Strategy
OUR INVESTMENT STRATEGY IS BASED ON THE FOLLOWING KEY CONSIDERATIONS
ECONOMIC CYCLES
Careful evaluation of macro and micro economic cycles to ensure that the investment will perform as conditions inevitably change.
MARKETS
We carefully evaluate supply and demand, demographics, historical performance and other market conditions to identify high growth, supply constrained markets.
INFORMATION
We utilize our relationships with local and National Brokers, Lenders and other market participants to gain superior information that is not available to the market at large.
ECONOMIC CYCLES
Careful evaluation of macro and micro economic cycles to ensure that the investment will perform as conditions inevitably change.
MARKETS
We carefully evaluate supply and demand, demographics, historical performance and other market conditions to identify high growth, supply constrained markets.
INFORMATION
We utilize our relationships with local and National Brokers, Lenders and other market participants to gain superior information that is not available to the market at large.
Acquisition Criteria
Location
We focus on Emerging market areas with indicators for strong near and long-term economic growth.
Asset Type
We look for class C- to B+ properties located in C- to A areas that were constructed in 1970 or newer.
Unit Mix
We prefer to invest in properties where no more than 30% of the unit mix can be made up of one bedroom apartments.
Transaction Size
We focus on complexes that are 50+ units and can be acquired in the $4MM – $50MM range.
Hold Period
Each asset is typically held 5-10 years depending on its exact business plan.
Operating History
Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities.
Location
We focus on Emerging market areas with indicators for strong near and long-term economic growth.
Asset Type
We look for class C- to B+ properties located in C- to A areas that were constructed in 1970 or newer.
Unit Mix
We prefer to invest in properties where no more than 30% of the unit mix can be made up of one bedroom apartments.
Transaction Size
We focus on complexes that are 50+ units and can be acquired in the $4MM – $50MM range.
Hold Period
Each asset is typically held 5-10 years depending on its exact business plan.
Operating History
Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities.
Path of Progress Strategy
A Path of Progress is where the greatest amount of building and development is currently happening, or soon to be.
HERE IS HOW THE STRATEGY WORKS:
Properties rapidly shoot up in appreciation
Majority of new construction is going on
Families and individuals are moving into the area
Investing in the Path of Progress yields the greatest returns in a short period of time.
Our Process
Location & Property Analysis
Our team of Real Estate experts identify and evaluate stable markets and desirable cities throughout the United States with consistently strong historic or upward trending cities with considerable room for growth.
Value-Add Management
We use multiple value-add initiatives and implement operational improvements to drive greater profitability through rent growth and increase tenant occupancy which allows us to achieve the highest possible appreciation.
Liquidity & Distribution
Our focus is to increase Net Operating Income (NOI) and distributable cash flow every year. Through NOI growth, we have the ability to increase the value of your investment year over year to reach our exit strategy.
ECONOMIC CYCLES
Careful evaluation of macro and micro economic cycles to ensure that the investment will perform as conditions inevitably change.
MARKETS
We carefully evaluate supply and demand, demographics, historical performance and other market conditions to identify high growth, supply constrained markets.
INFORMATION
We utilize our relationships with local and National Brokers, Lenders and other market participants to gain superior information that is not available to the market at large.
Acquisition Criteria
The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.
MARKET SEGMENTS
- Age: The 18-35 year old market segment is 22% of the U.S. population
- Income: Renters who earn $40,000 or more annually
- Price: Rent is 30% or less of the median income
- Retiring Baby Boomers are scaling down and enjoying maintenance free multifamily living
PROPERTY CRITERIA
- Multifamily residential apartments
- Pitched roof construction preferred
- Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities
TARGET VALUES
- Size and Price: 20+ units in the $4MM – $50MM range
- Returns: 7-10% Cash on Cash, Minimum Debt Service Coverage ratio of 1.25
- Type: C to B+ properties located in C+ to A areas
- Property Vintage: 1970 or newer
- Location: Emerging market areas with indicators for strong near and long-term economic growth
Emerging Markets
HOW WE CHARACTERIZE EMERGING MARKETS
- People moving in, rather than leaving the area
- Jobs being created and moving in rather than lost
- Rents and property values rising
- Local government dedicated to attracting jobs
- Markets starting to absorb oversupply
Through extensive research, we analyze many indicators to identify emerging markets in the US. We start out by performing thorough market research that includes the following areas:
- Job Growth Report
- Population Growth
- Path of Progress Reports
- Local Economic Reports & Trends
- Chamber of Commerce Reports
- And many more factors
Acquisition Practices
Each asset undergoes a thorough due diligence process to confirm the physical and legal status of the property and to confirm valuations to ensure achievable investment strategies.
Early in the asset evaluation phase, the debt and equity financing strategy is developed based on a number of factors such as property type, the magnitude of renovations, expected hold period and investor objectives. Each asset is typically held 3-7 years depending on its exact business plan.
INVESTMENT DISCIPLINE
Asset selection involves a systematic, routine evaluation to identify favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.
Markets with supply constraints receive the most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.
