Investor Inquiries
Transparency is required for efficient capital flow. Review our detailed responses to common operational and strategic questions regarding our real estate models.
How do you calculate physical vacancy vs. economic vacancy? +
Physical vacancy is merely empty units. Economic vacancy accounts for bad debt, concessions, and non-paying tenants. We underwrite purely on economic vacancy to ensure cash flow projections are highly conservative.
What is your stance on Class A luxury developments? +
We generally avoid Class A. Yields are overly compressed, and tenants have high elasticity of demand. Class B and C workforce housing provide more inelastic demand and broader value-add opportunities to force appreciation.
How is deferred maintenance budgeted during acquisition? +
Immediate deferred maintenance is subtracted directly from the offer price. We require a minimum 20% margin of safety on contractor bids to account for unseen structural or systemic issues discovered post-closing.
Do you utilize variable interest rate debt? +
Rarely. Variable debt introduces uncontrollable systemic risk to the cash flow model. We prefer to lock in fixed rates and accept slightly higher upfront costs to guarantee our DSCR (Debt Service Coverage Ratio) remains stable.
What role does depreciation play in your models? +
Depreciation is utilized for tax sheltering, particularly through cost segregation studies which front-load depreciation on non-structural components. However, it is not factored into the raw operational NOI or CoC calculations.