On a recent trip to our local brewery, Myron and I got into a debate on how to best drink the flights. Is it light to dark, or dark to light? While our taste buds analyzed the American IPA, Hefeweizen and Coffee Stout, this conundrum had us drawing parallels to the diversity related to investments in the multifamily space.
The Coffee Stout – Small Mobile Home Parks
The coffee stout tends to be thicker and strong tasting, not for everyone. But for those that can appreciate the hints of chocolate mixed with roasted malts, it can be oh so sweet. We are bullish on mobile home parks because of their high demand here in the Sunshine State. We have been putting offers on small mobile home parks for a while looking to get into this space. Some of the key advantages that we are attracted to are:
Lower per-unit cost since you are only renting a lot
Low maintenance since the tenant is also the owner of their mobile home
Lower tenant turnover since, contrary to what you may hear, picking up and moving a mobile home is expensive and elaborate
The Hefeweizen – Small Apartment Complexes
Perhaps the most underrated beer is the Hefeweizen. I am a big fan of the ambrosial, dark, cloudy beverage that jumps at you with flavorful hints of banana, vanilla, and clove. The small apartment complex is a winner in my book because I feel it is overlooked. We are bullish on small apartment complexes, under 20 units for this article, because they are caught between adventurous residential investors who might bite off more than they can chew and your typical syndicator that isn’t even considering them for their portfolio. Consider these when you find yourself with a 1031-exchange and you’re looking to level-up from the residential market.
The American IPA – Mid-Size Apartment Complexes
Everyone loves the American IPA. Poll after poll, it continues to be the most popular and sought-after craft beer. What is there not to love? With the citrus aroma and bitter-sweet taste. If you’re not expecting it, though, the hops can sneak up on you and ruin the moment. The mid-size apartment complexes, 20-80 units, is a busy space. Much like the popular IPA, investors continue to overpay for these assets. We sometimes look at the winning bid comparing their numbers and it continues to baffle me how investors purchase with very little cash flow (cash on cash percentage). The key advantages to this asset class are:
Predictable income stream. As long as you can keep the vacancy under 10%, you will have a dependable income stream.
Forced appreciation. Increase the property value just by increasing rents.
Scalability. Share your management, maintenance and operating costs across multiple units.
All of these options can be completed using our innovative partnership model or the traditional syndication model.
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We are Ten15 Capital, and we are innovating the world of real estate investing via apartment complexes. We create lucrative opportunities via syndication or joint venture projects.
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