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Originally appeared inNew Mexico Apartment Report Vol. 5.2 - Q2’98
A few years ago I sold an apartment community to a good client of mine. Though careful planning, management, and a good business environment, his 226 unit community has thrived to the point that he considered an additional investment. Having built a substantial equity, last on his list of potential investments was a little fourplex in area formerly known as the war zone. So what changed his mind? Two things – the similarity of the smaller product to his current community, and the neighborhoods increased investment of time and money (see LINC article), both of which indicate substantial equity build up in a small amount of time. The concept was simple – purchase a fourplex in an area that otherwise has difficulty in obtaining tenants. Use the marketing efforts of the larger community to encourage spillover of under-qualified tenants into the smaller community. The result? Spectacular success. The small property has been 100% occupied in a market area that averages 75% to 85%. While other landlords in the neighborhood have been offering rental concessions, the tenants of this fourplex have a “special pass” to the larger community. With this pass, they can use the swimming pool and laundry facilities of the larger community at any time. The end result? The unused capacity of mental and fiscal capital has been transferred into an otherwise underutilized fourplex, enhancing the value of both communities and their neighborhoods. Interested in pairing up with a larger or smaller community? Call for a free development plan and/or introductory workshop.

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by Todd Clarke CCIM (www.nmcomreal.com/nmcomreal)
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