In September 2022, we acquired Sterling Court Apartments, an 80-unit multifamily property in Frankfort, Indiana. This was one of our most strategic acquisitions to date—sourced off-market through a broker, and purchased from a retired automotive executive looking to exit. From the beginning, our goal was clear: execute a well-structured value-add plan, then refinance into long-term debt to create velocity of capital and maintain stable, long-term cash flow.
We acquired the property for $4.8 million, financing it through a local community bank with 80% loan-to-value and a construction line of credit for planned renovations. That initial structure gave us the breathing room we needed to update units, improve operations, and drive NOI.
The Game Plan: Renovate, Reposition, Refinance
Our strategy for Sterling Court focused on targeted renovations to enhance property value and justify market rents. We kept the original property management team in place—a decision that proved valuable, as their experience helped keep the property operating smoothly while we made upgrades.
The plan was to refinance between years 2 and 3, return most of our investors’ capital, and still hold long-term debt that allowed for attractive cash flow.
The Refinance & Results
The refinance was a success. We returned 75% of our original investor capital, and when combined with cash flow, investors had received 90% of their initial investment back within the first 18 months.
- Original Capital Invested: $970,000
- Capital Returned from Refi: $722,822
- Total Returned (Incl. Cash Flow): $874,497
- Remaining Capital in Deal: ~$100,000
- Anticipated Preferred Dividend: $6,000
- Projected Cash-on-Cash Return: 60% annually (not including surplus)
Real Investor Example:
- Original Investment: $155,000
- Preferred Payments & Cash Flow Before Refinance: $33,425 (9.6% annual return)
- Refinance Payout: $230,177.98 (148% of capital)
- Remaining Capital in Deal: -$108,602.98
- Anticipated Preferred Payment: $9,300
- Annualized Cash-on-Cash Return: Infinite
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