In January, M1 began renovating 320 N. McArthur Ave. in Macomb, IL. This property had previously been given an exterior facelift with new siding, roof repair and several new windows. The interior, however, had not been updated since the original construction, estimated to have been in the early 1900s.
The property consisted of three apartments, a 1-bedroom, 2-bedroom, and a 3-bedroom apartment. The potential rent for these three units was $1,250/month or $15,000 annually. However, based on its current condition it would have been very difficult to rent the 2-bedroom and 3-bedroom at market rates.
M1 redesigned the building, keeping the 1-bedroom apartment as is, but converting the 2-bedroom and 3-bedroom apartments into one 4-bedroom apartment with a computer room. M1 gutted the units, removing all electric, plumbing, and interior walls back to the studs. With an estimated completion date of July 15th, the new building will have all new electric and cable wiring, plumbing, fixtures, flooring, cabinets, and appliances. Our total renovation investment is budgeted and on target to be $35,000.
As of today, twelve month leases beginning August 1, 2011 have already been signed and the new rental income for the building will be $1,800 per month or $21,600 annually. Based on a cap rate of 10, this adds $66,000 in value to our property, giving us an 88.5% return on invested capital for this renovation.
This is an example of how M1 is delivering on its business strategy, buying nonperforming and poor condition properties, then improving the property and community through quality renovations resulting in an improved tenant experience while delivering solid financial gains for its share members.
Great job M1, I'm proud to be on your team!
BILL HOLSTINE
