A 400-unit complex in Colorado was purchased in 2015 as a value-add opportunity and self-managed. The owner was ready to sell, but the complex was not ready to go to market. Major maintenance and renovations started in 2018 and were not progressing as planned. The owner contacted the Sweetwater Property Management (SPM) team for consulting services.
THE CHALLENGE
By the start of 2022, the renovations were falling further behind schedule, occupancy was averaging 86%, the delinquency rate was climbing, and employees lacked oversight, guidance, and motivation.
The owner reached out to Sweetwater Property Management for help because of how effectively and efficiently they were managing several of his other assets. Desperately needing the renovations completed and the property stabilized – he knew SPM was the solution to his problems.
The owner had been trying to self-manage the property and renovations remotely and was simply overwhelmed. When the owner reached out, he was looking for SPM to take over managing the property and renovations. To understand the size and scope of the situation, Sweetwater sent one of its highly experienced managers to tour the site, review operational expenses, and evaluate the current property management in place.
Key Issues Identified:
▪ Onsite management team was ineffective.
▪ High vacancy and delinquency rates.
▪ No coordination of major renovations.
▪ 30 units still required complete renovations.
▪ Dated systems resulting in increased operating costs.
▪ Dated units.
▪ Ineffective marketing.
▪ Leasing team not motivated.
▪ Lack of amenities.
▪ Poor landscaping – no curb appeal.
Once the property tour and operational review were completed, SPM returned to the owner and gave him a series of options. Since the owner was preparing to exit the property, the primary recommendation was for Sweetwater to provide consulting services focused on the most pressing issues. In this way, the team could offer the most value to the owner over a short timeframe by tackling the property’s most complex challenges and setting the stage for a successful sales transaction.
THE PLAN
The plan was to leave one of SPMs talented property managers onsite to oversee the renovation, property management transition, and sales process. This would include guiding rebranding, marketing improvements, and preleasing.
Key Issue Resolution:
▪ Replace management team and establish clear guidance and expectations.
▪ Reduce vacancy and delinquency rates.
▪ Provide coordination between the renovation teams and new property management.
▪ Redo air conditioning system and plumbing.
▪ Refresh units – flooring, paint, appliances.
▪ New branding and updated marketing.
▪ Create a set of incentives for the leasing team and focus on preleasing units.
▪ Add a dog park and a basketball/pickleball court.
▪ Add in-unit washer and dryer hookups.
THE SOLUTION
On February 10, 2022, work began in earnest. Over the next four months, the SPM consultant in Colorado guided the property’s renovation, rebranding, and preleasing. Work that had been delayed for years and was over budget was finally moving ahead rapidly.
Over the next few months, the 30 units requiring major renovations were completed and preleased, the delinquency rate was effectively eliminated, unit updates were completed between tenant turns, and amenities were added. Renovations included completely redoing the HVAC systems and significant plumbing work.
While all the work was going on, the consultant guided the transition to a new property management team, helped develop new branding, and facilitated property tours during the sales process.
When the SPM consultant flew out on June 10, the renovations were complete, the property was rebranded, 100% preleased, and the sales process was complete. In total, the renovations cost $5MM, but the owner sold the property for approximately $274K per door – more than doubling the original purchase price.
SUMMARY
Not only did the SPM team solve the owner’s problems, but they also reduced his stress and workload while increasing the property’s value. By leveraging their knowledge and experience, the Sweetwater Property Management team identified critical issues, created a plan, and guided the execution efficiently and professionally.
What issues are you facing with your properties? The Sweetwater Property Management team can specialize in a plan to get the desired results by identifying what needs to be done and what is impactful. Click here for more information.
