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A lot of real estate activity is centered in the Sunbelt areas of the country, but there are also plenty of opportunities in the Midwest for real estate investors. Chicago, the third-largest city in the United States, is a vibrant city with an enticing mix of culture, jobs, and legendary sports teams.
According to a June report from JPMorgan, the multifamily market is steady. Asking rents were up 2.7% year over year in the first quarter with vacancies at 5.6%. “These are healthy metrics underscored by a strong job market and a multifamily market where renters can access units at a variety of price points throughout the Chicago metro region,” said Matt Felsot, Senior Regional Sales Manager at Chase.
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That backdrop intrigues EquityMultiple’s new mixed-use property offering in the City West submarket. The Linkt complex was built in 2017. It has 47 Class A residential units that are 94% occupied. On the ground floor, there is a Wingstop and the VannHardin barbershop. Amenities include an outdoor sun deck, a rooftop with a skyline view, a fitness studio, grills, and a lounge area. The property is located in the River West neighborhood on Milwaukee Ave. It is a one-minute walk from the Chicago Blue CTA ‘L’ train line and has access to major thoroughfares.
The current owner developed and stabilized the property. They planned to stabilize and exit, but then the pandemic hit. The seller hasn’t pushed rents to the current market level, and the building requires some upkeep and maintenance, making this a value-added deal. The sponsor is purchasing the property for $14.1 million with a total capitalization of $15.1 million. The purchase price represents a 27% discount on comparable sales and a 30% discount on replacement costs. A 2023 appraisal gave it an as-is value of $16.8 million.
EquityMultiple offers investors a $4M limited partner equity opportunity co-sponsored by repeat sponsors DMG Capital and EM Investment Partners. This deal is for accredited investors and has a $15,000 minimum. It promises a net target internal rate of return of 21.9%, an average net cash on cash of 5.8%, and a 1.6x equity multiple. The target hold period is three years.
DMG Capital plans to renovate the common areas and refresh the units to bring the rents up to market level. On the investment webinar, Roger Daniel, founder of DMG Capital, explained how his company centralizes everything they do around the property management portion of the business. Because of the relatively light lift to bring the property up to market standards, there should be limited disruption to cash flow.
If $15,000 is above your target, EquityMultiple has another option for new investors. The Ascent Income Fund targets stable income from senior commercial real estate debt positions and has a historical distribution yield of 12.1% backed by real assets. With payment priority and flexible liquidity options, the Ascent Income Fund is a cornerstone investment vehicle for income-focused investors. First-time investors with EquityMultiple can now invest in the Ascent Income Fund with a reduced minimum of just $5,000.
The sponsor is underwriting an exit of the property after three years at a 6.0% exit cap rate. Market cap rates for comparable properties range from 4.8% to 5.7% with an average of 5.2%. Three main factors make this deal attractive: an attractive purchase price, in-place cash flow, and a sponsor with local experience. Market conditions are subject to change, and investors should do their due diligence before deciding on any investment. Offering documents and the investment webinar are available on the EquityMultiple website.
This article Multifamily Real Estate Investment Launches In Chicago With A Nearly 22% Target IRR originally appeared on Benzinga.com