A Phoenix REIT draws on large and small investors to fund its multifamily renovation projects

In May 2024, the City Council of Mesa, Ariz., unanimously approved the zoning application for what is the first hotel-to-housing conversion conducted by Neighborhood Ventures, an eight-year-old real estate investment company based in Phoenix, whose business model utilizes crowdfunding from large and small investors for multifamily housing projects.

Venture on Country Club, the name of the Mesa project, is introducing 120 housing units (35 studios, 73 one-bedroom, one-bath units; 12 two-bedroom, two-bath units) into what had been an American Inn motel that was built on three acres in 1985 and which Neighborhood Ventures acquired in 2021. Since that purchase of what had become a community eyesore, the REIT has invested millions in repairing and renovating the units with new furniture, flooring, paint and appliances. The former hotel office has been repurposed into a coworking space, while the gym and pool areas have also been upgraded with new equipment and furniture. Community amenities include an indoor game room, spa, dog park, and barbeque area.

Manwaring said that when Neighborhood Ventures underwrites a project, it expects a return in the “high teens; at least 16%” annually.  It typically holds onto its real estate assets for three-to-five years before selling or refinancing. The Mesa project was “just about completed” when BD+C interviewed Manwaring in late August. It attracted more than 300 investors.

Going beyond superficial improvements

Venture on Maryland is a 78-unit multifamily property that Neighborhood Ventures’ acquired through a pre-foreclosure sale at $10.7 million. (It closed on this property last summer.) Neighborhood Ventures is investing $2 million in capital improvements to both the interior of units and exterior of the building, to enhance the property's value and appeal. As part of the renovation plan, the firm is also converting an existing office space into a residential unit, as well as repurposing the laundry room to create another unit. These additions will increase the property’s unit count by two.

Manwaring said that Neighborhood Ventures performs its renovation work in-house, only occasionally using outside architects. “When we go into a project, it’s a big commitment,” said Manwaring. “We go in with our reno team, property management, and maintenance.“ 

So far, Neighborhood Ventures is active in Greater Phoenix and Flagstaff, Ariz. It is currently looking for expansion opportunities in several other markets, including Las Vegas, Austin and Dallas, Florida, and the southeastern U.S.