June 9th, 2023
After rebooting Tempe retail center, Neighborhood Ventures shifts focus to multifamily
Two years after Neighborhood Ventures started raising funds to purchase an underperforming Tempe strip center, a key tenant is now open for business at the revitalized project.
Neighborhood Ventures, a Phoenix-based real estate crowdfunding company that specializes in value-add investments, raised $1 million from 167 investors to revamp a retail strip center at Mill Avenue and Broadway Boulevard, which is home to a newly opened Dunkin' Donuts and Burger Rush. The property is now known as Venture on Broadway.
A 3,850-square-foot space remains to be leased at the center. Once that happens, the project would be considered at the "cash flow" stage, and the investors will start to be paid back. Neighborhood Ventures will then look to sell the property and complete the "life cycle" of its investment process.
"Our investors tend to be working folks and they might invest $5,000 or $10,000 and not $200,000. They like the fact that they get the first 12% back," said Jamison Manwaring, co-founder and CEO of Neighborhood Ventures. "As the development company, we don't get paid until it has successfully liquidated at the end. The first 12%, including all the cash flow from the rent, goes to the investor. Once the investor has gotten 12%, whatever is left over is our profit."
Ideally, the company raises enough money to close on its purchase. Manwaring said the company's first project took six months to raise the capital needed to close, but Neighborhood Ventures is seeing the process move quicker these days.
"It's gotten easier because we have a lot of repeat investors," said Manwaring. "On one side, we're working to put together our underwriting [to market] to investors. On the other side, we're working with a seller for the closing. We try and time those up so we'll have the capital ready to close."
Six of Neighborhood Ventures' 15 projects have gone through the full "life-cycle," meaning the properties have been liquidated and investors have been paid back along with their return on investment.
Neighborhood Ventures looks to multifamily sector
When the life cycle completes at Venture on Broadway and is liquidated, Neighborhood Ventures will focus more on the multifamily sector. Manwaring said the company will look at submarkets and neighborhoods that are poised for growth.
Neighborhood Ventures is currently raising $1.4 million for 30 apartment units in East Phoenix, which the company will put about $20,000 into each unit, in turn meaning that they will be able to add about $400 a month to the rental rate.