The Jaxon Apartment Homes Offering On RealCrowd - 17.3% to 18.1% Target IRR

Private equity real estate investment platform RealCrowd announced an offering for a multifamily apartment complex in the Dallas-Fort Worth suburb of Frisco, Texas.

The Jaxon Apartment Homes is a 240-unit multifamily project with considerable value-adding potential. The complex’s amenities include a swimming pool, an indoor common area, business and fitness centers and an outdoor patio area with a grill. 

Frisco is the fastest-growing city in the Dallas-Fort Worth metropolitan area and among the fastest-growing in the country. Over the course of the last nine years, the city has seen a 71.1% increase in population causing a surge in housing demand. 

The property was purchased for $41 million — $3 million below the appraised value, giving investors walk-in equity. Additional value-adding will come from planned upgrades to the interior and exterior, allowing the owner to raise rental rates to match the market. Currently, the average rent at the Jaxon is $1,145 while the market average is $1,338.

The new owners expect to command a $200 rental increase on 87 units (36%) after completing the upgrades, which include stainless steel appliances and new cabinets, countertops, backsplashes and flooring. Additionally, 144 of the apartments will receive a washer and dryer for a $50 monthly premium while 20 units will receive pet yards for a $125 premium. The budget includes $1.6 million that will be used for exterior renovations to the amenities, landscaping, gate repairs and improved lighting. 

The deal’s sponsor, CAF Capital Partners, has mitigated risk factors related to operational costs and interest rate. 

According to RealCrowd, ”By having in-house property management, CAF is able to mitigate many of these risks and have clear insight into each property’s performance. CAF Capital has instant communication, control and ground-level insights with CAF management.” 

The operators have purchased an interest rate cap so investors won’t be vulnerable to market pricing volatility, given the floated rate. 

• Minimum investment: $50,000
• Target internal rate of return (IRR): 17.3% to 18.1%
• Target equity multiple: 1.6x to 2.1x
• Target cash yield: 1.29% in year one; 4.8% in year two
• Target investment term: three to five years

Get details on RealCrowd offerings

Founded in 2011, Dallas-based CAF Capital is a real estate company that specializes in the multifamily value-add sector. The historical performance of the real estate firm includes a 22.5% IRR and a 1.8x equity multiple. 

CAF’s assets under management are valued at $2.25 billion. The group owns and manages 67 communities and 20,631 units across Texas, Arizona and Oklahoma, including 30 properties in the Dallas-Fort Worth area.