We know numbers matter most for real estate investors. That’s why we always detail our track record first at DLP Capital Partners.
Here’s what we’ve achieved across 400 properties, 10,000+ units, and 400+ loans:
- 6 active investment funds and 800+ investors
- Over $800 million in assets under management
- Fixed and preferred return targets have been surpassed every month since inception
- Double-digit returns for all equity investors, with all funds exceeding return goals
- Zero principle losses
What drives us is our purpose: To create prosperity through innovative real estate investments.
Whether you’re interested in learning more about multi-family investments or looking for a real estate investment fund, this article can provide the information you need. We’ll cover how we’ve been so successful in multi-family investing, and how you can profit as well.
A commitment to the right principles and process
DLP Capital Partners’ success in multi-family investments stems from a commitment to a set of principles:
- No losses to investors—ever.
- Generate the highest returns possible (while sticking to the first two principles)
Those principles sound nice, but how does DLP put them into action? It begins with a focus on you—the investor.
“At DLP, we put our investors first. For the Preferred Returns Equity Fund (PREF), our investors get all of the cash flow before DLP gets a management fee. Investors get a 7% preferred return first. Then we share in the profits after we achieve that 7% return,” states Don Wenner, Founder and CEO of DLP Capital Partners.
To ensure DLP’s real estate investment funds can consistently deliver solid returns, the team conducts comprehensive due diligence during the acquisition process. This guarantees DLP buys value, minimizes risk, and maximizes return potential.
Comprehensive due diligence ensures we only enter the best real estate investment deals
“Throughout the process, our strong-in house management leverages our relationships with banks, brokers, and sellers to see hundreds of deals each month. We leverage our size and credibility in bidding situations. We also leverage you, our investors, and our own access to capital, to move fast,” details Wenner.
By putting investors first, doing extensive analysis, and utilizing our advantages, DLP makes certain to always buy value. We never get too attached to one deal, which can lead to getting caught up in a bidding frenzy (and overpaying). We also put ourselves in a position to win the right deals quickly.
A focus on adding value and generating cash flow
DLP strives to deliver investors consistent cash flow. This puts investors in a better position to withstand hard times.
Staying cash flow positive relies on having adequate capital and being conservative with debt. The average loan-to-value ratio of DLP investments is about 55%. These are non-recourse loans with locked-in interest rates for 7–12 years.
“Interest rates are locked in for our investment period. This way, we’re not exposed to the following risks: one, our loan coming due and having to pay it off; and two, our interest rates going up. This gives us the position to generate consistent income and long-term gains for our investors,” says Wenner.
Moreover, DLP adds value through strong in-house management and upgrades. This includes:
- Exterior capital projects (i.e. renovating roofs and parking lots)
- Renovating and upgrading apartments
- Adding amenities, like a pool
- Improving management
Such enhancements enable DLP Capital Partners to increase rent prices, occupancy, and tenant retention, while decreasing maintenance costs.
Upgrading this multi-family investment in Brunswick, Georgia allowed us to increase rents from an average of $600 to $1000
Through smart money management and a commitment to increasing value, DLP can deliver solid cash flow through multi-family real estate investments.
“When you have cash flow, you’re not as worried during downturns. You don’t need to sell in distress because you have cash flow. Our PREF real estate investment fund provides great consistent cash flow. We have a target of 2% dividends every quarter, or 8% annually. After 5-6 years, we’re often able to return 1.5-2x the initial investment,” explains Wenner.
Designed to produce 12% annual returns net to investors, the DLP Preferred Returns Equity Fund (PREF) provides liquidity and quarterly distributions. That consistent cash flow puts you in a position to hold on to your investment until you get the returns you seek.
The PREF fund also comes with tax advantages. Throughout the investment, nearly all of the distributions are sheltered from taxation due to depreciation. When you receive your profits, it’s taxed as long-term capital gains instead of ordinary income (which could save you up to 50% on taxes).
Of course, investors may have concerns over the potential for a recession, and that deteriorating cash flow and the value of their investment. DLP has strategized for that as well through the types of housing and markets in which we invest.
An emphasis on Class B multi-family real estate investments
The average rent price has increased by 54% nationwide over the last decade. However, income for those most likely to rent a home—the bottom 70% of earners—has only increased by 4%.
Given the situation, one would imagine housing developers would have focused on building non-luxury rentals (workforce housing). That’s not the case.
As Harvard’s State of the Nation’s Housing Report, construction has fallen drastically for workforce housing (Class B and C housing). The vast majority of new construction has been for luxury housing.
“Everything being built is luxury, with rents exceeding $2,000 even in secondary markets. Yet incomes aren’t rising. This has created a compounding need for affordable housing,” states Don Wenner.
At DLP Capital Partners, the team aims to mitigate risk through Class B multi-family investments. To navigate through market corrections, the Class B space not only offers protection, but also consistent returns.
“We believe occupancy will remain high and rents will remain stable in the Class B space. If we go into a recession, we think Class A housing will experience trouble, as people move to more affordable housing. Workforce housing puts you in a safer position during a downturn,” adds Wenner.
Market data proves DLP’s strategy right. During the 2008-09 recession, multi-family investments provided the best protection. The Dow Jones plummeted more than 50%, while multi-family rental prices only declined by 7.9%. In comparison to other types of housing, multi-family housing rent far outperformed.
Multi-family was the best real estate investment during the downturn and recovery. Rent declines during the downturn were 6.2% less than the next best (retail rents); rent increases during the recovery were more than triple the next best (industrial rents).
Source: CBRE Research
“It’s simple supply and demand. During a recession, demand for Class B housing rises,” says Wenner.
Investing in secondary and tertiary markets
Research from Redfin discovered that large coastal housing markets carry the most risk in a downturn for investors.
Through the PREF fund, DLP Capital Partners aims for targeted annual returns of 12%. Due to heavy competition, high values, and vulnerability to market downturns, housing in big markets, especially luxury housing, can’t consistently achieve 8%+ capitalization rates like DLP’s multi-family investments in secondary and tertiary markets. That’s why we opt for multi-family properties in smaller markets.
Multi-family real estate investments in secondary and tertiary markets, such as DLP’s markets, provide a better return on investment and less risk.
Specifically, DLP focuses on multi-family real estate investments in the southeast. We look for housing in good locations (near good schools, stores, entertainment, etc). We also make sure to spread out investments across strong, diverse economies (see image above).
When looking at a multi-family investment property in the south, we want to see the following in the local area:
- Population growth
- Job growth
- Increasing demand
With diversification of Class B multi-family investments across healthy communities in the southeast, DLP Capital Partners can consistently get great value and deliver higher yields to investors (without the risk).
Building wealth with a multi-family real estate investment fund
If you seek high yields but less risk, you should consider adding a multi-family investment fund into your portfolio. Specifically, affordable housing in secondary and tertiary markets is uniquely positioned to navigate through market corrections and deliver consistent, solid returns.
Yet you can’t just invest without the proper resources and support. Joining a professionally managed real estate investment fund, like DLP’s Preferred Returns Equity Fund (PREF), could enable you to achieve your investment goals in any economic environment.