Are there risks in multifamily real estate investing?

Yes, there are some risks, and you should take all the time you need to understand them. We are here to help answer your questions and point you to outside resources to aid in your research.

Risk 1: Loss of capital. This is an extreme worst-case risk, but investors should know that as unlikely as this will be, it is still possible. We work extremely hard to keep anything like that from happening, including:

• Finding properties in stable, growing markets
• Hiring onsite property management that is fully capable, experienced, has high integrity, and works with our best interests at heart
• Analyzing every investment opportunity with a conservative approach including financial and operational projections
   

Risk 2: Changes in economic conditions, both local and national. Economic changes could impact our ability to execute our business plan, such as finding qualified labor to renovate units, and attracting tenants willing to lease at our projected rent price. We enter and grow in markets where we have already researched these risks and have developed solutions to protect our investments. Our research identifies where the job growth is coming from and what the projected growth will be. We take a close look at what tenants have been paying for comparable apartments in our submarket.

Risk 3: Fires and natural disasters. All of our properties are fully insured, plus we have comprehensive rules in place and mandated enforcement of these rules through our property management to minimize the likelihood of fires and damage caused by natural disasters. 

There is not a typical return on our multifamily investments. With each opportunity we present to qualified investors, we project the return on investment. Different property types carry different projected returns.

Returns on multifamily properties will usually consist of:

• cash distributions paid regularly with cash flow produced by the operation of the property
• a share of the appreciated value when the property is sold or refinanced
• depreciation reflected in end-of-year tax statement (K-1 statements) which investors may use in their tax filings

On average, the minimum amount is $50,000 and is dependent on each individual opportunity. We also work with your self-directed IRA manager and other similar retirement accounts.

For most of our investments, you’ll need to be either an accredited or sophisticated investor. These are industry and regulatory standards, and we can help you understand their meaning and your qualification.

Yes, our management team invests in our deals. Our interests are fully aligned with our investors.

We look for B and C Class properties, built from 1970 or newer, which have opportunities to grow in value, and where we can drive that growth. We identify properties already experiencing growth with a relatively high level of rental occupancy. 

We look for properties with these attributes:

• currently leased below what nearby competitors are charging,
• low market vacancy rates
• high rental demand in that area

   

We also look for diversity in employment. Many markets typically have robust employment the education and healthcare sectors, and other government-run institutions. In our approach, we look for strong private-sector growth engines, such as companies moving into the area or expanding, which indicates a stable and growing rental market.

Identifying properties with a favorable market size, employment diversity, and stable or growing rental demand, translates to a high demand from buyers when we prepare to sell the property.

Usually, our target hold period is 3-5 years, although it could be less or more, depending on whether management has reached the business objectives for this property. 

As this is a property holding investment, there are no opportunities to cash out of an investment before the sale of the property.