Why We Invest Equity in Residential and Multi-Family Properties
We focus our investments in multi-family income producing properties, ensuring strong management to produce consistent double-digit monthly cash flow. We believe that apartments provide consistency and stability even when the market is in a recession, especially when purchased at distressed or undervalued pricing. We focus on buying properties that we project we will be able to generate 12%+ annual cash-on-cash returns within 15 months of acquisition.
Nationally, rentership is on the rise, homeownership is on the decline, family formation is happening later in life, and those who do buy a home are doing so later in life.
Why Class B and C Multi-Family?
We primarily focus on Class B and C multi-family properties. Class B and C refers to properties that are not “luxury” in quality. Typically, built prior to the early 2000’s, these properties do not have the amenities of newer communities and usually command much lower rents.
We focus on these assets for a number of reasons:
- Cash Flow. Typically Class B and C properties sell at significantly higher cap rates and better cash-on-cash returns than Class A properties.
- Supply and Demand. Class B or Class C products are not being built. Instead, there is currently a concentration of high-end, luxury apartments developments underway. In many markets, the average 1 bedroom rent is $1,500-$2,000 per month, while the average 1 bedroom rent in a Class B/C community ranges between $650 and $900 per month. In addition to little new inventory, there is a growing demand for affordable housing.
- Declining Market Protection. We believe that in a recession people will still need a place to live and that many people living in Class A communities will be forced to move to Class B or C communities, so we anticipate occupancy will remain strong in a recession.