2023 Real Estate Investment Highlights

We made this blog post to keep people up to date on our real estate investment highlights from the past year. 2023 was a great year for us. There were some ups and some downs but at the end of the day we learned a ton and are having a lot of fun in the process. Here are a few of the highlights from Stowe Capital Group from 2023!

Investment in The Chateau Dijon Apartments 

(425-Units) via New Holdings Company

Stowe Capital made a new investment this year in a 425-unit apartment building in Houston, Texas. This time we created a holdings company and invested in this deal via that new entity. (Read about the advantages of holdings companies)

Chateau Dijon Apartments is a 425-unit property in Houston, TX. The property consists of 18 buildings with a range of 1,2,3, and 4-bedroom units with a weighted average unit size of 955 square feet. The investment strategy is to reposition it to a Class B+ asset from a B-through an extensive renovation program focused on upgrading the property’s interiors to push the asset to a level above that of comparable properties in the submarket. 

This deal came about because the previous owner was in a distressed situation due to rising interest rates. The debt he had on this deal had become too expensive and he was forced to sell. This created the opportunity to acquire the property at a discount.

Unit Rehab Completed at 11 Alexandia Drive and Condo-Conversion Process Started

This year we focused on re-habbing the interiors of 11 Alexandia drive in Nantucket to justify an increase in rents. We re-painted the units, put down new floors, and re-habbed the kitchens and bathrooms. After completion, we were able to attract some fantastic new tenants and increase the rents...So success!

We also decided to start the process of converting the 2 duplex units at Alexandia into individual condominium units. This involves having the property surveyed, obtaining a site plan, and having a lawyer submit documents to the state to (hopefully) get them approved and to be able to sell the units individually as condos. We are currently about halfway through this process and feel that having the ability to sell one or both units in the future as condos could have some significant upside potential. Fingers crossed on the approvals...we'll keep you posted!

Passing on an Off-Market 4-Unit Deal

This year we had the opportunity to purchase a new off-market 4-unit property on Nantucket via a seller who've we've purchased a property from in the past.

At first glance, this deal appeared to be a home-run. It appraised for far more than our agreed-upon purchase price and is well-positioned to capitalize on the housing shortage on-island.

However, after numerous meetings with banks, private lenders, and investors, the deal proved to not be the home-run that we initially thought. The lending environment in the second half of 2023 proved to be extremely difficult. Rising interest rates and uncertainty about the future led many banks to be extremely conservative in their underwriting. The loan offers that we received were not going to allow us to get the returns we had hoped for and we ultimately ended up passing on the deal.

Although we decided in the end to pass on this deal, it was a major learning experience for us. We got intimate knowledge of the current lending environment and established new relationships with bankers and private lenders that we could potentially work with on future deals. Plus we learned that not everything that glitters is gold (as they say). We learned that you really need to dig into the specifics of a deal to uncover just how good (or bad) the deal actually is. Just because you really want to swing at a pitch doesn't mean you should. But hey, no worries! Today's a new day and there are more opportunities out there.

New Sliding Door & Participation in the "Lease to Locals" Program at Macy's Lane

This year we made an improvement to our Macy's Lane property in Nantucket that we'd been wanting to make for a while. We installed a new sliding door that opens out to the new deck we recently built off the back of the house. This improvement adds a ton of natural light to the top unit and gives it a much more "open" feel. Upon entering the front door you can now see out to the back deck which makes the unit appear much bigger and much more attractive for entertaining guests. We're super psyched with how this turned out!

Upon making this improvement we decided to remove the unit from Airbnb and participate in a new on-island program called "Lease to Locals." Lease to Locals is an innovative new program that financially incentivizes homeowners to rent their properties to local families.

Other Updates:

Setup Holdings Company: This year we set up a holdings company to own investments and make future limited partner investment deals. There are a number of tax and legal benefits to creating a holdings company and we're happy to have an extra layer of protection on our assets.

Analyzing Deals in Carolinas: With our network of brokers sending us deals this year we were able to carefully analyze numerous apartment building deals in our chosen Carolina markets. With the current environment, it's been a difficult time to find deals worth investing in. That being said we've started to become experts in those markets and are better prepared to identify a great deal when we ultimately come across it.

Group Coaching with Matt: We continue to keep a relationship with our mentor and friend Matt Picheny. Matt has been a huge source of education and inspiration for us over the past year. As a result of our group coaching with him, we've also met many like-minded individuals who are on the path to financial freedom via real estate investing.