Acquiring an apartment building requires the ability to source and analyze the right kind of opportunities.
We source on and off-market deals through a variety of channels, including property owners, brokers, financial institutions, capital advisors, onsite management, among others. Through these relationships and channels we are able to maintain a healthy pipeline of multifamily deal flow.
When we identify an investment opportunity, we conduct a basic analysis to determine if the deal warrants further investigation. At this early stage of due diligence, we review the local market, demographics and competition and prepare a budget and pro forma to determine the upside potential from applying appropriate value-add improvements.
The acquisition of an asset is only the beginning of the value-add process. The real work begins with the implementation of the redevelopment plan.
Each asset that we acquire is unique and requires us to analyze various redevelopment options. We take into account the appearance, brand integrity, desired tenant mix, asset preservation and market conditions to develop a plan that ensures the expenditures are asset specific and provides the biggest impact towards achieving our desired returns.
Once the plan is established, the following tasks are undertaken:
- Assemble and appoint a redevelopment team
- Negotiate and execute design and construction contracts
- Refine the redevelopment budget and timeline
- Coordinate interior upgrades with current vacancies and apartment turns to minimize rental income downtime
- Execute the exterior improvements and amenities
- Review ongoing the budget, schedule and risk management
Our in-house property management arm gives us complete visibility into the portfolio and allows us to maximize the profitability of each multifamily property.
It is essential that each property be staffed with the right personnel. They are the face of the asset and are integral to successfully carrying out the operational component of the value-add strategy. Upon acquiring a property, we evaluate each team member to determine whether or not to make changes. We consider experience and training, attitude and people skills, organizational and attention to detail aptitude – traits that we value and consider essential to effectively managing a value-add apartment community.
Once the right team is in place, we train them to focus on achieving the mission of our property management arm. That mission is to:
- Attract and retain quality tenants
- Drive income
- Reduce expenses
As we execute on these three objectives, we are able to effectively stabilize the asset and maximize its profitability.
We have acquired ~5,000 apartment units since 2012. We have realized a 35.2% average gross IRR (28.4% net) and a 2.5 average gross equity multiple (2.1 net) over an average hold of 3.3 years, based on 6 properties sold.
NoRi, Kansas City
THE OPPORTUNITY 176 unit apartment building in Kansas City, built in 1972 Located north of Downtown Kansas City, near strong employers and good retail. Tired asset exiting low income housing restrictions. A submarket in transition with comps that supported property upgrades and rent rate increases. THE PLAN Renovate the asset with ~$4.5M to upgrade interior … Read More >>
Desert Ridge, Las Vegas
THE OPPORTUNITY 304 unit apartment building in Las Vegas, built in 1990 Located in east Las Vegas near high-value single family homes. Well managed asset with additional room to grow. A good submarket with comps that supported property upgrades and rent rate increases THE PLAN Renovate the asset with ~$1.1M to upgrade interior units, exteriors … Read More >>
Haven Kansas City
We acquired Madison Park Apartments, a 388 unit apartment building in southeast Kansas City, for $13.8M in 2014. The property was located 1 mile from a $4.5B Cerner campus under construction for 16,000 employees. Madison Park was poorly managed and tired, but the submarket was shifting and the competition showed opportunity for increased rent. We … Read More >>