INVESTMENT STRATEGY

Acquisition Criteria

The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.

MARKET SEGMENTS

  • Age: The 18-35 year old market segment is 22% of the U.S. population

  • Income: Renters who earn $40,000 or more annually

  • Price: Where rent is 30% or less of the median income

  • Retiring Baby Boomers are scaling down and enjoying maintenance free multifamily living

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 and Price: 50+ units in the $4MM – $50MM range

  • Returns: 7-10% Cash on Cash, Minimum Debt Service Coverage ratio of 1.25

  • Type: C- to B+ properties located in C- to A areas

  • Property Vintage: 1970 or newer

  • Location: Emerging market areas with indicators for strong short-term and long-term economic growth

Acquisition Criteria

The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.

MARKET SEGMENTS

  • Age: The 18-35 year old market segment is 22% of the U.S. population

  • Income: Renters who earn $40,000 or more annually

  • Price: Where rent is 30% or less of the median income

  • Retiring Baby Boomers are scaling down and enjoying maintenance free multifamily living

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 and Price: 50+ units in the $4MM – $50MM range

  • Returns: 7-10% Cash on Cash, Minimum Debt Service Coverage ratio of 1.25

  • Type: C- to B+ properties located in C- to A areas

  • Property Vintage: 1970 or newer

  • Location: Emerging market areas with indicators for strong short-term and long-term economic growth

Emerging Markets

HOW WE CHARACTERIZE EMERGING MARKETS

  • People moving in, rather than leaving the area

  • Jobs being created and moving in rather than lost

  • Rents and property values rising

  • Local government dedicated to attracting jobs

  • Markets starting to absorb oversupply

Through extensive research, we analyze many indicators to identify emerging markets in the US. We start out by performing thorough market research that includes the following areas:

  • Job Growth Report

  • Population Growth

  • Path of Progress Reports

  • Local Economic Reports & Trends

  • Chamber of Commerce Reports

  • And many more factors

Emerging Markets

HOW WE CHARACTERIZE EMERGING MARKETS

  • People moving in, rather than leaving the area

  • Jobs being created and moving in rather than lost

  • Rents and property values rising

  • Local government dedicated to attracting jobs

  • Markets starting to absorb oversupply

Through extensive research, we analyze many indicators to identify emerging markets in the US. We start out by performing thorough market research that includes the following areas:

  • Job Growth Report

  • Population Growth

  • Path of Progress Reports

  • Local Economic Reports & Trends

  • Chamber of Commerce Reports

  • And many more factors

Acquisition Practices

Each asset undergoes a thorough due diligence process to confirm the physical and legal status of the property and to confirm valuations to ensure achievable investment strategies.


Early in the asset evaluation phase, the debt and equity financing strategy is developed based on a number of factors such as property type, magnitude of renovations, expected hold period and investor objectives. Each asset is typically held 5-10 years depending on its exact business plan.


INVESTMENT DISCIPLINE


Asset selection involves a systematic, routine evaluation to identify favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.


Markets with supply constraints receive most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.

Acquisition Practices

Each asset undergoes a thorough due diligence process to confirm the physical and legal status of the property and to confirm valuations to ensure achievable investment strategies.


Early in the asset evaluation phase, the debt and equity financing strategy is developed based on a number of factors such as property type, magnitude of renovations, expected hold period and investor objectives. Each asset is typically held 5-10 years depending on its exact business plan.


INVESTMENT DISCIPLINE


Asset selection involves a systematic, routine evaluation to identify favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.


Markets with supply constraints receive most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.

Value-Add Strategy

Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. These are called “Value Plays” or “Value Adding Components”.

VALUE PLAYS WE CAPITALIZE ON

  • Mismanagement caused by owner self-managing

  • Poor supervision of management companies

  • Deferred maintenance

  • High vacancies

  • Below market rents

Some examples of value-add plays we implement:

  • Improve curb appeal by improving landscaping, adding dog parks, carports, etc. Residents will pay more when a property is in better condition and has amenities.

  • Purchasing 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.

  • Adding a coin laundry facility to the complex.

Value-Add Strategy

Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. These are called “Value Plays” or “Value Adding Components”.

VALUE PLAYS WE CAPITALIZE ON

  • Mismanagement caused by owner self-managing

  • Poor supervision of management companies

  • Deferred maintenance

  • High vacancies

  • Below market rents

Some examples of value-add plays we implement:

  • Improve curb appeal by improving landscaping, adding dog parks, carports, etc. Residents will pay more when a property is in better condition and has amenities.

  • Purchasing 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.

  • Adding a coin laundry facility to the complex.

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Under no circumstances should any material at this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular investment. Access to information about the investments are limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they are capable of evaluating the merits and risks of prospective investments.