Rare 7% Cap Rate Investment Deal: University City
Updated: Apr 7, 2022
UPDATE: SOLD IN UNDER 7 DAYS OVER ASKING
There is a reminiscence of the fact that housing prices in University City used to be very affordable just about 5-7 years ago. Investors had more opportunities to purchase investment properties and got better rates - however, things have changed. The neighborhood has boomed with development such that it’s becoming one of the most attractive neighborhoods to live in the City of Brotherly Love in recent years. Therefore, rent rates have increased but opportunities to acquire investments have decreased. Inventory might be tight but finding a good investment opportunity isn't impossible! Here is one we have for sale [pro forma included]:
The “438 Lofts” was just completed in March of 2022. Meticulous attention to detail is presented in the kitchen with quartz countertops, customized cabinets and brand-name stainless steel appliances. The property also offers ultra-high end finishes, shared rooftop terrace, and a stunning common space with bike and package storage. The first floor consists of 2 bi-level units featuring 2 bedrooms and 2 full bathrooms. Upstairs, you’ll find two 2 bedrooms and 1 bathroom while the third-floor penthouses feature two 2 bedroom and 1-bathroom units with high ceilings.
Based on our careful research, this is the pro forma rent for each unit:
Unit 1| 2 Beds/ 2 Baths (Bi-level): $2,200/mo
Unit 2| 2 Beds/ 2 Baths (Bi-level): $2,600/mo
Unit 3| 2 Beds/ 1 Bath: $2,400/mo
Unit 4| 2 Beds/ 1 Bath: $2,200/mo
Unit 5| 2 Beds/ 1 Bath: $2,300/mo
Unit 6| 2 Beds/1 Bath: $2,300/mo
Projected gross income: $14,000/mo
According to Bright MLS, the average sold price of multifamily houses in the zip code 19104 between 2020 and 2022 is $1,530,782 while the price per unit is $364,129 and days on market is low at 44 days.
We’re selling this brand-new property at $1,999,900 or $333,316/unit. Based on our cash flow analysis, this is a 7% cap rate and 6.5% COC deal, which is rare to find in this solid B class neighborhood.
"With the recent remapping of this particular area from RM1 to RSA5, this increases barriers of entry for additional multifamily units and reduces risk of over saturation in the rental market"
-Bob Kiziroglou, Realtor® New Development & Investment Specialist
This 6-unit beauty is located in the fastest growing sector of Philadelphia - University City. The neighborhood is known as a major nerve center for innovation, world-ranked colleges, top-rated hospitals, bountiful greenery and ease of transportation. University City is the perfect combination of ancient and modern aesthetics. You can walk past gorgeous 200-year-old Victorian Gothic buildings like the University of Pennsylvania and immediately see subtly sophisticated contemporary constructions like the Drexel Academic Tower.
The city has paid special attention to the development of this neighborhood. In 2019, over 900,000 SF of new development was underway for an estimated value of almost $400 million. They also planned to invest $450 million toward local transportation infrastructure over the next 10 years to further improve accessibility. University City’s streets, sidewalks and transit stations are highly reliable. Walkscore.com has awarded the neighborhood with “paradise” status for walking, biking and public transit.
Not only does the city heavily invest into University City but it also attracts enormous funding from other places. In 2019, a record 232 patents were issued to University City businesses and institutions, R&D investment reached $1.85B. Over 85,000 jobs are available, and locally businesses are booming, accounting for 70% of all businesses in Philadelphia. (source: https://www.visitphilly.com/areas/philadelphia-neighborhoods/university-city/)
Showings are by appointment only.
Call us at 215-499-0887