I have been presented with an opportunity to invest in 2 syndications: 1) a 500 unit Garden Style (advertised as Class B) apartment community located in the Peachtree Corners neighborhood (around Hwy 140 and 141) of Norcross Georgia and 2) a 200 unit (what looks to be Class C) apartment community at Hillandale Drive near I-10 in Lithonia, GA 30058. Both of them are offered as value-add plays based on a light reno which is supposed to result in rent increases of $115 to $150 per unit.
I have my own thoughts on where I want to be in terms of property quality but I wanted to see if any investors local to the area or knowledgeable about the area could offer any opinion on what class these two neighborhoods/areas are and which of them would be more resilient in an economic downturn.
I would agree with your current classes that you have for the areas in general. Without looking at the actual complex or neighborhood it is difficult to be more specific. I would certainly rank Norcross higher than Lithonia as income is higher in Norcross. If you don't mind me asking what are the CAP rates for these deals?
Peachtree Corners is very nice, a lot of high end commercial development in the area and the proximity to downtown Norcross is really convenient as far as value for location. They host a lot of public events and the public green spaces are beautiful. It has come a long way in the last 15 years. As long as I've lived in Atlanta, however, Lithonia has always been exactly the same.
The Devil is in the syndication's details and the purchase price and details of the deal. The Lithonia deal may have a higher cap rate (as it should) where the Peach tree corners may be higher appreciation following rent raises (commercial does not appreciate for any other reason but by cap rate compression PLUS NOI increases).
Is the syndication debt only, cash flow only or a mix of appreciation (at the end) and percent of cash flow as it increases..
Lots of syndications benefit the syndicators mostly, some are balanced and are win-win for the investor as well. Its all in the fine print, AND the goals of the investor. Some Chinese just want capital preservation, me I would not invest in any deal that was not at least 20% cash on cash to ME... And everyone else is all in between these 2 points.