We’ve invested $24.4 million in the acquisition and renovation of The Palmer, a 502-unit apartment community in Woodstock, Georgia, about 30 miles north of downtown Atlanta.

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 migration from northern to southern states 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

At the time of our acquisition, the property was roughly 94% 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.

Prior to our investment in the property, our partner, McDowell Properties, had already successfully renovated 142 (or roughly 28%) of the property’s units. They plan to spend an additional $3.8 million on renovating a portion of the remaining unrenovated units. Given the increase in rental income that they’ve achieved with the first phase of renovated units, we believe additional investment will drive further similar increases.

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 paid for 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.

  • Healthy local economy: Between 2010 and 2019, the Atlanta area’s population grew nearly three times faster than the national average. As the area continues to grow, affordability is becoming a top concern, making neighboring areas like Woodstock attractive to both renters and homebuyers.
  • 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.
  • Income-generating asset: The property was roughly 94% 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.