Reawaken Capital Acquires Seven Atlanta-area Rent by the Room Properties at Below Market Value, Presenting a Strong Cash Flow and Appreciation Opportunity
Reawaken Capital has had a strong start. After performing its initial raise in its flagship fund and acquiring a portfolio of solidly profitable, single-family residential properties in the Kansas City, MO, Indianapolis, IN, and Birmingham, AL metropolitan areas, we acquired a portfolio of seven rent-by-the-room houses in the Atlanta, GA metropolitan area in the fourth quarter of 2024.
Rent by the room properties can be difficult to manage for an individual or inexperienced investor. The previous owner of these properties, an individual who was not a full-time property developer, acquired them in 2022 and had converted the single-family residences to maximize the number of bedrooms available. Due to poor property management, the previous owner was only achieving approximately 70% average occupancy and had to frequently deal with property management-related issues. This ambitious owner thus became a motivated seller.
Through his deep real estate connections and deal-making experience Reawaken Capital founder Dylan Peters identified this deal and obtained significant concessions and price reductions for the properties in the portfolio. On a portfolio basis, the properties were acquired for 29% below their 2022 sale prices, which we believe to be a considerable discount from market price. With new local property management in place, overseen by Reawaken Capital’s experienced team, we have been able to increase occupancy to near 80% in just a few months, with the ultimate goal of exceeding the local rent by the room average of 82% occupancy and achieving approximately 85% occupancy. Even at 82% occupancy, we estimate that the properties would achieve a 13.40% cash-on-cash return, which excludes appreciation.
Reawaken Capital is currently pending on an eighth property in the seller’s portfolio and intends to expand this strategy within the hot Atlanta real estate market, where home values have appreciated 7.6% more than the national average since April 2020 (according to home price indices from S&P CoreLogic Case-Shiller).
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Image credit: formulanone “Curving Green Residential Neighborhood Near Atlanta” via Flickr. Licensed under CC BY-SA 2.0.
