Two 4-Plexes Add Value 860-870 SW 8 TH STREET POMPANO BEACH OFFERING MEMORANDUM $750,000 PeterDacko Media Realty & Advisors 954-923-2325 954-328-8248 PDacko@MediaRealty.net
TABLE OF CONTENTS 3 Forward 8 Subject Property 22 Rent Survey 24 Sale Comparables 27 Financials 34 Pricing Analysis 38 Customer Information Package 2
MISSION STAT EMENT Media Realty was created in 2004 with the vision that real estate is the one common denominator that binds the neighborhoods to its residential and business communities alike. Media Realty is a full service real estate company with a business platform which includes brokerage services, property management, tenant placement services, and other ancillary services such as valuations, highest and best use analysis and tax abatement. Through our commitment of creating and maintaining long term relationships Media Realty is dedicated to reshaping our neighborhoods with best business practices and community involvement. Media Realty will enable our clients to maximize their net returns by providing the best information which allows our clients to make the most educated decision in a timely manner. Media Realty offers a unique value proposition no matter which side of the transaction you are on. 3
EXECUTIVE SUMMARY Sailent Data Current Year 1 Price $750,000 Cap Rate -4.00% 8.70% Down Payment $750,000 G R M 7.1 Loan Amount $0 Net Operating Income ($2,521) $65,399 Loan Type New Posposed Interest Rate 4.75% Amortization 30 Years Unit Bearkdown Number of Units 8 # of Units Type Unit Size Net Rentable SQFT 6566 Number of Buildings 2 Price/Unit $93,750.00 8 2/1 821 Price/SF $114.22 Number of Stories 1 Year Built 1973 Lot Size 9934 4
INTRODUCTION TO BROWARD COUNTY Broward County is well known for its brilliant sunshine in the winter, and ocean breezes in the summer, but it is also a vibrant, diverse destination for many growing businesses, corporations and others who seek the unique South Florida lifestyle. Currently, the County consists of thirty-one (31) unique municipalities, from the bustling urban center of the City of Fort Lauderdale, to the tranquil rural lifestyle found in the Town of Southwest Ranches. The diversity of lifestyles and tremendous population growth has positioned Broward County to become the second most populated county in the State of Florida. Broward County is an urbanized county located in southeast Florida. It is bounded by Palm Beach County to the north, Miami-Dade County to the south, Hendry and Collier Counties to the west, and the Atlantic Ocean on the east. The County population has increased steadily from 5,135 in 1920 to more than 1.7 million in 2011. This dramatic increase has made Broward County the 15th largest County (in terms of population) in the United States and the second largest in the State of Florida, just behind Miami-Dade One of the challenges residents of Broward County will face with is build-out. Broward County is the first County in the State to face the issue of build-out. Buildout occurs when available vacant or undeveloped land no longer exists. New development cannot occur without the demolishing, reconstructing, or subdividing of existing properties. As build-out becomes a reality, redevelopment within Broward County will be the future focus of how the County manages and directs growth, while protecting existing residential neighborhoods. 5 5
