s overall appeal. There is additional revenue potential by including washer and dryer sets as hookups are already available in each unit.
