OUR STRATEGY
Multifamily Acquisition Criteria
We use the following criteria to identify undervalued multifamily properties, optimize value, and enhance management and disposition strategies.
Market Segments
Age: The 18-35 age demographic represents 22% of the U.S. population, making it a key target market for multifamily investments.
Income Level: Focus on renters with an annual income of $40,000 or more.
Affordability: Properties where rent is 30% or less of the median income, ensuring affordability for tenants.
Retiring Baby Boomers: Many are downsizing and seeking maintenance-free multifamily living options.
Property Criteria
Property Type: Multifamily residential apartments with a focus on value-add opportunities.
Construction: Preference for pitched roof construction, which is often more durable and easier to maintain.
Occupancy Rate: Properties with an occupancy rate above 80%, except for those requiring renovation but still offering value-add potential in prime locations.
Target Investment Values
Size & Price: Targeting multifamily properties with 50+ units, valued between $4 million and $50 million.
Return Expectations: Aiming for 7-10% Cash on Cash returns, with a minimum debt service coverage ratio of 1.25.
Property Class: Seeking C- to B+ properties in C- to A-rated areas.
Vintage: Focus on properties built in 1980 or later to ensure modern construction and reduced maintenance costs.
Location: Targeting emerging markets with strong economic growth indicators for both short-term and long-term returns.
Acquisition Practices
Each property undergoes an extensive due diligence process to verify its physical condition, legal status, and accurate valuation. This ensures that our investment strategies are both realistic and achievable, aligning with long-term goals.
Strategic Financing Planning
During the initial evaluation phase, we develop a tailored debt and equity financing strategy. This approach considers factors such as property type, renovation scope, anticipated holding period, and investor objectives. Typically, assets are held for 5 to 10 years, depending on the specific business plan.
Investment Discipline for High-Performing Markets
Our asset selection process is methodical, relying on routine evaluations to target markets with favorable demand drivers.
Key factors include:
Job and Population Growth: Indicators of economic expansion and increased housing demand.
Demographic Shifts: Trends that highlight emerging rental markets.
Supply Absorption Rates: Evidence of a balanced or undersupplied market.
Supportive Local Legislation: Policies that foster economic and housing stability.
Avoiding Oversupply Risks
We prioritize markets with supply constraints, which are backed by strong underwriting. Conversely, we steer clear of areas showing signs of oversupply, such as:
Excessive available land
Changing zoning laws.
Rising building permit volumes.
By adhering to these disciplined investment principles, we maximize returns while mitigating risks in multifamily real estate investments.
Value-Add Strategy
Think of an Apartment Investment as a Business. The value of an apartment complex is directly tied to its income potential. The more revenue it generates, the higher its worth. At Mountain View Capital Partners, we target opportunities to boost cash flow in various areas. These opportunities are known as “Value Plays” or “Value-Adding Strategies.”
Value-Adding Opportunities We Focus On
Inefficiencies caused by owner self-management
Lack of oversight with property management companies
Deferred property maintenance
High vacancy rates
Rental rates below market value
Examples of Value-Adding Strategies
Enhancing Curb Appeal: Upgrading landscaping, adding amenities like dog parks or carports. A more attractive property with desirable features commands higher rents.
Acquiring Below-Market Rent Properties: Purchasing complexes priced at least 10% under current market rates provides room for rent increases and instant value appreciation.
Implementing Utility Bill-Back Systems: Transitioning water and sewage costs to residents based on usage. This not only offsets expenses but also encourages conservation, reducing operating costs.
Interior Upgrades: Modernizing units with new paint, appliances, countertops, and flooring to attract higher-paying tenants.
Adding Amenities: Installing coin-operated laundry facilities to increase revenue.
By focusing on these value-add opportunities, we maximize property income and overall investment value.
Emerging Markets
How we categorize emerging markets
Increased Population Growth: Regions experiencing a steady influx of new residents.
Job Creation: Areas where jobs are being added rather than lost, driving economic growth.
Rising Property Values and Rents: Communities showing consistent upward trends in real estate prices and rental demand.
Pro-Business Local Governments: Markets with leadership dedicated to attracting jobs and fostering economic expansion.
Absorption of Oversupply: Locations where housing markets are stabilizing and excess inventory is decreasing.
In-Depth Market Research
We rely on a variety of data sources and reports to make informed decisions, including:
Job Growth Reports
Population Growth Statistics
Path of Progress Analyses
Local Economic Reports and Trends
Chamber of Commerce Insights
And numerous additional market factors