2022 Q1 Distribution
Spring has sprung, finally! Looking like possibly some 80-degree weather this week!
Your Q1 2022 distribution check went out Friday, May 6 so you should see them this week!
Josh has been or will be, in contact with you about updating your banking information in order for us to begin distributions in the form of ACH payments. Our InvestNext platform allows us to do that, so we’re taking advantage of the technology to help us be more efficient.
We’re insanely proud we have been able to deliver on time the full 9% ROI on your investment for the life of our investment here at Meadowview Apartments since taking over in January 2020!
Shameless plug, Josh and I are looking to keep working to scale our business and continue to provide these types of investments for more and more people. The state goal is $30 million in assets under management by December 31, 2027. Today we’re about 1/3 of the way there with about $9.5 million assets under management between Meadowview and our Saginaw Township and Alma properties. We’re looking for property to buy within an hour of Corunna. We’re currently looking at a deal for 36 units in Lansing. If you know someone who may be interested in our type of investment product, please put us in contact.
As we enter our 28th month of operation at Meadowview, we’re poised to begin reaping more of the rewards of the heavy lifting we have performed over the last 2+ years.
We’re ready to begin pulling back on the number of renovations to apartments since we touched just over 50% of them so far. We’re at the point now where we’re getting back into the ones we have previously renovated and we’re doing less where possible to the ones we haven’t touched.
The first quarter saw a slightly higher vacancy rate than forecasted due to an array of factors. Some people moved to buy houses, which is a natural turnover. Some people changed life circumstances and some people were served notices to quit for non-payment. We forecast a 5% vacancy, we experienced about 7.5% for the quarter.
We were able to raise rents toward $695 for existing leases and $725 for new leases. That is significant because our 5-year target was $695. The booger part is that we weren’t able to fully capitalize on that because we did experience a little more turnover as referenced above. Still, we outpaced last year’s Q1 income by 1.7%.
Operating expenses saw a 1.9% decrease which is significant, given the pricing and supply climate. That is a function of intentional and mindful spending.
We pulled back capital expenditure spending by just over 30% (30.4%), even with $16,000 going toward paying off a new roof on E building.
Combine those three numbers and we were able to increase our Net Operating Income ahead of Q1 2021 trends.
There are a few headwinds we will continue to face.
Property tax re-assessment has caught up to us, resulting in a $30,000 per year increase. Unfortunately, that’s what the market dictates. Our investigation into challenging the valuation with CORE Solutions Group returned a verdict of there’s nothing much to be done.
Pricing for materials, especially mechanicals like hot water heaters, furnaces, AC units, lighting, etc has jumped significantly with some items pushing 30% increases from last year. One small example, the blinds we use for windows have gone from $17 middle of last year to $32. Water heaters have increased at least 20%. The good news is most of the suppliers we work with have caught up on supply.
We’re going to continue to be attempting to take advantage of the inflationary climate to push rents as much as we can. The hard part is this whole economic climate puts pressure on consumer products, gas, wages… everything. So we need to work to keep income up at the pace expenses will rise.
We have lots of levers to push as we move forward.
As we cruise into summer, we’re planning on a smoothed-out run. But as we all know, things happen, and things come up. We’re planning the best we can and we’ll tackle the challenges as they present.
Thank you for your continued support and investment!
Cheers!
Mark & Josh