Hipster Real Estate Developers Building for Millennials
Young developers John Chaffetz and Dave Enslow of Timberlane Partners are giving their fellow Millennials what they want: cool cafés, farmers markets and entertainment rooftops within walking distance.
The Seattle and LA-based firm purchases neglected apartment buildings in neighborhoods on the verge of becoming trendy and then renovates, raises rents (by 15% to 20%) and fills 'em up with young professionals lured in by the exposed brick walls and in-building yoga studios.
The apartments are often small studios or one-bedrooms; but that's OK, because young tenants will happily sacrifice space for trendiness. "The goal is for this to look like a Moroccan boutique hotel," John says about his latest project, a $7.2M LA Echo Park building.
The strategy has been successful for the past four years, producing a 24% return on the pair's first five buildings with annual yields for seven additional sitting at 11.2%. Its portfolio sits at $160M, up from below $80M just two years ago.
Adding to the Millennial spirit, about half of the investors are under 40. The bullish company, which claims its portfolio could hold for decades, could face risk, however, if markets peak or Millennials change their lifestyles. [Bloomberg]
