Due Diligence

Our disciplined investment strategy is rooted in thorough risk assessment and high-reward potential. We take a meticulous approach to due diligence, ensuring every investment aligns with our buying criteria. We conduct comprehensive property walkthroughs with contractors and industry experts, gathering critical insights to assess the asset’s true condition and potential.

For multifamily investments, our due diligence process involves an in-depth evaluation of the property's physical, financial, and operational aspects. Here’s a breakdown of the key areas we focus on:

1. Financial Due Diligence

  • Rent Roll – We verify occupancy, lease terms, and rental rates.
  • T-12 (Trailing 12-Month Financials) – We analyze income and expenses for trends or red flags.
  • Bank Statements – Cross-check reported income and expenses.
  • Delinquency Reports – Assess collections and tenant payment trends.
  • Utility Bills – Identify inconsistencies and potential cost-saving opportunities.
  • Tax & Insurance Expenses – Confirm accuracy and look for potential increases.
  • Loan Documents (if applicable) – Review terms and prepayment penalties.
1. Financial Due Diligence

2. Physical Due Diligence

  • Unit Walkthroughs – We inspect every unit for condition and deferred maintenance with highly qualified General Contractors.
  • Roof, HVAC, Plumbing, and Electrical Systems – Check for age, functionality, and needed repairs.
  • Foundation & Structural Integrity – Look for cracks, water intrusion, or other major issues.
  • Parking Lot & Common Areas – Evaluate pavement condition, landscaping, and amenities.
  • Environmental & Zoning Compliance – Ensure no violations, hazardous materials, or zoning conflicts.
2. Physical Due Diligence

3. Operational Due Diligence

  • Property Management Review – Evaluate the current team’s effectiveness and whether to retain them.
  • Vendor Contracts – Review agreements for landscaping, security, maintenance, etc.
  • Tenant Leases – Confirm lease terms, rent increases, and clauses affecting cash flow.
  • Evictions & Turnover – Analyze historical tenant retention and turnover costs.
3. Operational Due Diligence

4. Market Due Diligence

  • Rent Comparables – Ensure market rents align with expectations.
  • Submarket Trends – Look at population growth, job market, and economic indicators.
  • Cap Rate & Exit Strategy – Ensure realistic assumptions for appreciation and resale.
4. Market Due Diligence
Two people discussing document at table.

Implementation

Post-Closing Implementation Plan for our Investors

I. Executive Summary
This implementation plan outlines the strategic steps to be taken immediately after the closing. The objective is to efficiently transition ownership, execute value-add renovations, stabilize occupancy, and position the property for long-term profitability or a successful exit.

I. Executive Summary

II. Immediate Post-Closing Actions (Week 1-2)

  1. Confirm Closing & Documentation
    • Verify final settlement statement, title transfer, and loan closing documents.
    • Ensure all necessary contracts and agreements are properly executed.
  2. Operational Transition
    • Transfer all utility accounts (electricity, water, gas, internet, waste management).
    • Notify existing tenants (if applicable) of new ownership and management contacts.
    • Assign a property manager or oversee direct management setup.
  3. Insurance & Compliance
    • Activate property insurance policy with appropriate coverage.
    • Conduct a compliance check for any zoning, environmental, or ADA requirements.
II. Immediate Post-Closing Actions (Week 1-2)

III. Property Assessment & Renovation Plan (Week 3-8)

  1. Property Walkthrough & Due Diligence
    • Perform another detailed site inspection to assess structural integrity, HVAC, plumbing, electrical, roofing, and other major systems.
    • Review any pending repair or maintenance items.
  2. Renovation & Value-Add Strategy
    • Define scope of work (cosmetic vs. structural improvements found during due diligence).
    • Review contractor bids and secure permits for required work.
    • Implement key improvements:
      • Exterior upgrades (landscaping, signage, facade enhancements).
      • Common area enhancements (lobby, parking lot, lighting upgrades).
      • Tenant space build-outs (if applicable).
  3. Budget & Timeline Management
    • Establish renovation budget and contingency plan.
    • Develop a phased implementation timeline.
III. Property Assessment & Renovation Plan (Week 3-8)

IV. Leasing & Occupancy Strategy (Month 2-6)

  1. Tenant Retention & Communication
    • Engage existing tenants regarding lease renewals and potential modifications.
    • Address any tenant concerns and provide incentive programs for retention.
  2. Leasing & Marketing Plan
    • Partner with a commercial leasing broker or in-house leasing team.
    • Update marketing materials, online listings, and signage.
    • Offer leasing incentives (TI allowances, free rent periods) if necessary.
  3. Lease Execution & Stabilization
    • Negotiate and execute new leases.
    • Monitor tenant improvements and build-outs to ensure timely completion.
IV. Leasing & Occupancy Strategy (Month 2-6)

V. Financial & Operational Optimization (Month 3-12)

  1. Accounting & Financial Reporting
    • Set up the property in accounting software (Yardi, AppFolio, MRI, etc.).
    • Track rent collection, expenses, and capital expenditures.
    • Implement cost control measures for operational efficiency.
  2. Property Management System
    • Establish maintenance request protocols.
    • Develop a preventative maintenance plan.
  3. Debt and Refinance Strategy
    • Monitor financial performance to assess refinance opportunities.
    • Work with lenders to determine best timing for refinancing based on market conditions.
V. Financial & Operational Optimization (Month 3-12)

VI. Exit Strategy & Performance Review (Ongoing Year 1-5)

  1. Quarterly Performance Evaluation
    • Review key performance indicators (occupancy rates, rental income, NOI, expenses).
    • Adjust leasing strategies based on market trends.
  2. Market Reassessment
    • Monitor local market conditions for timing an optimal exit.
    • Obtain periodic appraisals and broker opinions of value.
  3. Disposition or Long-Term Hold Analysis
    • If selling, prepare financial packages and engage a sales broker.
    • If holding, assess long-term improvements and potential future repositioning.
VI. Exit Strategy & Performance Review (Ongoing Year 1-5)

VII. Conclusion
By following this structured post-closing execution plan, we will be efficiently transitioned, stabilized, and positioned for maximum value appreciation. The focus on operational improvements, leasing strategies, and financial performance will ensure a strong return on investment for stakeholders.

VII. Conclusion

Disposition Strategy

At the culmination of our value-add strategy, we implement a carefully structured exit plan to maximize returns for our investors. Depending on market conditions and investment objectives, we pursue one of two primary strategies:

1. Refinancing for Long-Term Cash Flow

Once the property has achieved stabilized operations and enhanced value, we strategically refinance the asset. This allows us to return investor capital while retaining ownership, transforming the property into a sustainable, long-term cash flow generator. This approach enables ongoing passive income for investors while maintaining asset appreciation potential.

2. Strategic Asset Sale for Equity Realization

In cases where market conditions present a favorable opportunity, we may elect to sell the property. This allows us to capitalize on the value appreciation achieved through our repositioning efforts, delivering strong equity gains and a profitable exit for our investors. Our data-driven approach ensures that timing and pricing align with optimal market conditions to maximize returns.

Through disciplined execution and proactive asset management, we ensure that every disposition aligns with our overarching investment strategy, focusing on delivering strong, risk-adjusted returns while preserving capital and maintaining investor trust.

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