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The Central Park at Craig Ranch apartments have a resort-style swimming pool, a workout room, a tenant lounge and a game room.
But what’s really caught tenants’ attention is an offer to get back up to a year in rent.
That’s right. The owners of the McKinney rental community — a partnership that includes Farmer Branch-based Megatel Homes — are offering to refund up to 12 months’ worth of rent if tenants buy one of the company’s new homes.
Megatel, which sells between 1,200 and 1,400 houses a year in Texas, sees the unique rental plan as a way to expand its operations into rental apartments while boosting its traditional new home sales business.
"We think this is a game-changer," CEO Zach Ipour said. "We think we are creating a bridge between single-family homes and multifamily. This is a way to increase our home sales and to support our multifamily investments,. Currently we are working on more than 2,000 units in multifamily developments."
Ipour said Megatel is eyeing new apartment developments in Dallas, Rockwall, Prosper and Fort Worth. And the company intends to build another 250 units at Craig Ranch in McKinney.
Megatel partnered with the builder of the Central Park at Craig Ranch apartments, which opened last summer. "We came in and partnered with them to test the idea to see how it goes," Ipour said.
Since kicking off the "12 months rent on us" program, Ipour said leasing in the project has accelerated.
"Our website traffic and our foot traffic has increased significantly," Ipour said. "We believe we are going to get to 100 percent leased on this property in the next 60 to 90 days. "
Ipour said Megatel is expanding into the multifamily business to insulate it from dips in new home sales.
"Megatel up to now has mostly been focused on building homes," he said. "A problem for homebuilders is when the market slows down, you are exposed to the downturn.
"In the fourth quarter of last year, it was a wake-up call for me that the market had slowed down," Ipour said. "When there is less demand for for-sale homes, we shift our investment for more multifamily development."
Ipour and his older brother Aaron founded Megatel more than a decade ago, buying distressed houses and fixing them up for flips. From there, the brothers expanded into homebuilding and by last year they had new houses in about 100 subdivisions statewide.
Ipour said Megatel has pulled out of some neighborhoods in the last six months and is targeting more affordable housing. "We are getting away from the higher price points and focusing more on townhouses and affordable, high-density, single-family homes," he said. "Affordability is becoming a major issue these days."
The owners make no secret that they want to take the company public and say they have turned down purchase offers by larger builders.
Ipour said the firm is raising money from investors to support its new multifamily program.
Megatel’s expansion into the apartment business comes at a time when rent increases for owners are shrinking and there are more giveaways to lure tenants. More than 30,000 apartments are under construction in North Texas.
The company is counting on its rent rebate offer to bring in renters without offering a month or two free rent up front.
Zach Ipour, co-founder of Megatel Homes, hopes the company’s unique ren- to-own program is a hit.
"Right now multifamily is facing a concession crisis — it’s the highest in years," Ipour said. "If we can get away from those concessions, it has a huge value to our rent revenue."
Some national homebuilders have worked with major U.S. apartment builders to escrow money toward down payments for homes. But Megatel’s program that would offer up to $25,000 in rent refunds toward a house goes one step further.
Ipour said the company is even working on a program to give money back to its renters who buy from another builder if they use Megatel’s in-house home sales firm called ROU Realty.
"It’s a better deal if you buy a Megatel Home," Ipour said.
He said the company expects 15 percent to 20 percent of the renters in its apartment projects to take advantage of the homebuying program.
"We have six active subdivisions in this area near Craig Ranch if you want to buy one of my townhouses that cost $280,000," Ipour said.
The builder is also raising funds through its Megatel Capital Investment division to buy struggling apartment communities that it can use for the new program.
"If we can get away from offering concessions and have quicker lease-up of these properties, it creates much more value," said MCI executive vice president Trey Hoppe. "The homebuilding business gets increased traffic from this, too."
Megatel says it’s counting on its rent rebate offer to bring in renters without offering a month or two free rent up front.