Sold my 88-unit 55-plus at 6.1. Internet is what nearly killed it.

The fiber overrun makes sense to me. Trades background, and running conduit in a 2004 three-story with an elevator core is a completely different job from a two-story walk-up. Riser space is usually already full of whatever the original low-voltage contractor stuffed in there, and half the time the as-builts are wrong. Did you core new risers or fish existing?

$195k on 88 units is about $2,200 a door which is honestly not bad for that building type.

The $50 premium at purchase is what I keep looking at. Why was it only $50? Age-restricted with a community room and a walking loop should have carried more than that even before your capex. Was the prior owner just not marketing it as senior at all?

The variable that carried this deal is the exit cap, and it deserves naming as separately as @kestrel named it.

NOI went from $470k to $806k, which at a flat 6.1 cap is $5.5M of value creation from operations. Purchase at $9.4M on $470k is roughly a 5.0 entry cap, so the exit at 6.1 was actually cap expansion against the entry, and the deal still worked because the NOI growth was large enough to overwhelm it. That's a healthier structure than the reverse. If the entry had been at 6.1 and the exit relied on compression to 5.0, the same operational work would have produced a much thinner outcome and a far more fragile one.

On the internet spend, $61k buyout plus $195k fiber is $256k, about $2,900 per unit, against a rent lift of roughly $295 per unit per month across the building. That's a simple payback on the connectivity work alone inside a year, assuming the lift is attributable and not just market rent growth in that submarket, which is the assumption doing the most work in the whole post. Anyone underwriting a similar building should separate market rent growth from repositioning lift before crediting capex with the result.

The programming and amenity read is consistent with what drives demand in active adult product. Working residents expect connectivity comparable to what they have at home, and wellness features get used. Bulk services contracts are where that collides with the previous owner's decisions, and the termination terms vary enormously by contract and by state law on exclusive service agreements. That one belongs to a lawyer before you underwrite a buyout number.

@rena-expert's point about entry at 5.0 is the part I'd have missed. Kestrel, you paid up going in. Did that feel expensive at the time or did the age-restricted label just come with that price?

What happens if occupancy stalls at 89 instead of going to 96? You've got $1.1M in and the exit thesis needs the NOI. Was there a version of this where you hold four more years instead of selling at 24 months, and did the loan let you?

The exit survey is what got me, after five years running a service business. Three of four move-outs naming internet is only useful information because you asked. Most owners don't run exit surveys on 88 units and then can't tell you why anybody left.

What did the survey actually look like, and who administered it?

Coming from construction, the thing I'd want in the record is your capex contingency. $1.1M budget, and you named a $75k miss on fiber and a $61k unbudgeted buyout. That's $136k. What was your contingency line and did it hold, or did you fund the gap from something else you'd planned to do and cut?