A troubled Super 8 motel has been transformed into 129 apartments in Madison, Wisconsin.
The motel was in rough shape and had a lot of crime and policy activity over the years, plaguing the surrounding residential neighborhood, according to local reports.
Wiseman Capital recently acquired the building, gutted it to its bones, and reconstructed it into the Sandburg Studios with apartments ranging in size from 277 to 340 square feet, with some units coming furnished. Rents are between about $975 and $1,125 per month. In comparison, the overall average rent in Madison is about $1,695, with studios averaging about $1,250, reports Zillow.
The project accomplishes the goal of creating “naturally occurring affordable housing,” or NOAH units, says Cody Wiseman, founder and CEO of Wiseman Capital, who wanted to develop Sandburg Studios without the restrictions that come with formal affordable housing programs.
“This is proving you can do this in the right situation,” he says.
Wiseman has done value-add multifamily acquisitions in the past but not a motel conversion.
He says he bought the building for about $3.95 million. He then put a significant amount of money into rehabilitating the building into apartments, using a standard construction-to-permanent loan through a local lender.
One of the biggest challenges involved in the installation of utility meters. The initial plans called for heating and electricity to be included in the rent, but a state law requires multifamily housing developments—but not motels—to have individual electric meters for each unit. The installation of the meters added to the costs and delayed the project about a year.
In addition to the apartments, Sandburg Studios includes community spaces, a fitness center, and a pool.
Leasing is ahead of expectations, according to Wiseman.
Sandburg Studios is located near a technical college and a new hospital. As a result, he hopes his project will pull in different renters such as students and traveling nurses. There are no income restrictions on renters.
NOAH projects are an important part of meeting a community’s housing needs just like conventional affordable housing, stresses Wiseman. “They all work together,” he says. “It’s not all one, and you can’t have the other.”
Courtesy Wiseman Capital
