Total profit remaining and distributed after operating expenses are paid. Also known as passive income.
Force appreciation by intentionally adding value and natural appreciation by market rise.
Gains from increasing income and property improvements. Equity increases can be seen over the lifetime of the property through principal pay down.
Use the losses from a multifamily investment to offset other gains. (Speak to your CPA or tax advisor)
The first step is to search thoroughly and identify markets and submarkets with favorable demographic and economic growth. Next, we’ll build relationships to review quality deals and ensure they meet our criteria.
Underwriting is the process assessing the degree of risk through financial analysis and requires modeling deal and market assumptions. Some of the assumptions and risk are amplified by rental and sale comparable, property management pro formas, and general contractor bids.
At this stage our intent is to discover all of the deficiencies in person that that could impact the returns of the investment. The property ownership history is reviewed and evaluated, including past and current operating statements. We hold a physical inspection walkthrough of the asset, conduct a lease audit, and interview the on-site property staff and tenants. Our team assess the condition of the property and identify deferred maintenance as well as price potential capex projects.
Once we have the asset under contract, our due diligence will continue and we’ll finalize our debt terms with our lender and raise equity. The lender orders third party reports (PCA, ESA, appraisal). Our specialized attorneys get involved at this point to assist in with the legal documents. Once we finalize our business plan, our team will coordinate with our equity partners for the wiring of funds for our LP, GP, and/or preferred equity.
Upon closing and ownership, our managerial initiatives begin for operational improvements and renovations in accordance with our business plan. Occupancy and rent increases are carefully balanced throughout the repositioning process. Site visits are performed to ensure proper execution of the plan and to ensure the on-site team is exceeding expectations. Capital improvements are made with a focus on driving NOI and exceeding our equity partner’s expectation.