ABOUT POMPANO BEACH, FL Located just north of Ft. Lauderdale, east of the Florida Turnpike, in the heart of Florida s Gold Coast. The City of Pompano Beach is home to some of the warmest and clearest waters, beautiful sand beaches, and calming breezes. It's the perfect place for a beach vacation, with opportunities for lots of fun and adventure. Enjoy great dining, exciting water sports from deep sea fishing to paddle boarding or just relaxing on the beach. Visit one of our many fabulous parks, take in a game of golf or tennis, some unique shopping, harness racing or try your luck at the smoke free casino. Wikipedia As of the 2010 census the city's population was 99,845 with an estimated population of 102,984 as of 2012. It is part of the Miami Metropolitan Area, which was home to 5,564,635 people at the 2010 census. Pompano Beach is about 31 miles north of Miami. Just a quick ride up or down I-95 or Florida's Turnpike. Pompano Beach is currently in the middle of a redevelopment process to revitalize its beachfront and historic downtown. The city has also been listed as one of the top real estate markets, being featured in CNN, Money and the Wall Street Journal as one of the country's top vacation home markets. Pompano Beach Airpark, located within the city, is the home of the Goodyear Blimp Spirit of Innovation. 6
MARKET SUMMARY POMPANO BEACH APARTMENTS The vacancy rate in Pompano Beach/Deerfield Beach expanded in late 2016, but bounced back in the first three quarters of 2017 and was slightly right on par with the Fort Lauderdale metro average as of October 2017.There are over 10,000 units (including 1 & 2 Star properties). This submarket comprises about 11% of the metro s inventory, ranking fifth out of nine in the metro. Most multifamily buildings are located east of I-95 along major thoroughfares like SW 10th Street, East Sample Road, and East Atlantic Boulevard. This submarket s average rent is one of the lower ones in the metro, but recently surpassed the Hollywood/Dania Beach Submarket as of October 2017. At this point in the year, Pompano Beach/Deerfield beach edged out Hollywood/Dania beach in terms of price for the first time in recent memory. Still, both submarkets were within about $50/unit on average, and even closer on a per square foot basis. After years of of landlords having no need to offer concessions due to nonexistent supply, new deliveries and a rising vacancies have begun to spark competition among properties. Rent growth was faster than the metro at about 2% in the year ending September 2017. Pompano/Deerfield Beach had experienced a fairly unremarkable year in terms of inventory turnover as of October 2017. As of the time of writing, there were four transactions recorded in the submarket, paling in comparison to the record breaking numbers of the previous year. The largest transaction of the year as of September was the sale of The Renee Garden Apartments in June. The 3 Star, 46 unit community was purchased by L & H Land Corporation for $6.25 million. The price reportedly generated a 6% cap rate. The property last sold less than one year earlier for $5 million. 7
SUBJECT PROPERTY
BCPA 9
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COMMENTS ON SUBJECT The subject properties are contiguous and have their own folio. Each building contains four (2/1) apartments. Currently five units are vacant and as such will not carry financing. The subject property has deferred maintenance issues which includes a roof(s), interior plaster/ceiling repair, carpet replacement. See Photo Addendum. This acquisition represents an added value opportunity for an investor to acquire and reposition the property in the marketplace. In doing so will create a significant return on investment just north of a 9% capitalization rate. The property must be purchased all cash. 11
LOCATION MAP Click here to Google Map 12
SKETCH 13
PHOTO ADDENDUM 14
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AERIAL Zoning RM-30 21 21
RENT SURVEY Section 2
