Freedom Completes 33rd Real Estate Deal
Acquires 475-unit Decatur, Georgia Apartment Complex to be renamed Villas at Panthersville
Freedom Family Office paid $29,900,000, representing a cost of less than $63,000 per door, a low entry price for an Atlanta MSA property. Comparable units have recently sold between $85,000 to $110,000 per door when properly maintained and managed.
Built in 1969, Villas at Panthersville is situated on an expansive 43.1 acres with easy access to downtown Atlanta and Hartsfield-Jackson International Airport.
The seller had previously held an auction for the property, but the winner could not secure a mortgage as a result of the pandemic. Given our expertise and experience in turning around value-add workforce housing deals, not only did they sell to us at less than the auction price, but they also agreed to loan us $26,900,000 at no interest for 6 months.
In addition, they allowed our operating partner to begin managing the property upon signing our letter of intent. As a result, we were able to increase income over $80,000 in the month before closing, dramatically improving both occupancy and collections.
What Freedom Plans to Deliver to Investors
Our goal is to stabilize occupancy at 90%+ within 6 months, at which point we can complete a cash-out refinancing. Based on our assumptions, we should get most or all of our initial equity back, still own the asset, and produce consistent income. This is the model we showcase in our book, “How My Family Gets Infinite Returns Investing in Apartments.”
Freedom partner Robert Rubenstein said, “This property has been mismanaged, but with our expertise in this market, we can quickly create a lot of value.”
There are a lot of incentives to buy income-producing real estate. Just one are the tax benefits, which are still under-recognized. In a deal such as Panthersville, investors will receive a K-1 in 2020 that will report at least 100% of their investment as a tax loss resulting from depreciation. Investors that had rental income or sold other property for a profit would offset that income with this loss and pay no taxes.
Freedom remains committed to acquiring workforce housing constructed in the 1970s and 1980s in growth markets.