Acquisition and Renovation of Ovation at 3500

In 2022, we successfully acquired Ovation at 3500, a 226-unit multifamily property located in Columbia, South Carolina. At the time of acquisition, approximately 40 units had already been renovated by the previous owner. Our goal was to evaluate whether this property could generate attractive returns for our investors, and after careful underwriting, we concluded that further renovations and strategic improvements would unlock significant value.

Due Diligence and Underwriting

During the acquisition process, we thoroughly evaluated both the property and the broader Columbia market. Key factors included the city’s population growth, rental trends, and job market, which is supported by strong medical, federal, educational, and private sector industries. Given Columbia’s position in the growing Sunbelt region, we identified promising future growth for the area.

Our underwriting included plans to renovate an additional 180 units and implement several external upgrades. These improvements were designed to enhance curb appeal, modernize interiors, and ultimately justify higher rents, increasing cash flow and returns for our investors.

During the due diligence phase, we encountered a challenge related to the South Carolina Department of Transportation’s (SCDOT) plan to expand a nearby highway. Initial information suggested that one of the property’s buildings might be condemned, which would result in a loss of 8 units. We factored this risk into our underwriting while working on mitigation strategies.

Post-Acquisition Enhancements

Once we acquired the property, we immediately began executing our improvement plan. In the first year, we focused on:

1. Unit Renovations: We immediately began interior renovations and successfully completed 40 units within the first 12 months. The upgrades included new kitchen appliances, cabinets, countertops, and light fixtures. In the bathrooms, we installed new vanities, toilets, hardware, and refinished the tubs, along with applying fresh paint. Additionally, we upgraded the flooring by adding luxury vinyl plank (LVP) and new carpet throughout the apartments. These enhancements significantly improved the units’ appeal, allowing us to increase rents and improve the overall value of the property.
2. Curb Appeal: External improvements included installing new roofs, upgrading to LED lighting throughout the property, and enhancing the pool area with new furniture. We also repainted the property buildings, repaired or replaced wood on balconies, and addressed other key aesthetic updates. These external upgrades, combined with refreshed communal areas and improved landscaping, greatly enhanced the property’s appearance, positioning it as a more attractive rental option in the market.
3. Condemnation Challenge: To address the potential building loss due to the highway expansion, we collaborated with an engineering firm to analyze the impact of the SCDOT’s plans. Over the course of 4-5 months, we engaged in multiple studies and negotiations. Ultimately, we were able to redesign the parking lots and entrances, which allowed us to save the building initially slated for condemnation. This was a critical win, as we retained the rental income from these units.
4. Ongoing Property Management and Operations: From the start, we partnered with Asset Living to manage Ovation at 3500. This partnership has been integral to the success of the property. Working closely with their team, we have streamlined operations in key areas:
5. Expense Management: We implemented cost controls to keep operating expenses in line with projections.
6. Unit Turns and Leasing: Asset Living’s leasing team has been instrumental in managing unit turnovers and driving occupancy, leveraging effective marketing strategies to attract and retain tenants.
7. Problem-Solving and Collaboration: We meet weekly with the Asset Living team to review ongoing performance, address challenges, and develop proactive solutions. This hands-on approach allows us to resolve issues before they escalate, minimizing costly repairs and maximizing property value.

Refinancing for Long-Term Growth

As the renovations and operational improvements took effect, the property’s value increased significantly. We successfully refinanced Ovation at 3500 through Freddie Mac, securing favorable terms that will continue to benefit our investors. The refinancing not only allowed us to lower debt costs but also freed up capital for further enhancements.

Conclusion

The acquisition and improvement of Ovation at 3500 has been a resounding success. By identifying a property with strong potential, executing a strategic renovation plan, and navigating challenges like the highway expansion, we have been able to significantly improve the property’s value and generate strong returns for our investors. Our partnership with Asset Living has been key to maintaining smooth operations, and we look forward to continued success with Ovation at 3500 in the years ahead.