Nickolay Bochilo and the investment team at Bell Partners saw a unique opportunity to acquire a Columbia, Md. community for a value-add play. But what made this acq-rehab unique is that it had already been recently renovated.
The newly acquired property, Bell Columbia, underwent full interior upgrades in 2011 under the previous owner. While that renovation consisted mostly of modest interior upgrades, Bochilo, a senior vice president of investments, says the Greensboro, N.C.-based company would have been more interested in the property without the renovations.
And many of the community's potential buyers may have been turned off by the recent upgrades, since value-add opportunities are in hot demand in today's market.
“There probably would have been more potential buyers had the property not been renovated on the interior,” he says.
Bochilo and the team at Bell bought the 184-unit garden style property last month and are ready to tackle the community’s amenities through a light value-add plan.
“Our value-add proposition in this case is to upgrade common areas where we will focus on fitness and resident lounge areas,” he says. “We want to help the property compete against the competition.”
The property’s location was the main attraction for the purchase. Columbia is nestled between Washington, D.C. and Baltimore just off the parkway connecting the two major metro areas.
“The location has future growth prospects,” Bochilo says. “[Columbia] has relatively high barriers to entry for new competition so the amount of new supply in the area is very limited.”
The company plans to stay competitive by investing about $300,000 over six to nine months to give the clubhouse and leasing office a makeover and add a functional fitness center into the mix.
“We’re going to try to create some good connectivity throughout the clubhouse,” Bochilo says. “We’re in the process of thinking about that space and how we can program to bring people there. We’re thinking about how to activate that area where residents meet their neighbors and create a better sense of community.”
Over time, the company hopes the upgraded common spaces and modernized amenities will improve rents and deliver a return on investment in the “mid-to-low teens area”, according to Bochilo. Current occupancy stands at 99 percent.
“We don’t think rents will be $100 higher after we do this or that,” he says. “The strategy here is to make sure the property continues to be competitive in that marketplace.”
Lindsay Machak is an Associate Editor for Multifamily Executive. Connect with her on Twitter @LMachak.