In October 2022, we acquired Georgetown Apartments, a 26-unit property located just outside Kokomo, Indiana—a region buzzing with job growth thanks to a new battery plant development. This deal marked the third acquisition under the Follow The Deal umbrella and presented both exciting potential and hard-earned lessons.
The property included 25 apartments, 3 garages, and a single-family home, all purchased from a seller with in-house management, maintenance, and contract services—making their reported expenses appear lean. We were able to negotiate a better price due to softening seller expectations and took the property down on-market through a broker connection.
The Plan: Soft Value-Add With Strategic Exit
The business plan was focused on light renovations—new paint, flooring, lighting, and updated vanities or cabinets as needed. We aimed to evict non-paying tenants, replace them with market-rate renters, and ultimately refinance within 2–3 years to recapture most of our capital. A key piece of the strategy was also to sell off the single-family house separately, creating a win-win for long-term equity and cash flow.
The Challenges: Appraisals, Turns, and Third-Party Management
We’ve learned over time that appraisals can make or break a deal. While our original loan terms included a construction line of credit, the appraisal came in lower than needed. This eliminated the line of credit and put pressure on our reserves from day one.
We also expected to turn 5 or 6 units early on. But over 18 months, we ended up turning 22 of 25 apartments, which drastically increased renovation costs. Add in a new roof and other capital expenditures, and suddenly our reserve strategy had to be rewritten.
To address the funding gap, we secured a private loan from one of FTD’s managing partners and re-appraised the property. That unlocked a $120,000 line of credit—just in time to steady the ship.
Perhaps the biggest misstep? Relying on third-party property management for the first 11 months. The lack of focus and subpar performance in leasing, upkeep, and tenant management slowed our momentum. Once we transitioned operations to our in-house team at Thrive Property Group, results began to improve—but the early damage had a lasting impact.
The Exit and Beyond
Despite the bumps, the property still delivered above-average returns:
- Purchase Price: $1,450,000
- Sale Price (Apartments Only): $1,850,000
- Hold Time: 22 Months
- Invested Capital: $307,500
- Return of Capital & Cash: $397,996
- Equity Multiple: 1.24x
- Average Annualized Return: 12.50%
- XIRR: 12.57%
The single-family house remains in our portfolio under a lease-to-own contract and is expected to sell for $135,000. Proceeds from that sale will be distributed at a later date, with a Phase 2 case study update to follow.
Download the Full Case Study
At Follow The Deal, we don’t just share the wins—we share the lessons. Dive into this case study to see how we navigated real-world obstacles and still came out ahead.
