Park Place is a well-located prime asset that hadn’t been renovated in 50 years and was renting for about 60% it’s peers and owner-managed. We purchased at a steep discount to market and began to implement our value-add program in 2020 as well as putting in place professional management. Demand for real estate in Palm Beach County, Florida has been at such an all-time high that the Financial Times declared the area ‘sold out’ in October 2021 after a record-breaking year. And there’s a good reason why. Incredible weather, pro-business policies and an autonomous vaccination mandate have driven a significant uptick in migration from business districts like New York to the Sunshine State, boosting the region’s real estate investment potential.
Park Place was crying out for a new lease of life to restore its glory days. The property had remained largely unchanged since its original construction and had lost considerable value due to poor management. We had originally estimated that we could hit $950 rent averages, but we increased rents from $600 to $1400 through our renovations and improvement of the property, produced excellent cash flow for investors, and the property is currently under contract to sell at a 4.5X equity multiple.
The renovation included landscaping, exterior wood rot repair, painting, tree removal, installing new washer and dryers and unit renovations. The cost of the unit renovations was around $6,000 per unit on average and included new LVL flooring, restoring the cabinetry, paint, tile refresh or replacement depending on the unit and new fixtures. Our return on invested capital for unit renovations is over 100%.