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Case Studies

May 4, 2021

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Multifamily Case Study: 300 Units in Sarasota, FL

This project is a 300 unit apartment community located on a 42-acre tropical...

Highlights: This project is a 300 unit apartment community located on a 42-acre tropical tract in the Sarasota-Bradenton MSA.  The community features an appealing mix of one-, two-, and three-bedroom units averaging 900 square feet. Each unit has washer/dryer connections, stainless appliances, and granite counters, as well as high end fixtures. The complex features resort style amenities such as paved walking trails around a private lake, large pool and spa area and a state-of-the-art fitness center. Additionally, residents benefit in its proximity to Sarasota’s largest employers, highly rated schools, and a variety of preferred retailers.  Premium beach access is available within a twenty-five-minute drive.  These factors combine to make this area on of the most desirable residential areas in the Gulf Coast region.The property was built in 2008 and all units received upgrades in 2018.  

Repositioning: The project will be acquired for $42,250,000.   A review of the financials show that the property is currently being operated a 48% expense to income ratio.  A careful analysis revealed that management was over staffed putting the management salaries at nearly twice the national average.  Additionally, contract services are excessive and should easily be reduced by 50% by having these items handled by the current onsite maintenance team.   The installation of our professional management team will allow us to bring our expense ratio well below 40% within year one.  There is also the opportunity to capture increased rental income since the only other comparable property in a 5- mile radius averages $100 per month more per unit and rental demand is at an all time high.  The increase in income combined with the reduction in expenses will dramatically improving NOI enhancing the valuation and improving cashflow.

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November 29, 2017

5 min read

An Overview of Core, Core Plus, Value-Add and Opportunistic Investments

If you spend any time around commercial real estate...

If you spend any time around commercial real estate, you’re bound to hear the terms core, core plus, value-add and opportunistic real estate thrown around. These terms are used to define the level of risk and return potential of an investment property. Not only are the physical attributes of the property used to define an investment but the amount of debt financing to support the project is also imperative.

To explain why the debt financing has such an important role, I find it easy to understand if you look at a single-family property. If a property has a long-term lease in place, it can sound attractive to a conservative investor who wants to play it safe. However, if the same property has been primarily financed through debt with very little equity, it can paint a very different picture. Should the property value decrease, the owner could end up owing more on the property than it’s worth.

As a commercial real estate investor, you should know about each of these terms. Let us take you through them one by one to help you understand them better.

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