Business Strategy
Acquisition Criteria
PROPERTY CRITERIA
Multifamily residential apartments
Pitched roof construction, preferred
Occupancy above 80%, with the exception of properties that require renovation, providing properties are well located and present value-add opportunities
TARGET VALUES
Size & Price: 50+units in the $3M - $10M range
Class: B class properties in A or B areas
Property vintage: 1970s or newer
Location: emerging market areas with indicators for strong near and long-term economic growth
Minimum Cash on Cash Return: 10% - 15%
Minimum Debt Service Coverage Ratio: 1.3
Minimum IRR: 12%
Emerging Markets
CRITERIA WE LOOK FOR EMERGING MARKETS:
Migration to the area rather than out of the area
Job growth and creation
Rents and property values increasing
Government dedicated to attracting jobs and creating business activity
Markets supply able to absorb renter demand
HOW WE EVALUATE EMERGING MARKETS:
Job growth reports
Population growth
Local economic reports & trends
Chamber of Commerce Reports
And much more
Acquisition Practices
RIGOROUS DUE DILIGENCE FOR INFORMED INVESTMENTS:
Each asset undergoes a comprehensive due diligence process to verify its physical condition, legal status, and accurate valuation. This ensures that our investment strategies are grounded in sound data and realistic expectations.
TAILORED FINANCING STRATEGIES:
Early in the evaluation process, we develop a customized debt and equity financing strategy considering factors like property type, renovation needs, anticipated holding period, and investor objectives. Our typical holding period for assets ranges from 5 to 7 years, aligned with individual business plans.
STRATEGIC MARKET SELECTION:
Asset selection involves a systematic evaluation to identify markets with favorable demand characteristics. We prioritize areas with strong job growth, population increases, favorable demographic shifts, robust supply absorption rates, and supportive local legislation.
AVOIDING OVERBUILT MARKETS:
Markets with signs of oversupply, such as excess land, zoning changes, or increased building permits, are carefully avoided. Our focus is on regions with supply constraints, which typically offer more favorable investment opportunities.
Value-Add Strategy
We specialize in acquiring properties that require strategic investment to accelerate the appreciation. This “forced appreciation” allows us to increase rents, thereby increasing the revenue and value of the property. These “value plays” are vital to our business strategy and returning stable, consistent returns to our investors.
KEY INDICATORS OF A VALUE-ADD PROPERTY:
Mismanagement by a self-managing owner
Poor supervision of management companies
Deferred maintenance
High vacancies
Below market rents
​Missed opportunities to add amenities
Some examples of value-added plays we’ve implemented:
Improve curb appeal and safety by improving landscaping, adding dog parks, installing new signage, installing outdoor lights & security cameras, etc. Residents will pay more when a property is in better condition and makes them feel safer.
Create a better resident experience by adding in-unit laundry, installing technology packages, valet trash service, assigned parking, additional storage containers, Amazon delivery lockboxes, and more. Residents will pay more for an apartment complex with more premium amenities.
Purchase a property that is 10% or more under current market rents. This gives us the opportunity to increase rents and immediately increase the value of the property.
Implement a water and sewage bill-back system to charge the residents for actual usage. Most apartment owners pay for all the water. When we bill back the residents it helps offset expenses and increase the cash flow. Through this system residents tend to become more frugal and will decrease overall operating expenses.
Improve unit interiors with new paint, appliances, countertops, and floors
