BRMK Brooksville Residences: Red-Hot Growth in Hernando County
With the average rent rising from $700 in 2012 to a remarkable $1,240 in Q2 2021, Hernando County shows a very favorable multifamily rental market. Because Brooksville sits at the center of Hernando County, steady population growth has resulted in a vacancy rate of just 2.68%. It is worth mentioning there are zero deliveries and projects under construction in this market currently, which will make the subject a sought-after housing option.
We recently funded a $5.75 million acquisition and rehab loan of a 60-unit multifamily garden-style community composed of 11 single-story buildings situated on a 14.70-acre site in Brooksville, FL. The property was originally built in 1980 with a total of 60 units upon rehab, including (12) 1-bed, (36) 2-bed, and (12) 3-bed units. The residential buildings have been vacant since at least 2015 and are currently in poor to fair condition. None of the units or buildings are habitable or rentable and will require substantial renovation before the leasing process begins. Although this particular market is substantially smaller than standard industry minimum requirements, we were able to understand the unique market opportunity with current supply and demand economics and help our borrower execute on this opportunistic value-add multi-family project.
We were able to utilize our local market knowledge, and leverage our local relationships to navigate industry market restrictions, successfully funding this transaction. This served as a special scenario that not only extended our reach into the multi-family acquisition and rehab rental space but will help our borrower provide a significant rental housing need in a market with a significant shortage of supply to meet current demand.
This garden-style community will be the first rehab project in Brooksville in 10 years and shows a favorable long-term outlook. It is very close to the Brooksville town center and has a quiet suburban feel with many local businesses, a historic city center with some buildings from the 19th century, and a rich mix of local shops and national branded stores. Schools are just 0.7 miles north, a 15-minute walk, or 3-minute drive. Restaurants, museums, and public services are also accessible by foot or with a very short drive. The subject allows a fast access (10 miles) to I-75, the main highway in the area, linking Miami and Tampa to the south all the way to Atlanta to the north. In the immediate area, there is an adequate mix of established single-family communities situated on larger tracts of land. Multifamily uses in the form of apartments and for-sale townhomes are located to the east in the urban portion of Brooksville. Most of the existing multifamily projects are older, non-renovated complexes, many of which are affordable housing communities. Local employment centers are in Brooksville proper and in Spring Hill to the SW. Major private employers in Hernando County include Walmart, Publix, Winn Dixie, McDonalds, and Lowes. The largest public sector employers include Hernando County Schools, Hernando County Government, Southwest Florida Water Management District, the Sheriff’s Office, and the Board of Commissioners. There is a large amount of vacant developable land and nearby support facilities cater to new residential and commercial developments. A lack of new development may indicate minimal economic growth in the subject’s immediate area over the past few years, however, the larger real estate market is stabilized and has been improving incrementally.
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