Multifamily Business Plan

[Ian Ray]

This is my Multifamily investing business plan, based on the Outline given by the wonderful Ryan Moeller. I would love feedback from all of you awesome BPrs, Good, Bad, and Ugly. I am jumping into this new industry and would love to get off on the right foot.

1. Mission Statement – To use the vehicle of investing in multifamily properties of various sizes (minimum of 10 units) to generate wealth for myself and my investors in a stable fashion. I plan to acquire ownership or control of 7,000 units within the next 7 years through a combination of syndication, joint ventures, and personal acquisitions.
2. Strategy – My strategy it to acquire moderately sized (50 to 150 unit) properties in emerging markets that are currently at a C+ to B- grade, as well as acquire large multifamily (160 to 350 unit) properties in stable areas around major industry and academic institutions that are B- to A- grade. The moderate sized properties will be managed by either an in house property management group that is a General Partner, or an outside property management company contracted for service on the specific property.
3. Market – Target markets will include Charlotte, NC, Raleigh-Durham, DFW, Knoxville, Nashville, and Johnson City TN, specifically around public education institutions that have pent up demand for viable student housing.
4. Criteria – I will select properties that can be acquired with a 65% LTV with a cap rate of 5.6 to 10% (based on size of acquisition and financing in place) cash flow sufficient to generate a minimum cash on cash return of 11%. The max purchase amount will be contingent upon the specifics of the deal and the position of the market at time of evaluation. With that being said, I will aim to purchase properties at least 15% below appraisal value. I will seek to hold these properties as long as the value of the investment and the yearly cap rate stays within our models.
5. How to find deals Marketing plan – I plan to network with brokers that specialize in the inventory I seek. I also intend to dialogue with other investors in the space who may be seeing deals that I am unaware of that fit my criteria, but not theirs. I will develop relationships with commercial lenders, and private money sources that invest in my target markets to create an ecosystem for information flow.
6. Finance – Deals will be financed on a case by case basis using a blend of private capital as well as JV and equity partners to raise capital for the down payment on the property. I will seek to use either conventional financing or seller financing where it makes sense to fund the rest of the acquisition of our target properties.
7. How to do deals – How are you going to turn a purchase of a property into profit? Clearly define the steps. Repairs, rent, management, implementation of exit strategies, etc.
8. Exit strategies, Backup Plans – I plan to maintain control of all properties acquired until the opportunity to sell becomes a better proposition than holding long term. I plan to return the bulk of investor principal via cash out refinance after a 3 year period, paid out in order of agreement based upon the specific deal structure. For student housing, I plan to execute a master lease with option to purchase in order to remove investor capital but maintain control of the property. I will also evaluate seller financing options as applicable.
9. Team & Systems – I will structure my team per acquisition. Team roles will include on-site property management and maintenance from a General Partner property management firm, or a contracted firm, as well as in house CPA, Lawyer, and asset manager.