Southwest Airlines
Executive Summary The M.G.M. Construction Company was formed ten years ago by me and a very experienced home builder named Martin Machin who wanted to get away from the large corporate home building companies in Houston to start his own company. For the past seven years, MGM has worked on remodeling and constructing houses built before 1950, most of which are located within a five mile radius of downtown Houston. Martin and I desire to remodel the kitchen and bathroom in units #1 and #2 in the West Gray Apartment House, circa 1932. With an occupancy rate over 83% for the past two years and rental rates at $.84 per square foot or $550 per unit, the apartment’s prime location to downtown and the recent revitalization of that area will have the West Gray Apartments being rented at $1.15 per square foot or $750 per unit. We propose that the two units undergo some renovations. The neglect on the inside of the house has kept the West Gray Apartments from being able to experience a substantial increase in rental income. We do not plan on a total renovation of the two units, instead focusing on the two most important areas, the bathroom and kitchen, the conditions there being the major factors in setting rental prices. The proposed schedule will have construction taking approximately 22 days, starting on December 1st and ending December 31st. MGM, Martin Machin and Jamie McDonald, will be performing all the necessary renovations and clean-up. We will also use all of our own equipment to complete the necessary electrical, plumbing, sheet rocking, and other remodeling work. The projected cost of the total renovations is $21,477 for all material and labor. This includes $1,700 for miscellaneous funds that will be refunded if not used during the project. Based on the average occupancy and rental rates for 2002 and 2003 at the West Gray Apartment House, we project an increase of $4,000 in rental income upon the completed renovations and move in of new tenants to the two units. With the revitalization of downtown Houston well under way and the new light rail to start running in early January, M.G.M. Construction believes unit’s #1 and #2 of the West Gray Apartment House will rent for $750 per month or $1.15 per square foot with the necessary renovations. This projection is a $200 increase per unit versus the past two years and a $4,000 increase in total rental income for 2004. Exploiting the great location of the apartments in relation to the downtown area and with an investment by Olympus/Nelson of $21,477 for the renovations, the investment would pay for itself in five and half years. Introduction The West Gray Apartment House in Houston, Texas, had an occupancy rate of 83.33% for 2002 and 2003. Rents in all four units are $550, approximately $.84 dollars per square foot. Now that the revitalization of downtown Houston is well under way, the average rental rates within a three miles radius of the downtown area for new apartments have jumped to over $1.25 per square foot. With the Super Bowl coming to town in January of 2004 at Reliant Stadium and the Toyota Center for Houston’s professional basketball team and concerts opening in early October, downtown Houston will be an exciting place to live.