Area Analysis Summary
Complex is located in northeast Houston, Texas in Harris County. It is located off Beltway8 and about 2 miles away from the Beltway 8/I-45 interchange, and the drive to downtown is only 20 minutes away, giving the resident a small community feel along with the benefits that the big city has to offer nearby as well. Also, Bush Intercontinental Airport is only a few painless minutes away from the complex. Below is a link of a map that shows where the complex is located:
http://mapq.st/Qr9kvy
Demographics
Houston is one of the largest metropolitan areas within the state of Texas, and it has experienced steady growth for many years. Below is a chart that outlines the population growth from 2000-2010 in Houston:
Another important statistic that this graph does not discuss is the amount of growth that the city of Houston has experienced over the years. From 2000-2010, Houston has grown 26%, which is the fourth largest growth increase in Texas.
Houston is also a very diverse community, with 42% of the population white, 34% Hispanic, 17% black and the remaining 7% Asian and other ethnicities.
The following charts document the household statistics in the city of Houston:
So, by looking at the graphs above, we can conclude that a majority of households that were sold in Houston were valued between $100,000 - $399,999 (63.5%). This is an important figure to know so we can gauge the average wealth a citizen in Houston possesses. Also, it appears that Houston is above the state average in average household size as well as population of individuals under 18, but below the state average in population of individuals over 65.
Target Market
The target market for this apartment complex are young single adults and/or small families with less income. These apartments are affordable and spacious enough for single adults to live comfortably, and we have units with 3 bedrooms for families with children.
Basic Employers
Houston isn't known as "The Energy Capital of the World" for nothing. Energy (especially Oil & Gas) is the backbone to Houston's very successful economy. A few employers include:
Available Inventory/Supply
As I mentioned earlier, the Houston economy continues to thrive and grow largely due to the Oil & Gas businesses that call Houston home. For this reason, apartments are a hot commodity. People are constantly trying to find places to live so they can work in Houston. Below is a graph that outlines the multifamily statistics in Houston:
As you can see from the graph above, average occupancy in Houston is at 91.3%, which is pretty high. Because Houston is such a large city with a growing economy, the need for multifamily residences will always be demanded. At the current point in time, Houston may be close to a multifamily residence shortage, which will drive prices up due to the lack of supply to meet the demand. Anytime this happens is a very favorable scenario for owners of apartment complexes, because that is when monthly rent begins to skyrocket.
Property Analysis
Deer Creek is a historically under-performing apartment complex with the potential to be very profitable with the proper management. Below is a brief summary of the property details:
.jpg)
The two facts that immediately jump out are the average rent/SF and the occupancy. At 88%, occupancy is roughly 4% lower than the Houston average, but average rent is $.80/SF, which is significantly lower than the Houston average of $.89. This property is very affordable when compared against other complexes in Houston, but it still seems to be struggling to get tenants. CMT Investments believes the issue is with the management, and with the proper renovations and care, Deer Creek can be a very successful apartment complex in northeast Houston.
Timing/Economy
As mentioned in earlier posts, the timing for a multifamily property purchase could not be better. Oil prices are soaring and the economy in Houston is consistently growing year after year. Texas has seen an inbound migration every year since 2005, meaning that more people are moving to Texas than people leaving the state, and Houston is a major destination to many of these migrants. As more and more individuals move to Houston, the demand for housing continues to rise. If we can provide a quality living situation at an affordable price, the occupancy rate should skyrocket, and the profits will follow.
SWOT Analysis
Strengths:
Property Comparables
1. Fallbrook Apartments
Well maintained, 280 unit, garden style, brick and wood apartment complex located in Greenspoint area of northwest Houston. Fallbrook features mature landscaping and spacious one and two bedroom units situated in 25 buildings on approximately 8 acres. The amenity package includes a perimeter fence with controlled access gates, cable ready units, ceiling fans, patios and balconies. The project amenities include two well equipped laundry centers, and two swimming pools.
This property is not far from Deer Creek, and it has had more success lately. However, with our rent prices, if we can make some improvements to the facility, there is no reason why our complex cannot be just as successful, if not more successful, than Fallbrook Apartments.
