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Cherry Mountain Townhomes
Forest City, North Carolina
Cherry Mountain Townhomes consists of five sizable townhouse units located in Forest City, NC, where we have management staff in place for several other properties. The townhouses are located on a very pleasant street, in a nice neighborhood and are convenient to the local downtown area. Each unit is 1200 square feet consisting of two bedrooms and one and one half baths. Units now rent for $500 per month. Tenants pay utilities and water. There is more than ample paved parking on the site. The construction is brick on concrete slab. The roof is in good condition. Tax Assessment is $213,800.
the project was "purchased" using a lease/option from a distressed seller who had no capital to renovate three of the units. We net lease the property paying all related expenses. We have a five year option to purchase at the mortgage balance at the time of exercise. The seller gets 15% of the profit at sale. For our protection, the option is recorded. This structure allows the present financing to remain in place in this market where such financing is virtually impossible to find. We will make "pass-through" payments for the mortgage, insurance and property tax on a monthly basis.
This current mortgage balance is $134,820 equating to about $26.960 per unit. At the end of 5 years the balance will be $106, 820 equating to about $21,200 per unit. In post-crash 2010, we sold four apartment properties within 12 miles of this one for per unit sales prices between $31,000 and $32,500. They were of smaller size and less quality than the subject. We are getting an excellent return on investment, some tax shelter, the benefit of the amortization of the mortgage during the holding period, cheap leverage, and a 5 year "free look" at the appreciated value.
Rutherford County is our base in the Carolinas and has for several years proved to be an excellent rental market. Affordable housing is in short supply as it is nearly everywhere. Nearby is the NC data center and the new 1,000,000 square foot Facebook Data Center.
NewLeafe owns 100% of the leasehold interest.