Parameters to look for in Acquisitions

7-9% cap minimum (Value = Income / Capitalization Rate)
A to C properties in A to B Areas
75% to 85% LTV maximum
Non recourse loans preferred or lower leverage
1.25 Debt Service coverage minimum
Demographics 75% Median income 125% above average
Household Income $50,000 and above
Manageable on site with res mgr and maintenance personnel
Usually minimum of 50 apt units or retail over 30,000 sf
Shadow anchored retail (nearby generator of daily traffic)
Slow traffic
Frontage and parallel to main artery
Anchor and Institutional grade properties nearby
Hospitals, Health Clubs, Offices nearby
Good business 7 days per week or at least 6
100,000 population inside 3 miles
Can tenants get employees at fair rate for labor
Signage ability
People and traffic
15000 – 25000 population inside 1 mile
70000-100000 population inside 2 mile
$45000 median hh income
15000 cars per day min
Is community proactive and welcoming
Business generators DAY AND NIGHT
Accessibility and visibility to main Arterial Street
Surrounded by institutional grade properties or owner occupied properties
Competitive amenities that give unique advantages
How will we attract and retain tenants
Appealing architecture. Functional Floorplan. Not too small not too big.
Quality built. Good water drainage from roofing.
Efficient acceptable HVAC
Easy ingress and egress. Quick to get in and out
Parking 2 spaces per apartment / 4 spaces per 1000 sf minimum
Secure image
Three years real operations
6 months collection report
Rent roll
Conservative economic evaluation
Consistency of Cash flow
Controllability of Expenses and Debt Service
Lender prefers this property type

Tom Fortin

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