Whether you are new to Multifamily Real Estate investing or a seasoned professional, you can appreciate the importance of a well-developed and detailed private equity investment analysis of any property we are considering. The world of Multifamily real estate is a category of its own for a reason – there are numerous factors for identifying, acquiring, and successfully managing multifamily investments that impact our decision to present an opportunity to our investors. As a core commitment to our investors, tenants, general partners, and community, we investigate an investment target and management plan as accurately and clear as possible to determine whether a deal is worth pursuing.
Key Elements of Real Estate Analysis
Every community is different, and in pockets across the United States we are seeing cities with Job Growth and Population Growth +2%, Year Over Year. In addition to job growth and population growth, we are also analyzing median household income, age of renters, and whether the location of the property is in a favorable zone for employers and employees.Â
As we narrow down to a specific city or MSA (Metropolitan Statistical Area), we are also looking for neighborhoods that are in the Path of Progress, meaning that growth and development of that area are trending positively and in the business plans for the city or county. When assessing a property in the selected MSA, we are evaluating a strategy for value-add to the property, identifying its internal opportunities, and whether it has rent growth capacity comparable to the surrounding properties.
Crucially, we incorporate an experienced Property Management Team to overview smooth operation from Day One. A strong Property Management team will ensure we have happy engaged Tenants, and the management plan is executed over the course of our hold time.
We are scouting for properties that are as low-risk as possible. We factor in environmental risks, market volatility, and interest rate fluctuations regularly and have a conservative strategy to mitigate shortfalls to protect our investors, general partners, and tenants. Â
Sourcing our Deals
It is important to diversify how and scrutinize where we get our information, often cross-verifying to ensure we are not missing an aspect of a property or area that could make or break a deal. The Milken Institute produces a yearly report for identifying emerging and growing markets across the country and is a robust resource for investigating MSA’s. From there, we obtain reports about neighborhoods, recently sold properties, and comparable properties in our city of choice to narrow down the scope of focus.
While the internet and reports produce incredible value for us as we are evaluating our market, nothing beats building relationships with folks in that city who can connect the dots with us. We prioritize building relationships with Commercial Brokers, City and County officials, and operators on the ground in that area. We know the best deals come from real relationships, so we focus on building strong foundations with the local people and hope to bless them along the way!
What does performance mean to us?
If the metrics don’t project a successful investment, the deal won’t happen. As we analyze a potential deal, as well as properties we currently own, we take a conservative approach to the target income of a property as well as the expenses to determine the Net Operating Income. Maintaining a high level of excellence for a property is a top priority for us, and as an example, we’ve seen many properties that have improper or inflated spending in certain expenses, like self-owned properties paying family members to ‘manage’ the property, but the property is not performing. As we build out our business plan with our GP’s, we implement value-add strategies to force appreciation, bring value to tenants, and overall boost returns to our investors. At the end of the day, we assess the multitude of factors that produce favorable NOI, Debt Service and sale price of the property to determine the returns to our investors and how the property is anticipated to perform.
Beyond the business aspect of real estate, our desire to help people know God is the driving force behind what we do. We love getting to partner with you to do that, in addition to blessing your family and the people around you. He is like a tree planted by streams of water that yields its fruit in its season, and its leaf does not wither. In all that he does, he prospers. Psalm 1:3. We pray you encounter and draw near to Jesus to experience His peace, grace, and refreshing in your life.
God Bless,
Kristin
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