LAKEWOOD PARK
Lexington, KY.
LAKEWOOD PARK
ROOM RENOVATED: Apartment bathroom
SIZE: 50 square feet
CHANGES: Rooms were totally gutted and replaced with new plumbing, wiring, HVAC systems, lights, fixtures, hardware, and mirrors
COST FOR IMPROVEMENTS PER BATHROOM: $3,500
INVESTMENT PER UNIT: $50,000
RENTS AFTER REHAB: One-bedroom, 900 square feet, $899; two-bedroom, 1,100 square feet, $1,059; three-bedroom, 1,400 square feet, $1,359
RENT INCREASE PER UNIT: $600
PRE-REHAB OCCUPANCY: 30 percent
POST-REHAB OCCUPANCY: 90 percent
COST PER SQUARE FOOT/ROI: $45/18 percent
MFE ARI: B+
THE SITUATION: The 330 mid-1970s apartments at Lakewood Park needed remodeling, especially 135 of them located by a reservoir, which were in the worst condition and on the most prime property. But the upside was that the developer—also the site manager, Andover Management Group—obtained the property at a good price; the shell was in good condition; and the development stood in a prime Lexington location, says Brett Wilson, Andover’s chief financial officer. The goal was to move all the units from the low end of the market, at under $400 in rent, to Class A, for $1,000-plus a month, with an anticipated upswing in occupancy from 30 percent to 90 percent.
THE CHALLENGE: After deciding to tear down the 135 units in the worst shape, Andover still needed to determine whether to build apartments, condominiums, or assisted-care senior Âliving in their place.
THE RESULT: The company is still trying to decide what type of housing stock to build by the reservoir. But in the meantime, it moved forward and redid the remaining 195 apartments—improving their interior features and overall aesthetics, which allowed Andover to increase monthly rents by $600. Wilson estimates that his company will spend a total of $10 million. Shared amenities are also being overhauled and include a clubhouse, walking/jogging trails, and pool. Using the company’s own construction team has helped keep down costs, Wilson says.
