Our Prudent Investment Strategy
Minimize risk, optimize returns, and eliminate uncertainty in investment choice. An opportunity is either embraced or dismissed after a rigorous evaluation process; the simplicity of our decision-making is a testament to its effectiveness.
The stringent criteria we employ significantly narrows down the number of deals that meet our exacting standards. Identifying lucrative opportunities is challenging, but this is precisely why investors repeatedly entrust us with their capital.
Here’s a detailed insight into our strategic approach…
We diligently sift through business news and demographic data to identify emerging primary, secondary, and tertiary markets—areas experiencing population and job growth, and real estate potential. Once we spot a promising market, we focus on premium and mid-tier locations, places that are highly sought after for living, working, and shopping.
A proven approach to mitigating risk in real estate investments is acquiring properties at wholesale prices. We engage with distressed property owners who are compelled to sell swiftly, often without the time or resources to renovate and fetch a higher price. Our aggressive negotiation tactics aim to secure the best prices and terms, always retaining the option to withdraw until a mutually beneficial agreement is reached.
We don’t rely solely on market trends for appreciation. We proactively boost the value with strategic improvements that positively impact the property's net operating income, either by cutting costs, increasing revenue, or both. This method of forced appreciation enhances property value. The projected value-added improvements help us estimate the after-repair value (ARV), which guides us in determining an optimal purchase price.
Cash Flow Centric
We never compromise on cash flow for the sake of potential appreciation. Our experience indicates that appreciation and cash flow are mutually inclusive. Banking on appreciation without positive cash flow is a misconception—one doesn't exist without the other. Prioritizing investments with positive cash flow is a key strategy to limit risk and create a favorable investment environment.
When we spot a potential deal, we scrutinize it with a critical eye, a process we refer to as "rigorous underwriting." We base our income estimations on real-world figures, rather than optimistic predictions. We also anticipate higher than expected expenses and overruns on rehabilitation estimates. This stringent underwriting process is designed to challenge each deal rigorously. Only the deals resilient enough to withstand this process are considered viable.
Our initial foray into new markets involves acquiring at least 70 apartment units, which allows us to benefit from economies of scale from the outset. Following this, we consolidate our market standing by acquiring more assets of 40 units or more, leveraging our experience from the initial acquisition to aggressively expand our presence.
We strategically plan each investment with multiple exit strategies in mind, ensuring a versatile investment approach that can adapt to changing market conditions. The most frequently employed exit strategy involves purchasing at 65% of the ARV and refinancing at 75% of the ARV. This strategy facilitates a swift return of capital to investors while maintaining their equity stake.