RENT SURVEY 2 BEDROOM APT CLICK HERE FOR FULL REPORT Address City Name Current Price Sale Price Closing Date Bed Bath SqFt Liv Area 240 NW 21st Ave Unit#2 Pompano Beach $1,019 $1,019 2/6/2018 2 1 345 NW 5th St Unit#3 Pompano Beach $1,100 $1,100 2/25/2018 2 1 851 NW 5th Ave Unit#4 Pompano Beach $1,100 $1,100 12/15/2017 2 1 685 870 SW 6th Ct Unit#2 Pompano Beach $1,100 $1,100 2/23/2018 2 1 900 860 SW 6th Ct Unit#C Pompano Beach $1,100 $1,100 1/5/2018 2 1 900 2104 S Cypress Bend Dr Unit#404 Pompano Beach $1,150 $1,150 12/20/2017 2 2 770 853 SW 9th Ct Unit#3 Pompano Beach $1,200 $1,200 1/8/2018 2 1 215 SW 1st Ct Unit#1-2 Pompano Beach $1,200 $1,200 12/4/2017 2 1 750 620 NW 8th Ave Unit#5-M Pompano Beach $1,250 $1,250 3/26/2018 2 1 900 620 NW 8th Ave Unit#10-O Pompano Beach $1,250 $1,250 1/31/2018 2 1 900 2320 S Cypress Bend Dr Unit#406 Pompano Beach $1,250 $1,250 11/1/2017 2 2 1,000 2316 S Cypress Bend Dr Unit#419 Pompano Beach $1,300 $1,300 3/21/2018 2 2 1,100 2334 S Cypress Bend Dr Unit#904 Pompano Beach $1,400 $1,400 2/22/2018 2 2 1,220 $1,186 $1,186 23 23
COMPARABLE SALES Section 3
COMMENTS DIRECT SALES COMPARISON A comparable sale is property that is similar to the subject property in most respects. It is located in a nearby location. It has recently sold for a fair market value. The selection of comparable sales is in most appraisals is the single most determining factor in establishing the value. The responsibility is to fully research the local real estate market and determine which comparable sales represent the best value characteristics of the subject property. The market or direct sales comparison approach to an estimate of value is a process of comparing market data, that is, prices paid for similar properties, prices asked by owners, and offers made by prospective buyers or the tenants willing to buy or lease. Typically a comparison grid is used and adjustments are made to each comparable sales used for major differences between the comparable and the subject property for such items as location, construction quality and significant amentias, etc. In the market approach, the attempts are made to both gauge and reflect the anticipated reaction by a typical purchaser to the subject property. 25 25
COMPARABLE SALES GRID 3-4 UNITS REAL TIME CLICK HERE TO VIEW FULL REPORT Address City Name Original List Price Current Price Sale Price Closing Date Days on Market Total Units SqFt Liv Area Price/Unit Price/SQFT Pending Closed 238 NW 14th St Pompano Beach $289,000 $265,000 146 3 2,040 88,333 $129.90 246 NW 14th St Pompano Beach $275,000 $275,000 131 3 2,040 91,667 $134.80 224 NW 12th St Pompano Beach $315,000 $305,000 27 4 2,859 76,250 $106.68 700 NW 3rd Ave Pompano Beach $280,000 $300,000 5/31/2018 8 3 2,786 100,000 $107.68 316 NW 7 ST Pompano Beach $350,000 $330,000 4/20/2018 14 4 82,500 221 NW 12th St Pompano Beach $365,000 $365,000 6/27/2018 295 4 2,040 91,250 $178.92 85,417 $123.80 91,250 $143.30 26
FINANCIALS Section 4
INCOME & EXPENSE 8 UNITS Summary Price: Down Payment: Number of Units: Price per Unit Current GRM: Current CAP: Market GRM: Market CAP: Annual Rent per Square Foot: Approximate Age: Approximate Lot Size: Approximate Net RSF: Cost per Net RSF: $750,000 25.00% $187,500 Terms: 8 $93,750 23.1-0.34% 7.1 8.72% $4.93 1968 9,934.0 6,566 $114.22 SQ FT Proposed Financing Purchase Money Mortgage 4.50% 30 Monthly Payment: interest yr. amortization $562,500 $2,877.73 Scheduled Gross Income: Less Vacancy Rate Reserve: Gross Operating Income: Less Expenses: Net Operating Income: Less Loan Payments: Pre Tax Cash Flow: Plus Principal Reduction: Total Return Before Taxes: Annualized Operating Data Current Rents $32,400 $ 32,400 34,921 $ (2,521) 34,533 $ (37,054) $ 11,573 (25,481) -13.59% * Market Rent $105,600 5,280 $ 100,320 34,921 $ 65,399 34,533 $ 30,866 11,573 $ 42,439 5.00% 34.81% 16.46% 22.63% *As Percent of Down Payment Scheduled Income Annualized Expenses Current Rents Market Rent Taxes: $ 14,311 UNIT BDRMS/ Unit Monthly Monthly Monthly Monthly Insurance: 8,500 NUM BATHS Size Rent/Unit Income Rent/Unit Income Maintenance: 4,500 3 2/1 821 $900 $2,700 $1,100 $3,300 Water & Trash 4,800 4 2/1 821 Vacant $1,100 $4,400 Landscaping 990 1 2/1 821 Owner $1,100 $1,100 Licenses Mananement 200 1,620 Total Scheduled Rent: $2,700 $8,800 Laundry Total Expenses: $ 34,921 Monthly Scheduled Gross Income: $2,700 $8,800 Per Net Sq.Ft.: $5.32 Annual Scheduled Gross Income: $32,400 $105,600 Per Unit: $4,365.14 28 28