Company Profile
HC Realty began by two owners, Christine Moore and Hillary Poole. The owners both have a BBA degree from Texas A&M University. Their main real estate focus has been in the city of College Station, TX. The company enjoys the new opportunities the city of College Station brings. Every year there is an increase of a student population for the university, which allows an increase in demand for apartments and homes. HC Realty's new focus is looking into investing town homes located off University Drive.
Market Analysis
Sales Representatives from HC Realty will begin by researching the Brazos County area and figuring out what type of target market College Station brings in. We want to build relationships with people in the area and get the word out of our new design as quick as we can. Our main targeting strategies will be through home magazines, TV commercials, local College Station events, HC Realty website, and word of mouth. We will analyze our rent prices by comparing them with our competitors near by. We will strive to have our sales representatives be able to make a better deal with our customers compared to our competitors. HC Realty wants to give our clients lower prices with better quality.
Property Descriptions
The town home designs all have different structures, as well as different brick layers. Gateway Villa town homes are all 2 stories with the option of having either a 2 bedroom, 3 bedroom or 4 bedroom structure. There is a easy road access out of Gateway Villas to one of College Station's main roads', University Drive.
Financial Analysis
HC Realty wants to invest in town homes for a profitable business opportunity. The Gateway Villa town homes that HC Realty are looking to invest are being sold for approximately $28,000,000. We will be acquiring a loan from The Bank of Ozarks and the loan will be fully amortized over 25 years with a balloon payment at 10 years. Total expenses such as real property taxes, hazard insurance, maintenance, and interest expense will all be in collaboration with local municipalities. HC Realty will also be calculating the net income after taxes and projecting a Discounted Cash Flow Analysis. This investment will be profitable with a Net Present Value of $3,419,231 and an Internal Rate of Return of 13.41%.
Monday, April 30, 2012
COMPANY PROFILE
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| Owners: Christine Moore & Hillary Poole Texas A&M University Bachelor of Business Administration |
HC Realty began its real estate business in 2011 in the city of College Station, TX. Our goal is to eventually become one of Texas' largest real estate and investment companies. The office is located off of University Drive across from the campus of Texas A&M University. Not only do we find properties to invest in ourselves, but we also empower our customers with knowledge that will enable you to build a safe, financially secure future. Our realtors will help you do whatever research you require to determine the best investment for your unique goals. HC Realty is focused on investing properties such as town homes, house cottages, apartments, and residential homes. We will begin in the city of College Station and eventually move on to other cities such as Austin, Dallas, and Houston. Our upcoming project is investing in town homes in the Gateway Villas facility. The town home design is 2 stories with a 3 or 4 bedroom floor plan.
PURPOSE
To be an optimum business template for the real estate industry. HC Realty wants to optimize relationships, service and profitability.
VISION
To invest in different real estate properties all over the state of Texas.
MISSION STATEMENT
Build lifetime relationships with our customers and communities.
MARKET ANALYSIS
AREA ANALYSIS
Brazos County is home to many college students attending Texas A&M University as well as Blinn Junior College. The culture has always been known to be friendly, warm, and welcoming. The landscape consists of bluebonnets, farms, and new neighborhoods being built all over the county. Brazos County is located between the Navasota and Brazos rivers in southeast central texas. The county was named after the nearby river, Brazos River. Bryan and College Station play the major roles for this Texas county. The community consists of working people who are involved in the agriculture field, as well as students here for a good education.
PROPERTY ANALYSIS
In 2004, Gateway Villas was built in College Station off one of the main roads, University Drive. The first town homes had made a great investment which eventually led to the builders creating a second section in 2008. Gateway Villas is still continuing to grow and a third section is being built at this moment. The town home HC Realty is looking to invest 3 bedroom/3 bathroom or 4 bedroom/4 bathroom homes that average 1405 square feet. The estimated sales price is around $150,000.
The estimated local population in College Station consists of 96,661 people. The town homes are walking distance to restaurants, such as Cheddars, Chipotle, and Texas Roadhouse. Ulta, Pet's Mart, and Kirklands are stores that are also "walkable" from Gateway Villas. The schools zoned to Gateway Villas are College Hills Elementary School, College Station Middle School, and A&M Consolidated High School. The local colleges that many students attend are Texas A&M University and Blinn Junior College.
TARGET MARKET
Based on demographic research in the city of College Station, HC Realty has identified key consumer groups in the area that will help this investment process to follow through. Our primary focus will be on college students attending Texas A&M University or Blinn Junior College. Our secondary focus will be young couples that have just become newlyweds and beginning to start a family.
COLLEGE STUDENTS: This target market will be HC Realty's largest consumer group to focus on. Gateway Villa town homes are perfect places for College Students to spend their 4 years living in. The residency is big enough for them to create a "mini-home away from home." The town homes are also not overwhelmingly large to where students have a tough time maintaining it. The estimated student population is around 64,618 people, which is a huge number that HC Realty can set their main focus on.
