INVESTMENT STRATEGY
- We are a unique investment company in that we have developed our own top notch property management operations in-house. It is very difficult to find a property manager that does not have a conflict of interest with their owners because they make money when units turnover over and on maintenance/repairs – both of these costs owners money. Property management is key to ensuring high cash flow, and we have the best in the business after years of fine-tuning our strategic operations!
- Purchase Class B or C multifamily assets with value add characteristics and create stabilized capitalization rates of 8% – 12%
- Offer tenants a distinguishable value proposition among other housing options (i.e. wireless internet, DirecTV, community environment, upgraded interiors, patios, security screen doors, inunit washer-dryers, room additions, superior locations near public transportation, etc.)
- Create a substantial East Valley Phoenix area portfolio on an asset-by-asset basis in attractive low-middle markets with a high percentage of Hispanics residing in a high growth area
- Leverage a knowledgeable in-house management team that was created to maximize property performance of investments.
- Exit strategy is a partial cash-out refinance upon stabilization, hold for three to ten years, and sell an improved, stabilized asset to a passive local or national investor
ACQUISITION STRATEGY
- Phoenix-area multifamily properties of 10-100 units
- Locations near public transportation, schools, employment, and shopping
- Class B or C due to above-average returns
- Value add opportunities with IRR’s of 15 – 20%+
- Hispanic population of 30% or greater within 3 mile radius due to impressive growth projections
- Unit breakdown consisting of 25% or greater of two bedroom units
FOCUSED ASSET MANAGEMENT APPROACH
Employ proven marketing and management strategies to reposition under-performing properties
- Grow NOI through proven revenue maximizing strategies
- Engage local market team of professionals
- Leverage in-house management team’s 6-year reposition experience and superior results.
- Upgrade interiors to slightly higher quality than competitive set, which decreases turnover and increases rental rates
- Increase curb appeal of exterior
KEYS TO SUCCESS
- Experienced Management Team with Proven Track Record Executing Investment Strategy: Acquisition, asset management and renovation experience in repositioning multifamily properties for Hispanic demographic in Phoenix with proven track record executing investment strategy.
- Cater to High Growth Hispanic Demographic: One of the biggest impacts to the rental housing market is the changing demographic profile of Phoenix and the U.S. Disposable income is anticipated to grow 7.4% annually between 2012 and 2017.
- Favorable Industry and Economic Conditions: Multifamily properties have the strongest real estate industry fundamentals of all asset classes, and real estate intrinsic values are well below replacement cost (25-50% in many areas) creating ideal buying opportunities with the ability to finance with attractive debt.
WHY PHOENIX?
- Employment growth. Ranked as the metro with the 6th fastest job growth rate among the 100 metro areas analyzed in 2014.
- Diverse Economy. Transportation, wholesale trade, high-technology manufacturing, alternative energy, back-office financial operations, and tourism are all drivers of the economy. Phoenix is projected to be the 2nd largest “job engine” in the U.S. through 2025, according to Newsweek Magazine. Apple Corporation just established a manufacturing presence in Mesa in 2013. Population is expected to grow from 4.2 million in 2011 to 6.8 million in 2030.
- Demographics. High percentage of Hispanic households (approximately 30%), a growing market segment to target. The number of Hispanics has grown by 46% over the past 10 years. Hispanics make up the largest demographic of children under 17 in Phoenix. These trends should continue to drive demand for 2-3 Bedroom units.
- Low Vacancy: Vacancy has retreated more than 6% from the peak recorded during the recession. The rate will continue to improve in and beyond 2015, as renter demand for units is forecast to outpace new construction by a two-to-one ratio, according to CBRE.
PARTNERING WITH DESERT VALUE PARTNERS
Desert Value Partners is executing a tightly focused acquisition strategy of buying low to middle-market, under performing multifamily assets that can be repositioned toward the rapidly growing Hispanic demographic niche market using a community lifestyle approach.
The most viable formula is one that works. Some in our industry call it a niche, and we are solidly entrenched in a unique niche investment strategy that has proven itself multiple times.
We have learned that buying under-performing multifamily properties and positioning them to a growing and under served target segment by leveraging our experience and vendor relationships creates excellent opportunity for long term cash flow:
- Creating pricing power from quality and management of product
- Managing risk better due to relatively predictable cash flow
- Producing consistent investment returns from stable operations