3-Phase Multifamily Syndication
Multifamily syndication realizes higher-than-average gains by using a tried-and-true strategy. Their 3-phase formula begins with the acquisition of new properties.
When acquiring new properties, they focus on primary MSAs. They focus on diverse employment nodes and look for population growth. For many of their deals, they rely on a trusted broker who delivers off-market opportunities. Underwriting is done according to a strict set of acquisition criteria. Furthermore, they stress-test the purchase to ensure downside risk is mitigated.
Repositioning
After acquiring a property, their team moves to the repositioning phase. They start driving operational improvements, streamlining processes, and reducing overhead. Further, they renegotiate contracts and incorporate technologies to boost asset valuations.
Hardening the asset with capital infusions is the next step. They make physical improvements to the property’s interior, upping its curb appeal. In addition, they cure deferred maintenance and elevate the amenities.
Finally, they improve the project’s tenant base and employ stronger qualification standards. This step also involves addressing lease violations and maintaining a strong reputation.
Monetization
The final phase of their investment strategy is the monetization phase. First and foremost, they utilize KPIs to maximize rent premiums and drive renewals. These factors should lead to direct growth of the top-line rental income. Expense reduction strategies like water conservation are tracked and audited frequently. Proactive variance tracking can help to ensure targets are achieved. They can also strategize capital events, such as refinancing or selling.
Here are their targeted investor returns:
• 5-7% Annualized Cash-on-Cash (CoC)
• 1.8-2.0x+ Equity Multiple (EM)
• 16-20%+ Average Annual Return (AAR)
• 13-16%+ Internal Rate of Return (IRR)
