High Rate of
We identify underperforming assets that have upside potential where we can increase the net income and increase the value of the property.
We love B & C class multifamily properties that need some rejuvenation and most of the time they easily beat the 7% average return on the stock market.
One of the biggest benefits of multifamily investing is the ability to drastically increase the value of a property based on one sole metric: NOI. A high NOI increases property value via the cap rate method.
We increase NOI through strategic renovations that give us high rents and operational improvements to decrease our costs.
Economies of scale
Apartments have more units, residents, employees, vendors and materials which is valuable to us because it creates purchasing power and leverage. This means that we make decisions "in bulk", such as when we increase rents or buy construction materials.
In addition, once our teams and systems are in place for a specific submarket, acquiring new assets is easy and increases their value.
Institutional banks are the biggest money partner in these investments. They properly vet our team, underwrite our deals and make sure we have enough liquidity and the balance sheet for a successful investment.
Institutional banks provide some of the lowest interest loans that are typically non-recourse and lend to us as though each apartment is a small business.
As an owner of multifamily apartments, we receive tremendous IRS tax advantages, including depreciation and cost segregation, interest deductions, 1031 exchanges, and passive income rates.
For estate planning, a legacy transfer can be a powerful strategy to eliminate capital gains and depreciation. For instance, if your annual depreciation deduction is greater than the rental income, you can collect money without having to pay taxes on it that year.
High Level Property Management
We look for trusted property management partners to work with our residents and assist us in collecting rents at market value. For our 100+ unit buildings we have on-site management and strong regional support, while they manage at least 5,000 units nationally. We benefit from their experience, advanced cloud based reporting, deep relationships with vendors, and deep market data.
3.9 million units
It is impossible to underestimate the influence of supply and demand on investment value. Nationwide, there is a shortage of high quality homes for people to live in and our residents still need a place to live. We believe that this shortage in housing will keep the demand for high-quality affordable apartment units high.
Down the Debt
Loan payments can be divided into interest and principal. The interest is the profit the bank gets if they keep the loan and the principal goes towards paying off our loan. Every month we receive rents from our residents and pay the mortgage payment is another month that we are building up equity by paying down the principal loan balance.