Parkside Apartments
Parkside Apartments is a 171-unit multifamily property in Lubbock, Texas.
The investment involved acquiring an underperforming asset with operational inefficiencies and below-stabilized occupancy, with a focus on improving performance through direct operational changes. We found this deal off-market and acquired it for $ 8.9 M.
Where We Started
At acquisition, the property presented several challenges:
Occupancy at approximately 65%
Inconsistent property management performance
Weak leasing execution
Deferred maintenance affecting leasing velocity
limited access to favorable financing due to operational instability
The primary issues were operational rather than structural.
Strategy
The business plan focused on improving performance through execution rather than reliance on market-driven rent growth.
Key areas of focus included:
Operational Stabilization
Improving leasing processes and enforcing accountability at the management level.
7%+
Target Cash-on-Cash Return
Property Condition
Addressing maintenance issues that were impacting tenant demand and retention.
Monthly / Quarterly
Distribution Cadence
Financial Positioning
Stabilizing income to enable refinancing into more favorable debt terms.
3–7 yr
Typical Hold Period
Strategy
The business plan focused on improving performance through execution rather than reliance on market-driven rent growth.
Key areas of focus included:
Operational Stabilization
Improving leasing processes and enforcing accountability at the management level.
7%+
Target Cash-on-Cash Return
Property Condition
Addressing maintenance issues that were impacting tenant demand and retention.
Monthly / Quarterly
Distribution Cadence
Financial Positioning
Stabilizing income to enable refinancing into more favorable debt terms.
3–7 yr
Typical Hold Period
Execution
Several key decisions were made early in the hold period:
01
Property Management
The initial management company was replaced within approximately three months due to underperformance.
02
Leasing
Leasing activity and conversion were closely monitored and adjusted based on real-time results.
03
Operations
The maintenance backlog was addressed to improve unit readiness and the tenant experience.
03
Oversight
Active involvement in operational decisions and continuous performance tracking.
The impact of these actions included:
- Occupancy increased from approximately 65% to 100% at peak, and stabilized at approximately 95%
- Operational performance improved to support refinancing
- Financing improved from approximately 10.3% to 5.2%
- Approximately 60% of investor capital was returned within ~18 months
These outcomes were driven by operational improvements rather than changes in market conditions.
Several decisions had a direct impact on performance:
- Early replacement of the property management company
- Prioritizing leasing execution over cosmetic upgrades
- Addressing operational inefficiencies before expanding capital improvements
- Timing the refinance based on stabilized performance rather than initial projections
Risk Considerations
Have more questions? Our team is always happy to talk through the details on a call.
This investment involved:
- Below-stabilized occupancy
- Operational uncertainty at acquisition
- Higher initial cost of debt
Risk was managed through:
- Conservative underwriting
- Active operational involvement
- Focus on controllable performance factors
This investment involved:
below-stabilized occupancy
operational uncertainty at acquisition
higher initial cost of debt
Risk was managed through:
conservative underwriting
active operational involvement
focus on controllable performance factors
Outcome
The property was stabilized operationally and financially, allowing for improved financing and partial return of investor capital while maintaining ownership.
Takeaways
Operational execution is a primary driver of performance
Property management quality materially impacts outcomes
Conservative assumptions provide flexibility during execution
Performance is created through decisions made after acquisition