YOUNG FAMILIES: Our secondary market will be very important as well to focus on. There are many newlywed couples in College Station that are starting their first career outside of college, or are continuing their education at Texas A&M University for their masters. Gateway Villas would be a perfect place for newlyweds to start their life, because it will save them a lot of money compared to buying a house right away. This town home also provides them two extra rooms for an office, baby room, or another TV Room.
BASIC EMPLOYERS
RENT PRICE COMPARABLES
HC Realty's goal is to sell and invest in a home that provides quality to their consumers, and sells at a comparable price amongst their competitors. We determined our rent prices by comparing them with Fox Run, The Woodlands, and The Lofts. The Fox Run is the most similar to Gateway Villas, and The Woodlands and The Lofts are nicer apartment complexes that have rent prices similar to Fox Run. All three of these facilities provide the same facilities Gateway Villas displays, except Gateway Villas does not provide a fitness center and a club house area. We will include the two pools Gateway Villas provides into the final rent price.
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| The Woodlands: 3 bedroom Rent Price: $1,971 $657/Person |
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| The Lofts at Wolf Penn Creek: 4 bedroom Rent: $2,500 $625/Person |
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| Fox Run: 3 bedroom Rent Price: $1,800 $600/Person |
After comparing and analyzing different rent prices, HC Realty determined the rent price they will place on their Gateway Villas investment. They want to compete with their competitor over at Fox Run, so they placed the rent at $1,250 for a 2 bedroom, $1,850 for a 3 bedroom, and $2,250 for a 4 bedroom. This will give their potential buyers to see a cheaper price placed in a better location in College Station.
GATEWAY VILLA'S AMENITIES
Pool Area: Gateway Villas provides 2 pools in separate ares of the facility. One of the pool provides more shade, while the other pool soaks up all of the sun. The first pool was created in 2004, and the other pool was made in 2008. Both pools are kept updated, and are cleaned throughout the year.
VACANCY RATE
College Station has an overall low vacancy rate. With the population continuing to rise, houses all over the town tend to sell quickly. As of right now, the College Station-Bryan area has a sales vacancy rate of 1.8 %. The older units and affordable sales have kept this overall vacancy rate quite low. In College Station there is an average of nearly 950 home sold a year and it is only going to continue to increase. Gateway Villas is part of this low vacancy rate. By having a strong target market to focus on, the town homes are sold and rented out right after they are put on the market.
BUSINESS COMPETITION
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| Style Craft Builders is the largest new home builder in the College Station/Bryan area. They have been around for 20 years and they have a well-known reputation for integrity, honesty, value and style. |
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Oakwood Custom Homes has been building new homes in the Brazos Valley area for over 33 years. They are known to build affordable luxury homes all over the area. There homes vary from 1,500 to 4,600 square feet. |
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| A real estate agency who has sold homes in the College Station/Bryan area ranging from $130,000 to $450,000. They help consumers with leases, permanent properties, and investment properties. SWOT ANALYSIS
STRENGTHS
WEAKNESSES
OPPORTUNITIES
THREATS
DEMOGRAPHICS
College Station has around of 96,661 permanent residents. From 1990, the town has continued to grow every year. With the increase in student population every year at Texas A&M University, the permanent residency will be forced to grow as well.
RACE DISTRIBUTION:
Over 70% of the College Station population is White residents. The smaller percentages consist of Hispanics, Asians, and Blacks.
EDUCATION:
POPULATION BY AGE RANGE:
The majority of the age range is from 18-24 years old.
HOUSEHOLD INCOMES:
A large amount of the population are students still finishing their college degree. This explains while majority of the population has an income less then $15,000.
INDUSTRY:
There is a diverse range of industries in the city of College Station. The largest industries include Education, Health, and Social Services. The smallest one includes the wholesale industry.
LOCAL SCHOOLS:
College Station consists of 8 elementary schools, 4 middle schools, and 3 high schools. Listed below are a couple names of the schools and where they are located.
College Hills Elementary School Creek View Elementary School
1101 Williams St. 1001 Eagle Ave.
College Station, TX 77840 College Station, TX 77845
A&M Consolidated Middle School College Station Middle School
105 Holik Dr. 900 Rock Prairie Rd.
College Station, TX 77840 College Station, TX 77845
A&M Consolidated High School College Station High School
1801 Harvey Mitchell Parkway South 4002 Victoria Ave.
College Station, TX 77840 College Station, TX 77845
COLLEGE STATION AMENITIES
RESTAURANTS:
Family-owned and chained restaurants are all over the area of College Station. The newest addition to the city has been Chuys, BJ's, and Lupe Tortilla. These 3 restaurants has already taken a lot of business from the local owned restaurants. However, Layne's, Cafe' Eccell, and Cenare are all local restaurants that do significantly well.
