Bonvolo Real Estate Investments has successfully acquired the latest addition to its portfolio: a 40 unit apartment community in central Memphis.
Our primary portfolio focus up to now has been in Washington state. However, with the high prices and low cap rates available in most Washington markets at this time, we expanded into one of the three markets that we have been actively researching and monitoring for several years. Our approach has always emphasized cash flow properties, with appreciation as the “cherry on top”. We correspondingly acquired this property in a strong cash flow market.
The apartment complex cash flows well from the start, while also coming with rent upside and value-add plays. In addition, our research has long indicated how important it is to know the micro-local neighborhood specifics, since there is a wide range of neighborhood and tenant base quality levels throughout the Memphis metro area. We intentionally selected an average B/C quality neighborhood and initial property + tenant base which is surrounded by up-and-coming neighborhoods with substantial economic development and job growth already well underway. Market rents in all directions around the property are also higher than this micro-location, and very local properties are already being improved and up-scaled.
In addition, the property condition was solid enough that we can maintain it and make gradual improvements without need for significant upfront capital infusion. Our overall property improvement program will mostly be self-funding through cash flow.
Having a strong local team is extremely important for out of state investing. We performed extensive due diligence in obtaining referrals, background checks, customer satisfaction, policies, and many multi-step interviews in determining our core team members. The most important of those team members is our local property management team. We also have an attorney, contractors, and various specialists ready as needed.
As we develop this concept and ensure a successful first run in this market, we anticipate next partnering with others on larger exciting projects in the Memphis metro.