We’ve invested $12.1 million in the acquisition and renovation of the Dwell at Carmel, a stabilized 232-unit apartment community in Charlotte, North Carolina.

At a strategic level, this investment fits within our affordably-priced Sunbelt apartment / rental housing thesis. From millennials to retirees, a broad group of Americans have been taking part in a “great migration” from north to south over the past decade, driving continued demand for well-priced, well-located real estate, and supporting steady returns for disciplined investors.

As we stated in our mid-year letter to investors, we believe that this long-term trend has only been further accelerated by the pandemic. In an economy where remote work is becoming the norm for more and more people, we expect that an increasing share of the population won’t need to live in expensive gateway cities and will instead seek out locations that offer lower living costs and more agreeable climates.

Business plan

Built in 1979, the apartment community is in good condition, offering a mix of direct-entry and townhome style units, which we believe could prove to be particularly attractive to those who are seeking an additional level of social distancing, while still wanting the conveniences associated with renting an apartment.

At the time of our acquisition, the property was roughly 97% occupied, having maintained similarly strong levels of occupancy through the course of the COVID-19 pandemic. While the property is currently cash flowing, we believe there is an opportunity to make it even more competitive with some cosmetic improvements.

Our partner, McDowell Properties, plans to spend roughly $6.3 million on improving the common areas and renovating a large portion of the units. We expect this investment to drive an increase in rental income, and consequently, the overall value of the property.

Following the completion of renovations, we plan to hold and manage the property for roughly seven to ten years before seeking opportunities for an exit. Our goal is to earn consistent cash flow from rent payments, with the potential for long-term upside by selling the property for more than we put into it.

Why we invested

While the extent of the negative impacts of the COVID-19 pandemic on the broader economy remains uncertain, we believe this investment is well-positioned not only to withstand a prolonged economic downturn, but to potentially benefit from more permanent shifts in behavior that may result.

  • Social distancing-friendly: The community offers a combination of townhomes and direct-entry apartments, which we believe will be particularly attractive to renters who are seeking an additional level of social distancing, or who simply need more living space as norms around work and school shift.
  • Experienced partner: McDowell Properties currently operates a portfolio of roughly 10,000 units across the United States, and since their inception in 2004 they’ve purchased over 40,000 units valued at over $3.0 billion.
  • Healthy local economy: Charlotte has been one of the fastest growing cities in the country in recent years with the area’s population growth more than tripling the national average since 2010.
  • Income-generating asset: The property was roughly 97% occupied at the time of our investment, generating consistent cash flow through rental income.

As always, if you have any questions or feedback, please visit our help center or reach out to us at investments@fundrise.com.