Case Study: Melrose Apartments, Lebanon, IN
- Aug 14
- 3 min read
6th Acquisition and 5th Exited Full-Cycle Multifamily Property
This property was acquired in February of 2023, the 6th acquisition and 5th exited full-cycle multifamily property. It was sold in August of 2026 to a California buyer.
Built in 1972, Renovated in 2021
12 Units
Located 30 minutes north of Indianapolis, IN
Business Plan: Operate, Don't Renovate
Because the asset was turnkey, our business plan centered on operational execution rather than construction. The strategy was to maintain high occupancy, run the property efficiently, deliver a strong resident experience, and capture the rent growth we expected from the local employment boom. In practice, this made property management the single most important lever in the deal.
Execution & Challenges
Melrose produced solid cash flow, but it also taught us the operational realities of smaller assets — lessons we take seriously and share openly with our investors.
At just 12 units, the property was sensitive to vacancy. A single unit turning over represented more than 8% of the property's income, so even a few simultaneous vacancies had an outsized impact on net operating income and cash flow. Larger assets absorb that volatility; small ones feel every unit.
Management was our biggest challenge. Over the hold, we parted ways with two different property management companies whose inefficiencies were dragging on performance. We ultimately moved to a more experienced, more capable manager. That decision came at a higher payroll cost, but it was the right one — the property stayed largely full, and we grew both revenue and net income under stronger management. The tradeoff was clear: on a 12-unit asset, the revenue simply doesn't support dedicated, full-time onsite staff, which makes finding and keeping a great third-party manager both critical and difficult.
Despite these challenges, we were able to increase Net Operating Income on this asset from $78,284/year to $136,667/year, a 74.6% increase.
The Decision to Sell Early
At the 3.5-year mark, we brought a recommendation to our investors and held a unanimous vote to sell — a year and a half ahead of our original five-year plan.
The reasoning was disciplined, not reactive. The market had cooled somewhat from our initial projections, and we didn't believe waiting another 18 months would meaningfully change the property's trajectory. More importantly, we concluded that investor capital would be better deployed in one of our larger assets — 100-plus units with permanent onsite management and payroll — where operational challenges like the ones we faced at Melrose are structurally easier to solve.
Rather than hope a small asset in a slowing market improved, we chose to exit on a win and put the proceeds to work in a stronger opportunity. Every investor agreed.
Lessons Learned
Turnkey lowers capital risk but not operational risk. Buying a fully renovated asset protected us from construction surprises, but returns on any property still live or die on management and occupancy.
Small assets are hard to staff well. A 12-unit property can't support full-time onsite personnel, which makes it dependent on third-party management in a market where great small-asset managers are scarce. This experience continues to push our buy-box toward 100+ unit assets with permanent onsite teams.
Discipline beats hope. Knowing when to exit is as important as knowing when to buy. Voting to sell early and redeploy — rather than waiting out a slowing market — allowed us to lock in a full-cycle win and reinvest with conviction.
Financial Results
Purchase Price: $1.25M
Sale Price: $1.5M
Invested Capital: $387,882
Distributions: $98,061
Sale Proceeds: $463,340
Return on Capital to Investors: $173,519
Equity Multiple on Invested Capital: 1.45x
Realized IRR: 13.5% (vs 15% projected)
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