So, by looking at the graphs above, we can conclude that a majority of households that were sold in Houston were valued between $100,000 - $399,999 (63.5%). This is an important figure to know so we can gauge the average wealth a citizen in Houston possesses. Also, it appears that Houston is above the state average in average household size as well as population of individuals under 18, but below the state average in population of individuals over 65.
Target Market
The target market for this apartment complex are young single adults and/or small families with less income. These apartments are affordable and spacious enough for single adults to live comfortably, and we have units with 3 bedrooms for families with children.
Basic Employers
Houston isn't known as "The Energy Capital of the World" for nothing. Energy (especially Oil & Gas) is the backbone to Houston's very successful economy. A few employers include:
- Chevron
- Exxon (complex is located approx.13 miles away from Exxon's new 10,000+ employee campus off I-45 and Hardy Toll Road)
- Shell
- CenterPoint Energy
- Marathon Oil
- Anadarko
- BP
- Occidental Petroleum
As I mentioned earlier, the Houston economy continues to thrive and grow largely due to the Oil & Gas businesses that call Houston home. For this reason, apartments are a hot commodity. People are constantly trying to find places to live so they can work in Houston. Below is a graph that outlines the multifamily statistics in Houston:
As you can see from the graph above, average occupancy in Houston is at 91.3%, which is pretty high. Because Houston is such a large city with a growing economy, the need for multifamily residences will always be demanded. At the current point in time, Houston may be close to a multifamily residence shortage, which will drive prices up due to the lack of supply to meet the demand. Anytime this happens is a very favorable scenario for owners of apartment complexes, because that is when monthly rent begins to skyrocket.
Property Analysis
Deer Creek is a historically under-performing apartment complex with the potential to be very profitable with the proper management. Below is a brief summary of the property details:
.jpg)
The two facts that immediately jump out are the average rent/SF and the occupancy. At 88%, occupancy is roughly 4% lower than the Houston average, but average rent is $.80/SF, which is significantly lower than the Houston average of $.89. This property is very affordable when compared against other complexes in Houston, but it still seems to be struggling to get tenants. CMT Investments believes the issue is with the management, and with the proper renovations and care, Deer Creek can be a very successful apartment complex in northeast Houston.
Timing/Economy
As mentioned in earlier posts, the timing for a multifamily property purchase could not be better. Oil prices are soaring and the economy in Houston is consistently growing year after year. Texas has seen an inbound migration every year since 2005, meaning that more people are moving to Texas than people leaving the state, and Houston is a major destination to many of these migrants. As more and more individuals move to Houston, the demand for housing continues to rise. If we can provide a quality living situation at an affordable price, the occupancy rate should skyrocket, and the profits will follow.
SWOT Analysis
Strengths:
- Very affordable
- Close to major airport and not far from downtown
- Very spacious and capable of housing singles as well as small families
- Community pool/hot tub/recreation center
- Great landscaping. Mature trees provide shade, and gardens are well maintained
- Not far from major highway for easy access to and from the complex
- Over 300 units, which can provide very good revenue streams if occupancy increases
- Asset is underperforming recently
- Management is poor
- Low rent prices can lure potential tenants
- Good amount of unused land that can be developed to more complexes or amenities
- Other apartments could enter the market which would diminish our sales
- Without a differentiated product, tenants will continue to look elsewhere instead of Deer Creek
Property Comparables
1. Fallbrook Apartments
- Price: $6,000,000
- # units: 280
- Occupancy: 91%
- Lot Size: 8 AC
Well maintained, 280 unit, garden style, brick and wood apartment complex located in Greenspoint area of northwest Houston. Fallbrook features mature landscaping and spacious one and two bedroom units situated in 25 buildings on approximately 8 acres. The amenity package includes a perimeter fence with controlled access gates, cable ready units, ceiling fans, patios and balconies. The project amenities include two well equipped laundry centers, and two swimming pools.
This property is not far from Deer Creek, and it has had more success lately. However, with our rent prices, if we can make some improvements to the facility, there is no reason why our complex cannot be just as successful, if not more successful, than Fallbrook Apartments.
No comments:
Post a Comment