The BLVD Distribution December 06, 2023
3816 Nicollet Ave - The Crown of Kingfield
In this edition, we're featuring our property located at 3816 Nicollet Ave in the Kingfield neighborhood of Minneapolis.
How We Found It
The property located at 3816 Nicollet Ave was brought to our attention by a local investor who discovered it through a broker with an aptitude for finding off-market deals. The opportunity was then presented to us and a handful of other groups operating in the Twin Cities area. This building has 18 units and was built in the 1960’s.
Why We Like It
Our primary attraction to this deal stemmed from its exceptional location in Kingfield, a vibrant Minneapolis neighborhood renowned for its historic homes, excellent dining options, and a distinctive 'hipster' vibe. Directly adjacent to our apartment building is Petite Leon, recognized as one of the best restaurants in the city and a James Beard nominee.
Beyond the prime location, this deal presented an opportunity to execute our typical value-add business plan. The building is made up of mostly one-bedroom units with an average rent of $735 when we purchased it. Recognizing the significant potential for rent growth, we knew there was ample room to increase those rents.
Our Business Plan
All of the units needed some work, and some required a lot of work! The owner maintained a hands-off approach, and a few units housed residents who regularly smoked indoors. Our budget of $220,000 covered interior and common area renovations, including new carpet and paint in the hallways. Inside the units, renovations included new LVP flooring, cabinet refinishing, fresh paint, as well as updated bathroom tile, countertops, appliances, and lighting fixtures.
We initiated the transformation with the building's exterior, allocating $22,000 for a new paint job to align with the neighborhood's vibe. We believe it turned out great.
We were able to secure financing for the property through a local bank, which offered a fixed 3% interest rate for three years with the first 18 months being interest-only payments. This arrangement provided us with the flexibility to execute our business plan. We intend to either refinance or sell the property in January 2025.
How It’s Going Today
Approaching the two-year mark on this project, we've successfully increased average rents from $735 to $902. Introducing a utility billback program has contributed an additional $75 per unit in income, and we've implemented a $25 per spot parking fee.
Originally under the management of a third party, the transition to vertical integration with BLVD Management has allowed us to take control of operational improvements. We're excited about the promising future of this property!