I’m excited to provide a status update on the Ridgeview portfolio, including the final renovations at Morada Apartments and the latest developments at the Pineview Townhomes and Riverway Apartments. Additionally, I'll be discussing an upcoming acquisition, The Sunset Apartments. This property is slated to close in December of 2024 and will be a great addition to the portfolio.

The Morada Apartments

The Property

The Morada is a 71-unit building located on the Crystal/New Hope border. The 1971-built apartment building consists of 33 2BR’s, 36 1BR’s, and 2 Studios. Thanks to a huge renovation effort during the past 8 months, the Morada reposition is almost complete. Only 10 units remain unrenovated as of today. The apartments received new kitchens, with granite countertops and stainless appliances. The bathrooms have new vanities, granite countertops, and updated fixtures. LVP flooring was laid throughout the unit, and the bedrooms have carpet. The common areas are also extensively updated, including new carpeting, paint, lighting, and "Morada" branding throughout to reinforce the property's new identity. The exterior received a new paint scheme, new screens, and updated landscaping.

How It’s Going

We secured a purchase price of $6.64M and obtained a construction loan totaling $6.6M The interest rate was locked in at 6.96%, and currently has 4.25 years remaining until maturity.

The market's response to our renovations has been even better than anticipated. We're achieving rents significantly higher than pro forma projections. These rent increases translate to an additional $55 per unit over our pro forma rents. Once all units are stabilized at these rates, this will result in $46K in annual income over our projections—a significant boost to the property's cash flow and overall value.

Pineview Townhomes

The Property

The Pineview is a 28-unit complex located in Jordan, MN. Pineview Townhomes feature 14 3BR 2BA and 14 2BR 2BA homes, with an average unit size of 1,240 square feet. Newly built in 2019, the 2 story units feature an in-unit washer and dryer, a spacious single car garage, and private rear patios. Both 2BR and 3BR layouts feature ample closets and storage, central heat, and A/C.

How It’s Going

Suburban townhomes have proved to be popular in recent years, which can be seen in Pineview’s rent growth. YoY rent growth has averaged 5.2% since its acquisition in 2021. The Freddie Mac SBL debt has an interest rate of 3.51%, and has 6.5 years remaining until maturity. The Pineview is cash-flowing and pays out regular distributions.

The Riverway Apartments

The Property

The Riverway consists of two 12-unit apartment buildings located in Champlin, MN. Combined, the units total 22 2BR’s and 2 1BR’s. This complex was fully renovated in 2023. Updates include new kitchen cabinets, stainless steel appliances, LVP flooring, LED light fixtures, nickel door hardware, and low-flow water fixtures. The outdated pink tile in the bathrooms was replaced with stud-mounted bath surrounds. We also installed new vanities, countertops, mirrors, and lighting. The common areas were updated by removing the 1960s wainscotting, installing new flooring, and adding a modern paint scheme.

How It’s Going

Riverway was leased up and reached stabilization 1 year ago, and since then, Gross Income has grown by a massive 7.2%. The debt has an interest rate of 5.5%, and has 5 years remaining until maturity. Riverway is cash-flowing and pays out regular distributions.

Coming Soon: The Sunset Apartments

The upcoming addition to Ridgeview’s portfolio, the Sunset Apartments, is scheduled to close in December of 2024. As of this writing (11/14/24) we have a few spots left in this investment.

The Property

Sunset Apartments is a 36 unit apartment complex located in Champlin, MN. The property features great floor plans, sizeable bathrooms, and balconies on 2nd and 3rd floor units. Laundry rooms are available on every floor, and include additional storage lockers for tenants. There are 17 garage stalls available for rent, plus a large parking lot with 55 spaces.

The Business Plan

Sunset Apartments will undergo the same renovation formula used earlier this year on the Morada Apartments. A complete renovation of every apartment and all common areas sets the stage for better tenants, better rents, and lower operating costs during the ownership period.

5 Reasons I LOVE This Opportunity

1. Low Cost Basis

As the Federal Reserve waged war on inflation, multifamily interest rates have risen into the 6% and 7% range, putting downward pressure on sale prices. Today’s interest rate environment is directly responsible for the $112K per unit acquisition price. The $4.035M purchase price is 15% lower per unit vs past sales comps in the area.

2. Untapped Renovation Potential

A significant opportunity awaits, as none of Sunset Apartment’s 36 units have undergone renovations. Currently, renovated units in the area are achieving rent premiums of $350 for 1BRs and $400 for 2BRs, offering substantial room for improvement by bringing rents in line with the direct competitors.

3. Prime Location in a Proven Market

Champlin is a highly desirable city with high incomes and low crime. Ridgeview first entered the market in 2022, acquiring the Riverway Apartments. Tenants love the neighborhood and tend to stay longer than usual, leading to lower turnover costs and lower expenses overall.

4. Tax Advantages

A Cost Segregation study will be completed. This tax strategy accelerates depreciation for real estate, boosting cash flow and reducing tax burdens on rental income. Investors in the Sunset Apartments can expect significant passive losses on their 2024 tax return.

5. Low Supply Coming Online

Apartment development has dropped dramatically due to high interest rates and increased construction costs. The Star Tribune just published an article about this very topic. In Champlin, the last large-scale apartment development was the 212-unit Bowline Apartments in 2022. Since then, there has been little apartment supply added in town.

To express your interest in joining this venture, visit the Ridgeview Investor Portal:

In Conclusion

The Ridgeview portfolio has performed exceptionally well this year. This can be attributed to the significant renovations each property has undergone and the excellent property management teams in place. As a big-time multifamily owner once advised me, "Buy value-add, and run them tight!" This strategy has proven successful.

I remain optimistic about the outlook for the multifamily market and will continue to evaluate acquisition opportunities that align with our portfolio objectives. I would also love to have you join us in our investment in the Sunset Apartments.

-Ben Michel

Ben Michel is the founder of Ridgeview Property Group, an investment firm specializing in multifamily real estate. Register Here to be notified of available investment opportunities.