Friday, February 24, 2017

In with the old-Renovated apartments fill niche between pricey and dumpy

Renovated apartments fill niche between pricey and dumpy

Photos by Rose Baca/Staff Photographer
Perry Guest Co. bought and renovated 1960s apartments at 2902 Douglas Ave. in Oak Lawn. The small complex got a new exterior, landscaping, decorative lighting, and quality interior finishes and appliances.
Dallas’ close-in Oak Lawn neighborhood is seeing its biggest apartment boom in more than 40 years. Developers are putting up thousands of rental units to meet the needs of young professionals relocating to the area.

 Most of the apartments going up in Oak Lawn and nearby East Dallas are being built in place of older units that have been knocked down.

But not all of yesterday’s apartments are being traded for tomorrow’s construction.

Dallas-based Perry Guest Co. has been snapping up aging rental properties and giving them makeovers.

“We are taking the low end and making them pretty,” said Grant Guest, who’s busy with multiple rehab projects. “We have about 700 to 1,000 units.”

Even after the full-on fixup, Guest’s apartments rent for hundreds of dollars a month less than the new units being built a block away.

“Right now there is a discrepancy in the market — there is either the A-plus apartment or what we start with,” he said. “It’s either low end or high end.”

Guest’s projects aim for a different renter. He’s just finishing up a gut job on a 26unit apartment project on Douglas Avenue near Cedar Springs Road.

“This was built in the 1960s,” he said while giving a tour of the two- and threestory buildings.

He’s renting good-as-new units for $1,250 and $1,350. In the new apartments nearby, a one-bedroom starts at about $1,700.

“No, we don’t have the same amenities the big projects have,” Guest said. “But when someone is making $50,000 a year, saving $400 a month is huge.

“And not everybody wants to live in a 300-unit building where it takes you 10 minutes to park in the garage. They like the smaller buildings.”

That’s certainly the case for Kylene Law, who rents one of Guest’s Oak Lawn apartments.

“I looked around at all the places you can rent and didn’t want to do that,” said Law, a Pilates instructor. “I don’t want to be in some huge place where I don’t know who I live next to.

“The people who go into these units stay there and aren’t hopping around. I like renting from a family business that gives you more personal service.”

In many cases, owners of older apartment buildings in North Texas are getting larger annual rent increases than the newest buildings. A shortage of affordable housing in D-FW and teardowns of many aging rental units have put a pinch on that market.

Greg Willett of apartment analyst MPF Research says that for older apartments, rent growth averages 6.6 percent “with strong increases seen in every single neighborhood.”

“Class A rents are up less than 2 percent in Uptown, downtown and Oak Lawn, and slight rent cuts are occurring in the emerging North Oak Cliff and West Dallas pocket of activity.”

Guest is spending about $1 million to remodel the building on Douglas. It’s gotten a new exterior, landscaping, decorative lighting, and quality interior finishes and appliances.

“You have to put washerdryer connections in and do granite countertops,” he said. “And you have to have gated, secured parking.”

When he bought the rundown project, average rents were about $500 a month. Now they are more than twice that.

Guest typically spends about $40,000 per unit to overhaul the properties. He’s done two more in the next block on Douglas.

“They are tearing all these buildings down,” he said. “We are making them nice but affordable.”

Most of the properties Guest is revamping were built in the 1950s and 1960s.

“I just bought a building in East Dallas that was built in the 1920s. We are redoing all the hardwood floors,” he said.

In most cases, the renovations don’t go as far as knocking down walls or completely changing the exterior architecture.

“One building we did on Live Oak was so bad, we had to tear it apart,” Guest said. “But I try not to do that.”

He pools money from investors to buy the properties and then sells them after the renovations are done and they are leased to tenants.

“Everybody thinks what I do is crazy and these buildings are teardowns,” Guest said. “I don’t have much competition. Only a few people do what I do.

“We just bought a $10 million portfolio at San Jacinto and Bennett in East Dallas — 10 different buildings.”

Steve Brown/Dallas Morning News