In February 2023, we closed on a value-add opportunity that had potential written all over it—Serenity Apartments, an 18-unit property in Connersville, Indiana. It was an off-market deal brought to us by a broker who knew we owned a nearby property. The seller was a self-managing owner who had let operations slide, with one unit even occupied by their on-site maintenance guy. Vacancy sat at 38%, and rents were well below market rates.
Still, the bones were solid, and the cost basis made sense—especially with a creative deal structure. What followed was a fast-paced, eye-opening 18-month journey that reminded us just how important strong operations and thorough due diligence really are.
The Business Plan: Back to Basics
This wasn’t a flashy turnaround plan. The goal was simple: keep the good tenants, remove the bad, renovate the units, and push to market rents. Once stabilized, we planned to refinance between years two and three, pulling out our original capital while maintaining solid long-term cash flow.
But as it turned out, almost none of the tenants were paying—or staying. By the end of the first year, we had turned over 17 of 18 units. It was clear this wasn’t just a cosmetic rehab; it required a full-scale repositioning effort.
Lessons in Small Market Investing
We’ve had a lot of success in smaller Midwest towns—but Connersville, Indiana, taught us that not all small markets are created equal. The tenant pool here required significantly more screening, effort, and patience. It took twice as long to find qualified renters compared to our other markets.
On top of that, as we began turning units, we discovered just how many “Band-Aid” fixes had been done by the prior owner. Pipes, finishes, electrical work—you name it—looked fine at first glance but failed under closer inspection. This added nearly $100,000 to our renovation budget, a 50% increase over the original estimate.
Why We Sold
By mid-2024, the income was finally stabilizing, but we faced two looming roof replacements. With strong buyer interest, we had a decision to make: hold for long-term cash flow or exit with a solid return and recycle our capital into new projects. We chose the latter, opting for velocity over stagnation.
The Financial Snapshot
- Purchase Price: $792,000
- Sale Price: $1,175,000
- Hold Time: 18 months
- Invested Capital: $168,000
- Return of Capital & Cash: $334,000
- Equity Multiple: 1.99x
- Average Annualized Return: 58.11%
- IRR: 57.98%
Download the Full Case Study
You’ll get a detailed look at the deal structure, renovation timeline, financial strategy, and the biggest lessons we took away from this project. At Follow The Deal, we believe in full transparency—because investing with purpose means sharing both the wins and the wisdom.