Favorite Consumer Restaurants:
1520 Harvey Rd.
College Station, TX 77840
1512 Harvey Rd.
College Station, TX 77840
101 Church Avenue
College Station, TX 77840
ENTERTAINMENT:
From Texas A&M football games to music entertainment at Wolf Penn Creek Amphitheater, College Station provides great entertainment for family and friends.
Texas A&M Football: SEC Conference
Wolf Penn Creek Amphitheater
Hurricane Harry's
Hosts musicians such as Randy Roger's Band, Josh Abbott Band, and Aaron Watson.
ECONOMICS
The local unemployment rate in College Station, TX is 6-7%. The low rate has to do with Texas A&M University providing new jobs every year for permanent residents.
LIFESTYLE CHARACTERISTICS
High Community Involvement: College Station residents are very involved with their neighborhoods and communities. They gather together at neighborhood bbq's, church, tailgating for football games, and school events.
Friendly: "Howdy" will most likely be the first word you hear come out of a local resident's mouth. They make visitors feel at home, and will not hesitate to help any one if they are lost.
Educated: With majority of the population attending or working at Texas A&M University, the population of College Station is highly educated.
Conservative: There is a high % of resident's that fall under the Republican crowd. Majority of consumers are old-school and do not change their values very much. For instance, our own Governor Perry attended Texas A&M University.
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PROPERTY DESCRIPTION
MAP OF BRAZOS COUNTY AREA
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| Brazos County is 585.5 miles surrounded by Robertson County to the northwest, Burleson County to the southwest, Washington County to the southwest, and Grimes County to the east. Brazos County includes the towns of College Station, Bryan, Kurten, Millican, and Wixon Valley.
MAP OF SPECIFIC PROPERTY
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| Location: Forest Dr. College Station, TX Elevation: 440 ft above sea level |
PICTURES OF PROPERTY
LAYOUT OF INTERIOR
Square Footage of Property: 1456 / unit
PICTURES OF INTERIOR FINISH OUT
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| Kitchen View 1 |
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| Kitchen View 2 |
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| Downstairs Bathroom |
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| Downstairs Bedroom |
LEGAL DESCRIPTION
GATEWAY VILLAS, BLDG 1, UNIT 441
SIGNAGE
Once we buy the town home properties we will be placing signs in different areas of College Station. The main sign will be in front of the town homes for buyers to view our contact information. We will also be placing signs in front of Gateway Villas entrance as well as one off University Drive. The sign will be catchy to the eye and it will be lit up so potential buyers will be able to see it at night. The image below will be an example of one of our signs that will display our company name, town home image, and address.
ACCESS
There is two easy accesses for potential buyers to view the Gateway Villa town home. The first one is coming from University Drive and turning left onto Forest Drive. This will be how majority of consumers will enter, and they will be able to see the great atmosphere of stores and restaurants before entering Gateway Villas. The next entrance will be to turn right off Highway 6 and enter the shopping department. This will lead consumers into another entrance into Gateway Villas.
INGRESS/EGRESS
There are two ways for consumers to ingress and egress to the property. One of the entrance and exits is on the left side and the other is on the right side. This allows all the town homes to have close access to the main road. Many of the town homes are actually on the same street as the entrance and exit out of Gateway Villas. It is very easy to access and leave this property. The roads are quiet and it is never a challenge to back in and out of a parking lot.
VISIBILITY
Gateway Villas has a visibility different then other town homes and apartments. When people drive into the area they will notice the town homes all appear different amongst one another. This allows the town homes to bring in a uniqueness no others in this town behold. Consumers may not see Gateway Villas on the main roads, but when they do come through the neighborhood, they will leave with a visual they have not seen before in College Station, TX.
FINANCIAL ANALYSIS
OVERVIEW:
HC Realty has performed an comprehensive financial analysis of the proposed Apartment Complex and we have concluded that it will be a viable business opportunity. The financial analysis was conducted based on the HC Realty's most likely ProForma. By using the most likely ProForma, our team was able to determine a realistic projection
FINANCING:
In order to acquire funding for Gateway Villas, we are going to obtain a loan from The Bank of the Ozarks. The following numbers are representative of similar market averages.
Amortization Period: 25 years, 300 months
Interest Rate: 4.5%
Loan-to-Value: 65%
Discount Points: 1% of loan amount
Holding Period: 10 years
Acquisition Costs: $28,007,482.64
Selling Costs: 4% to our Investment Sales Broker at Holiday Fenoglio Fowler
"Going In" Cap Rate: 6.9%
Calculated using the Extraction Method utilizing Comporable Sales
"Residual" Cap Rate: 7.15%
Unknown market conditions may exist in future thus we have added 25 basis points to our Going In Cap Rate.
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