Investment Strategy

Real estate investment strategy refers to the plans and methodologies employed by investors to maximize returns from real estate assets. This involves identifying and acquiring properties that align with specific investment goals, such as income generation, capital appreciation, or diversification. Successful real estate investment strategies are based on a thorough analysis of market trends, economic indicators, and individual property metrics.

Our strategy is buy, hold and sell, which involves buying undervalued properties, renovating them, instituting the value add play and selling them after 5 years at a profit. This requires a keen eye for properties with significant value-adding potential and a good understanding of renovation costs and market dynamics.

Acquisition Criteria

The following criteria is used to identify undervalued multi-family 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: Where rent is 30% or less of the median income
  • Retiring Baby Boomers are scaling down and enjoying maintenance free multi-family 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: 50+ 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: 1975 or newer Location: Emerging market areas with indicators for strong near and long-term economic growth
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Emerging Markets

The following criteria is used to identify undervalued multi-family properties for acquisition, value optimizations, management and disposition.

Emerging Markets Are Characterized By

  • 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

There are many indicators and a lot of research that goes into identifying an emerging market 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

Acquisition Practices

Polaris Capital Investments, LLC takes pride in building relationships with local listing brokers to get their “pocket listings” and access to other Bank Owned Properties (REO). Our searches include soliciting owners directly instead of waiting for properties to come to market.

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.

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.

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Value-Add Strategy

The following criteria is used to identify undervalued multi-family properties for acquisition, value optimizations, management and disposition.

Value Plays We Capitalize On

  • Mismanagement caused by owner self-managing
  • Poor supervision of management companies
  • Deferred maintenance
  • High vacancies
  • Below market rents
  • 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.
  • Improve unit interiors with new paint, appliances, countertops, and floors
  • Adding a coin laundry facility to the complex

Path of Progress Strategy

A Path of Progress is where the greatest amount of building and development is currently happening, or soon to be.

A Path Of Progress Is Where:

  • 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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