Value-Add Strategy
Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. These are called “Value Plays” or “Value Adding Components”.
VALUE PLAYS WE CAPITALIZE ON
- Mismanagement caused by owner self-managing
- Poor supervision of management companies
- Deferred maintenance
- High vacancies
- Below market rents
Some examples of value-add plays we implement at 5D’s Capital Partners:
- Improve curb appeal by improving landscaping, adding dog parks, carports, etc. Residents will pay more when a property is in better condition and has amenities.
- Purchasing a property that is 10% or more under current market rents. This gives us the opportunity to increase rents and immediately increase the value of the property.
- Implement a water and sewage bill-back system to charge the residents for actual usage. Most apartment owners pay for all the water. When we bill back the residents it helps offset expenses and increase the cash flow. Through this system, residents tend to become more frugal and will decrease overall operating expenses.
- Improve unit interiors with new paint, appliances, countertops, and floors
Path of Progress Strategy
A Path of Progress is where the greatest amount of building and development is currently happening, or soon to be.
HERE IS HOW THE STRATEGY WORKS:
- Properties rapidly increase in appreciation
- Majority of new construction is going on
- Families and individuals are moving into the area
Investing in the Path of Progress yields the greatest returns in a short period of time.
Acquisition Criteria
The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.
MARKET SEGMENTS
- Age: The 18-35 year old market segment is 22% of the U.S. population
- Income: Renters who earn $40,000 or more annually
- Price: Rent is 30% or less of the median income
- Retiring Baby Boomers are scaling down and enjoying maintenance free multifamily living
PROPERTY CRITERIA
- Multifamily residential apartments
- Pitched roof construction preferred
- Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities
TARGET VALUES
- Size and Price: 20+ units in the $4MM – $50MM range
- Returns: 7-10% Cash on Cash, Minimum Debt Service Coverage ratio of 1.25
- Type: C to B+ properties located in C+ to A areas
- Property Vintage: 1970 or newer
- Location: Emerging market areas with indicators for strong near and long-term economic growth
Emerging Markets
HOW WE CHARACTERIZE EMERGING MARKETS
- People moving in, rather than leaving the area
- Jobs being created and moving in rather than lost
- Rents and property values rising
- Local government dedicated to attracting jobs
- Markets starting to absorb oversupply
Through extensive research, we analyze many indicators to identify emerging markets in the US. We start out by performing thorough market research that includes the following areas:
- Job Growth Report
- Population Growth
- Path of Progress Reports
- Local Economic Reports & Trends
- Chamber of Commerce Reports
- And many more factors
Acquisition Practices
Each asset undergoes a thorough due diligence process to confirm the physical and legal status of the property and to confirm valuations to ensure achievable investment strategies.
Early in the asset evaluation phase, the debt and equity financing strategy is developed based on a number of factors such as property type, magnitude of renovations, expected hold period and investor objectives. Each asset is typically held 3-5 years depending on its exact business plan.
INVESTMENT DISCIPLINE
Asset selection involves a systematic, routine evaluation to identify favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.
Markets with supply constraints receive most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.
Value-Add Strategy
Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. These are called “Value Plays” or “Value Adding Components”.
VALUE PLAYS WE CAPITALIZE ON
- Mismanagement caused by owner self-managing
- Poor supervision of management companies
- Deferred maintenance
- High vacancies
- Below market rents
Some examples of value-add plays we implement at 5D’s Capital Partners:
- Improve curb appeal by improving landscaping, adding dog parks, carports, etc. Residents will pay more when a property is in better condition and has amenities.
- Purchasing a property that is 10% or more under current market rents. This gives us the opportunity to increase rents and immediately increase the value of the property.
- Implement a water and sewage bill-back system to charge the residents for actual usage. Most apartment owners pay for all the water. When we bill back the residents it helps offset expenses and increase the cash flow. Through this system, residents tend to become more frugal and will decrease overall operating expenses.
- Improve unit interiors with new paint, appliances, countertops, and floors
Path of Progress Strategy
A Path of Progress is where the greatest amount of building and development is currently happening, or soon to be.
HERE IS HOW THE STRATEGY WORKS:
- Properties rapidly shoot up in appreciation
- Majority of new construction is going on
- Families and individuals are moving into the area
Investing in the Path of Progress yields the greatest returns in a short period of time.
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No Offer of Securities—Disclosure of Interests Under no circumstances should any material at this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular investment. Access to information about the investments are limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they can evaluate the merits and risks of prospective investments.
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Learn more about how we manage Multifamily Real Estate Investments
About
- Lake Oswego Oregon 97034
- 5DsMultifamily@gmail.comSend us an Email
No Offer of Securities—Disclosure of Interests Under no circumstances should any material at this site be used or considered as an offer to sell or a solicitation of any offer to buy an interest in any investment. Any such offer or solicitation will be made only by means of the Confidential Private Offering Memorandum relating to the particular investment. Access to information about the investments are limited to investors who either qualify as accredited investors within the meaning of the Securities Act of 1933, as amended, or those investors who generally are sophisticated in financial matters, such that they can evaluate the merits and risks of prospective investments.
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