21 George Newsletter 4/21
“Ideas are worth nothing unless executed”
It is an exciting time of year if you are a sports fan. I am watching the Boston Red Sox Opening Day game as I write this, and look forward to watching the March Madness Final Four this weekend. The beginning and end of the season are always the most exciting times for the players and the fans. But in the middle of the season during the dog days of summer, game 85 of the 162 game Major League Baseball season, it is not quite as exciting. It is more of a grind than anything. Multifamily real estate is no different. The acquisition and disposition of assets are always the most exciting part. The acquisition represents a new opportunity, and the disposition, well, you make money (hopefully). But the in-between is not as exciting. Not talked about as much. Most networking events and educational programs glance over it. But it is potentially the most important part of the process, it is… Asset Management.
We just took over the asset management of a 61,000 square foot office/industrial flex space property in Fort Wayne, IN. It is a stabilized property in an industrial park with a diverse tenant mix. As multifamily apartment specialists, this is out first experience with this asset class. While office and retail space are typically more volatile (as highlighted over the past year), the industrial flex space asset class has historically proven more resilient during economic downturns. Industrial Flex space is typically a single-story building with offices in the front and warehouse space in the back. While conventional office tenants can work from home, and retail tenants downsizing brick and mortar to focus on their online presence, the industrial flex tenant base need the warehouse space to store their inventory, and utilize the small office space in the front to run their operation. This is an asset class we will continue to explore.
We continue to work on stabilizing our 52-unit property in Chicago we acquired a year ago. It is a major reposition so we budgeted 12-18 months to stabilize the asset. We have completed all of the major items including, a new roof, new furnace, tuckpointing, concrete work in the courtyard, plumbing repairs, and the majority of our unit renovations. We will make some landscaping improvements and renovate three more units to complete the rehab.
We have completed our management transition on the 64-unit outside of Chicago we closed on in January. Occupancy and collections remain near 100%. Since this is a stabilized property, we do not need to act as quickly on our renovation projects, but we are beginning Phase I of our planned value add strategy to maximize our Net Operating Income.
After closing on the 64-unit property back in January, we have been working hard to fill our acquisition pipeline back up. While new and existing buyers continue to flood the market, we continue to maintain our conservative underwriting practices to identify undervalued multifamily properties that we can effectively manage over an indefinite period of time in markets with diverse local economies.
We continue to analyze new opportunities in New England, Chicagoland, and several southeast states.
We had a great time being Sponsors at the RE Mentor Sponsorship Event! There were varying degrees of real estate investment experience at this event, so it was a great opportunity to learn from more experienced investors, and help educate less experienced ones.
What is a “Sponsor”? In this case, a Sponsor is an individual, or company, who meets financial and investment experience qualifications required by lending institutions to get a loan for a multifamily property. A Sponsor is a vital member of any team, and will usually bring more to the table than just the ability to get a loan- including acquisition and asset management experience.