423 on Main
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Historic vibes with a white tin ceiling and plank wood floors. Great for coffee shop, retail, or beer/wine tasting room as some some leading ideas.
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Located at the entrance to a historic Main Street near where most of the traffic comes through, the building is further made distinctive by a private alley alongside it available for outdoor patio.
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Downtown Ionia is the the essence of West Michigan’s ongoing expansion outward with other buildings being redeveloped along Main Street and other major local projects in the pipeline.
Purchased in 2023
The Green Building with Patio Vibes
At $265,000 in deployed funds, this deal is currently spinning of projected 7.3% ROI in 2024 ahead of its next transformation; adding a ground floor apartment to increase cashflow return and appreciation return.
History
We think it is as old as 1860’s, but the first known record dates back to 1884 as a saloon, 1907 as a vacuum store, 1914 as the Salvation Army Hall, 1920 a battery service station, 1924 a saloon again, and by 1949 a restaurant that likely was the Coney Island we heard was there up until the 1960’s. Hotdogs were prepared up front, steaming the windows enticing passers-by to stop in for a bite.
1,500 SF FIRST FLOOR RETAIL
875 SF customer area through a historic storefront entry, 625 SF back of house configured to your needs. Well located brick alley patio access.
TWO-STORY 2,200 3-BEDROOM LOFT ABOVE
The address in 1884 was 322
The Pitch
Ionia Michigan is a diamond in the rough with a lot of upside potential as Grand Rapids and West Michigan economy keeps roaring. Professionals and families alike seeking smaller town living and commuting into the city from this sleepy little berg for their mid-week in-office days. The beautiful drive along the banks of the Grand River into the city is one perk of all the recreational landscape in the area.
The Strategy
The project works standalone on the basis of the upstairs rent as-is. Once acquired, we will work diligently to get a ground floor commercial users in place to grow the return and increase the building valuation. The final stage is to reposition the upstairs to maximize rent based on what the market demand is; either split into additional units or renovate into a single luxury space. They key here is a 5 year horizon as Grand Rapids keeps growing and the entire region keeps coming along. This walkable downtown niche is showing signs that is ready to pop in its redevelopment giving us confidence in the acquisition
By the Numbers
Starting with a modest return in Year 1, it is projected to reach an annual cashflow return of 7.8% plus a 58% appreciation gain in the next 3-5 years.¹ Read how.
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$265,000 Initial Investment Purchase, Due Diligence, and Initial Repairs.
Maintain Upstair Lease Continue Upstairs Lease for Cash Flow
Produce Initial Cashflow Return of a Modest 3%
Promote Lease of First Floor Comprehensive Boutique Campaign and Pop-up Shop Promotion
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Secure $8-$12/SF Lease Targeting Coffee Shop/Co-work/Beer/Wine Bar Combination.
$75,000 Second Round Investment for Build Out
Produce Annual Cash Flow Return of 7.5%
Building Appreciation Return of 37% Asset Valuation of $460,000 against $340,000 Investment
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Seek and Attain Grants for Improvements and Renovations
$250,000 Third Round Investment to Rebuild Floor 2 and 3 into Multiple Apartments
Produce Annual Cashflow Return of 7.8%
Building Appreciation Return of 58% Asset now Valued at $840,000 against $590,000 Invested
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Reposition as Cash Flowing Investment Additional Maintenance and Capital Improvements are Planned to be Paid for Out of the Fund Reserve.
Option 1 - Carry at Stabilized 7.8% Annual Return
Option 2 - Refinance Your Prorate Share with a Bank to capture Your Appreciation Gain
Option 3 - Sell to Another Investor Seeking Cash Flow Focused Investment Opportunity
¹ All projections are subject to change, especially at this formative stage of acquisition due diligence and continuing as the development process unfolds.
The Fund Raise
Largely due to the trust and belief in our development model, we have already received enough presubscription funds to close the Acquisition stage. However, the Add Value and Maximize Stages have room. To be part of the first access group on the next opportunity, connect with us about sending presubscription funds to get the first crack at these advanced stages at future deals.
$590k
Total Investment Capacity
$340k
Presubscribed
$250k
Available
Acquisition
Add Value
Maximize
More Number
The projected overall deal performance before development fees are distributed is 21.32% IRR¹ indicating a strong capital placement.
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3.65% 5-year IRR if not changes are made with growth into 21% range in a 3-5 year horizon when a retail tenant is placed and second floor is repositioned. Increased cashflow from that additional rent produces better cashflow for a higher annual return but also a better sale price if sold opportunistically. This is because the building will effectively become worth around 50% more with these moves. Not factored in is appreciation gains as this street blossoms over the next 5-15 years. The key to this is that we are acquiring for $55/SF which is an incredible price point compared to the Grand Rapids market and construction cost index.
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1.72x 5-year with potential to be more in the longer term horizon.
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The key to this deal is time and promotion of the building with strategic capital improvements to maximize rent opportunity when the time is right. Early investors can gain a lot of the earl lift on the Value Add side and sell their positions to Core investors or finance with a personal garuntee as it strengthens or continue on the ride long term.
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$25,000 Minimum
3% Preferred Rate for Investors; I won’t get paid until we get retail to work in this space, so I am incentivized to get that done quickly and effectively.
¹ IRR Internal Rate of Return to quantify its annual cash-on-cash return on investment. It is an easy way compare this to other investment options annual return.
The Building.
A 3,815 SF three-story walk-up with ground floor retail in historic storefront and a two story loft apartment upstairs boasting two-story terraced roof deck. The building needs some love and has real potential to be a stunner with capital investment over time to maximize the rent generation.
The Neighborhood.
Ionia is a small town outside Grand Rapids that is on the path of growth as the city keeps expanding its metropolitan footprint. As housing costs continue rising families are starting to see areas previously ignored. That is positioning some of the smaller towns around the city to attract significant revitalization. A great example of this is Lowell, which sits between Grand RApids and this place.
The Region.
1,628,323 people call West Michigan home.
Grand Rapids, MI economy is undergoing sustained tremendous expansion outpacing the US economy by 2x. Given our regional economic strength, it is anticipated that if there is a recession nationally, we might not see it here.
Talent remains a top issue for businesses and our area boasts amazing amenities of Lake Michigan, over 80 breweries, dozens of coffee shops, and new restaurants all the time. This is the result of over 20 years of revitalization and billions of new investment in the city which has transformed the city into a vibrant destination for all age demographics from college graduates to young families and beyond.
“Grand Rapids is the #2 Destination for Millennials”
We now have a diverse and vibrant business community and a cultural amazing place to live. The result is an attractive destination for young people to bring their time and talents to. That is the driver behind Grand Rapids having a population growth while the rest of Michigan and much of the midwest to be declining in population.
The key statistic that explains that is that we have more people in their 30’s than we do over 65, which is a pretty amazing statistic that not the case for other metro areas like Detroit and the US as a whole. That means we have a stable working population which attracts more businesses and ultimately a net migration in, more amenities and culture, all in a positive feedback loop.
All of those moving in and starting families in that demographic needs housing, which we are desperately short on. By 2027 it is projected that we will be 35,000 houses short of what we need, meaning significant continued value appreciation and new construction is on the horizon, but so also is the lateral spread away from the city center into interesting commuter hubs such as this one.
“Grand Rapids is the #7 fastest growing economy in the U.S.”