Multifamily

Our primary asset class is market rate value-add multifamily, typically 75 to 300 units minimum, class B and C properties in suburban and metropolitan areas. We prefer assets built after 1975 to avoid common construction inefficiencies found in older vintage assets. We target long term growth markets in order to achieve stability and long term rental and value appreciation. We can acquire assets or portfolios north of 25M if the opportunity arises.

Undervalued multifamily buildings are identified using the criteria below for acquisition, value optimization, management, and disposition.

MARKET SEGMENTS

• Age: The 18-35 year old market segment accounts for 24% of the population in the United States
• Income: Renters with an annual income of $40,000 or more
• Price: Rent is 30 percent of the median income or less
• Retiring Baby Boomers are downsizing and opting for low-maintenance multifamily living

PROPERTY CRITERIA

• Multifamily residential apartments
• Construction with a pitched roof is preferable.
• Occupancy of more than 80%, with the exception of properties in need of renovation, assuming that the properties are well-located and offer value-add potential

TARGET VALUES

• 75+ units in the $5MM – $75MM range in size and price
• Returns: 7 – 10% Cash on Cash, with a Debt Service Coverage Ratio of at least 1.25
• Property Type: C to B+ properties in C+ to A areas
• Property Vintage: 1975 or newer
• Location: Emerging market areas with high near- and long-term economic growth indicators

EMERGING MARKETS

HOW DO WE DEFINE EMERGING MARKETS?

• Rather than leaving, people are moving in
• Rather than being lost, jobs are being created and relocated
• Rents and property values are increasing
• Local government is committed to attracting new jobs
• Oversupply is starting to be absorbed by markets

We discover emerging markets in the United States by analyzing a variety of variables based on comprehensive study. We begin by conducting extensive market research, which encompasses the following areas:

• Job Growth Report
• Population Growth
• Path of Progress Reports
• Local Economic Reports & Trends
• Chamber of Commerce Reports
• And many more factors

ACQUISITION PRACTICES

INVESTMENT DISCIPLINE

VALUE-ADD STRATEGY

Consider it more of a company than a building. The more income it generates, the more it is worth. We search for specific chances to enhance cashflow in several areas when we buy an apartment complex. “Value Plays” or “Value Adding Components” are the terms for this type of strategy.

VALUE PLAYS WE CAPITALIZE ON

• Mismanagement caused by owner self-managing
• Poor supervision of management companies
• Deferred maintenance
• High vacancies
• Below market rents

At Tucker Equity Group LLC, we use the following value-add strategies:

• Improve curb appeal by adding landscaping, dog parks, and car-ports, among other things. When a property is in better condition and has amenities, residents are willing to pay more
• Buying a property at a discount of 10% or more below current market rents. This provides us the option to raise rents while also increasing the property’s value
• Implement a bill-back system for water and sewage to charge residents for real usage. The majority of apartment owners are responsible for all water usage. When we bill the inhabitants, we are able to reduce expenses and enhance revenue flow. Residents will become more frugal as a result of this method, lowering overall operational expenses
• Renovate the inside of the units with new paint, appliances, countertops, and flooring

PATH OF PROGRESS STRATEGY

HERE IS HOW THE STRATEGY WORKS:

• Properties rapidly increase in appreciation
• Majority of new construction is going on
• Families and individuals are moving into the area

Investing in the Path of Progress produces the best results in the shortest time.