Investment Overview

OFFERING OVERVIEW As the exclusive listing agent, Marcus & Millichap is pleased to present the opportunity to acquire a rare “turnkey” asset --- the Spring Valley Apartments, a 28-unit student housing / multi-family community --- that is “unimpaired by rent control.” A student population that moves every year or two allows the rent to be unimpaired by rent control. That is, the rent can be raised 10% per year with each vacancy – which is more than sufficient to be unimpaired. There are no comparable garden-style properties near American University. The Spring Valley Apartments are located between the American University and the Spring Valley retail center --- just a few blocks in either direction. The students indicate that they are 5 minute walk to class or a 5 minute walk to the retail center (restaurants, coffee shops, banks, laundry, gas station, etc.). The owner has spent roughly two million dollars on capital improvements over the past 10 years. Both the outside (new foam roofs, community decks, stairs, railings, bike racks, floodlights, security cameras), and the inside (AC units, electrical fixtures, flooring, plumbing, electrical, flooring, appliances, etc.) of the property have been upgraded. Consequently, the maintenance expense is relatively minor --- it is largely limited to plumbing stoppages and painting. In addition to the rent growth potential from improved marketing, solar panels will produce income of roughly $75,000 to $100,000 per year. Towards that end, a solar roof design drawing was prepared and high-value polyurethane foam roofs were installed in 2022. The property generally has a 100% student population and offers the lowest rent for the highest quality apartments. Because the apartments are the only town-house style apartments near the university, there is no low-rise competition --- only 15-story apartment buildings located on the other traffic impaired side of American University. Also, parking is free in the neighborhood versus paid parking at some of the comparable properties. Improving the market exposure with improved advertising will improve the rents. Word of mouth is often the reason that many students move from the high-rise apartments (Avalon at Foxhall) to the Spring Valley apartments --- town-house living is usually preferred and often commands a premium. THE ASSET The property has 28 apartments --- twenty-two 2-bedroom apartments and six 3-bedroom apartments. The apartments are separately metered –-the tenants pay for gas (heating and cooking) and electric (cooling and lighting) --- the landlord only pays for water and trash collection. As is the case with all town-house style apartments, some rooms do not have windows and therefore are considered dens versus bedrooms --- but are used as bedrooms. Ten of the apartments are fully furnished, which allow rents to be raised up to $1,200 per month, if the market will bear the increase. The furniture option allows the opportunity to raise rents independent of the rent control. THE LOCATION Spring Valley is a prestigious, high priced residential neighborhood that is removed from the traffic and congestion on the other side of American University. The Spring Valley shopping center has a complete range of stores (CVS, Starbucks, Crate & Barrel, restaurants, gas station, several banks, etc.) that are just a few blocks away. There is free, on-street parking in front of every building --- bike racks between the buildings --- and a reasonable walk to the Tenleytown - AU Metro station. The landscape has been replaced, enhanced, and upgraded to match the beauty and value of the neighborhood.