JB2 Apartment Hunt

We've been actively searching for our next investment opportunity and wanted to share how the process has been unfolding.

What's the Target

We are currently looking in KC, Tulsa, OKC, Wichita, and some markets in Oregon. We have narrowed our search to newer properties built in 1980 or newer.  The reason is our older product, which we currently own, and our cash flow has been hit by unforeseen CAPEX issues, mainly due to the systems.  Therefore, learning from that, we are avoiding the same product type in hopes of fewer surprises.  However, we will look at older products if, for some reason, the systems have had a significant overhaul. That has limited the opportunities we can underwrite since a lot of what is coming out is '70s product. Generally, because that's what the inventory is mostly comprised of. Whatever newer properties are coming out still seem to be quite competitive because many buyers are fighting for quality. Our goal is to strike a balance between property age and return on investment, which has proven to be challenging but something we are not wavering on.

The Way to get a Deal Done

Lending has been challenging and has not made anything easier for deals to pencil. However, lending will hopefully soften up towards the end of the year. Our last deal was a loan assumption deal that made it a deal.  That's still a way to get deals done in today's market.  We have been in close communication with many brokers.  They have done valuations for many sellers, and it seems a lot of them are sitting and waiting until we have less volatility in the market. Some of these sellers will need to make moves because debt is coming due.  We hope to see more deals coming soon.  In the meantime, we continue to analyze and get realistically creative to complete our next deal.

Keeping Enough Reserves Aside

Another challenge has been estimating bigger capex buckets to absorb unforeseen issues better, making it even harder for any deal to work. It's a delicate balance of keeping enough dollars aside while still being competitive on what we can pay. We follow up with agents weekly and constantly communicate to ensure we do not leave any stone unturned.

Getting a Deal Done

If we continue to underwrite deals diligently, we will find the one that checks the right boxes that we will move forward with. The key is striking the right balance between return on investment for our investors and risk mitigation through our buying parameters. Ultimately the goal will be to at least get one deal closed by the end of the year.

Current Search Criteria

-1980’s or newer

-3-12 million

-20-150 Units

-B or better areas

-At least 100+ rent spread to today’s market rents.

- OKC, Tulsa, Wichita, KC or Near Bend Oregon

-light to medium capex needs