Our Expertise, Your Investment
Asset Identification
Our approach begins by identifying assets that possess upside potential located in strategic markets with strong growth fundamentals.
Identify Markets: We start by identifying submarkets that possess strong growth potential. This analysis primarily involves determining projected job growth and population growth as well as identifying supply-and-demand dynamics, and barriers to entry.
Analyze the Micro Market: Once a submarket is selected, we shift our attention to identifying residential pockets with strong demand drivers, such as low crime rates, good schools, and access to necessities like hospitals or retail and office centers.
Set Investment Criteria: Once a Micro Market is selected. We use an external, macro, and micro factors to set our investment criteria. This list of factors includes analyzing metrics from the capital markets like treasury spreads, and debt terms, to metrics from the real estate markets like evictions, renter affordability, and cap rate trends.
Achieving your Goals
Financial Underwriting
Next, our team runs the asset's historical financials through a rigorous underwriting process to identify all strengths, weaknesses, and opportunities.
T-12 Analysis: The Trailing 12, or T12, is a document that contains categorized revenue and expense items from the past 12 months. Our team meticulously analyzes the full training 12 of each property which provides a clear picture of the property's performance history.
Rent Roll Analysis: By analyzing the Rent Roll, a document containing valuable information on all current tenants, our team is able to better understand the current situation of the property and where it will be heading in the coming months. This document typically contains tenant-specific data such as months at the property, current rent, and other fees owed.
Comparable Analysis: Comparables, or "Comps" are similar properties within a small radius of our subject property, usually our competitors. By analyzing and understanding what our competitors are implementing at their properties, we can outline both the opportunities and limitations of our subject properties.
Business Strategy: The last step of this stage is to create our business strategy. By utilizing all of the data received up to this point, our investment committee formulates a plan to create value. Our goal - To increase revenue and decrease expenses, all without creating significant execution risk.
Next, our team runs the asset's historical financials through a rigorous underwriting process to identify all strengths, weaknesses, and opportunities.
The best time to plant a tree was 20 years ago. The second best time is now.
Risk Analysis
Once the underwriting process is complete and a strategy is created, we meticulously review our business plan to identify each of the risks associated with the project
Debt Service: Our team diligently analyzes key metrics associated with our debt service assumptions to ensure we are obtaining positive leverage with minimal default risk.
Stress Test: Finally, our investment committee will run our projections through stress tests which adjust key variables such as vacancy, rent growth, and stabilization time down to extreme levels which allow our team to accurately visualize all downside scenarios. We then review cash flow metrics to ensure the success of our investment isn't tied to one variable.
This step is critical and accounts for a majority of the time spent underwriting potential assets. As mentioned before, this analysis allows our team to visualize returns in the spectrum between best and worst-case scenarios.
Investing in your future
Return Analysis
Finally, our investment committee uses a list of key metrics to determine the investment's overall return potential. We use this return analysis together with the risk profile created in the previous steps to determine the true quality of each investment.
IRR: The Internal Rate of Return (IRR) is a metric used to determine the time-adjusted return from our investment. By discounting cash flows received in the future, the IRR metric allows investors to see the quality of their future cash flows compared to other investments.
Cash on Cash: The Cash on Cash metric represents the percentage of cash flow compared against the capital invested. This metric excludes any significant capital events such as sales or refinances. A high percentage represents strong cash flows produced from the property which helps mitigate default risk.