NY investors plan $43M of renovations of Section 8 apartments in Houston

The Life at Parkview is one of three Houston properties Olive Tree Holdings is upgrading this summer

Olive Tree Holdings Kevin Marshall Moran with The Life at Parkview
Olive Tree Holdings Kevin Marshall Moran with The Life at Parkview (Apartments, Olive Tree Holdings, Getty)

A New York-based multifamily operator focused on Section 8 and affordable housing has renovations planned for at least three of its Houston apartment complexes.

Olive Tree Holdings has put $43 million towards renovating three of the twelve properties it owns in the Houston area.

The latest Olive Tree property getting an update is The Life at Parkview, a 309-unit apartment complex located at 2730 Lafferty Road in the oil refinery town of Pasadena, 17 miles southeast of Houston.

Olive Tree plans on spending $10 million on updating the property, which was appraised at $11.8 million by the Harris County Appraisal District in 2021. The complex’s buildings are getting roof, window, plumbing, and HVAC upgrades.

The Life at Parkview, which has a mix of one, two, and three-bedroom apartments available to prospective tenants earning up to 60% of the Area Median Income (AMI) will also have new flooring, counter and vanity tops, cabinet fronts and accompanying appliances.

Construction is expected to be finished in the second quarter of 2023.

The update of The Life at Parkview comes on the heels of a $7.8 million update of the $7.8 million 312-unit The Life at Westpark located at 14100 Rio Bonito Road in Houston. Olive Tree has $25 million slated for The Life at Grand Oaks, a 556-unit complex located at 5500 DeSoto Street.

Olive Tree purchased The Park View and Westpark in 2019 and Grand Oaks in 2021, Bel said.

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In other cities, Olive Tree has often purchased properties, rehabbed them and sold them on at significant profit. But the company has no plans to sell these Houston properties in the near-term, said Ian Bel, managing principal and CEO of Olive Tree, in an email to The Real Deal.

“These properties are affordable, and we recognize the need for more workforce housing options in Houston and strongly believe in the Houston market,” Bel said.

Olive Tree Holdings currently owns 10 properties in Houston, compared to two in Dallas-Fort Worth, and the firm plans to make more acquisitions in the Bayou City.

“Our team is very bullish on Houston and plans to continue our work in the area over the coming years,” Bel said.

With Houston’s apartment vacancy rate at a 10-year low, a “subdued” apartment construction pipeline, many multifamily investors find Houston to be an attractive opportunity, according to Bel — especially at the lower end of the market. Compared to Austin and Dallas, Houston has more low-income residents, which makes the city a prime market for investing in class C and D apartments, he said.

Bel said that Houston’s lower rents actually skews new investment in a way that creates a greater need for affordable housing — a niche where he says Olive Tree can fill a gap and make consistent returns.

“Due to lower income levels, Houston has lower rents than Austin or Dallas, this makes it less attractive for new development given the similar construction costs,” Bel said. “New housing that is developed is predominantly targeted towards high-income individuals and families, creating a chasm of underinvestment where it is needed most. We seek to bridge this gap by creating and preserving long-term rent-restricted affordable housing for the communities and families that need it most.”

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