Our Strategy
Explore the advantages of investing with expert guidance
At Land Fortuna, safeguarding our investors' capital is our top priority. Our investment expertise is honed on multifamily apartment assets, which are the cornerstone of our investment strategy. We focus specifically on elevating Class B & C Apartment communities across a variety of secondary and tertiary markets throughout the country.
Multifamily properties have historically shown the least amount of volatility during economic downturns among real estate categories, ensuring durability and robustness. They also present a significant opportunity for impressive gains when the economy is strong. We are particularly drawn to Class B & C properties in the multifamily domain due to their attractive dynamics of high demand and the relatively scarce new supply.
By targeting Class B & C multifamily assets in carefully chosen markets, we strive to leverage the steady need for cost-effective housing solutions while reducing exposure to economic variability. This strategic focus is in line with our commitment to preserve and enhance the investments of our valued partners.
Our Investment Standards
DEMOGRAPHIC
FOCUS
● Age Group: We target the 18-35 demographic, which constitutes 22% of the U.S. populace.
● Earnings: We cater to tenants with annual incomes of $40,000 or more.
● Affordability: We ensure rent constitutes no more than 30% of the median household income.
● Downsizing Boomers: Retiring individuals are transitioning to multifamily homes for a hassle-free lifestyle.
ASSET
SPECIFICATIONS
● We specialize in multifamily residential apartments.
● We prefer properties with sloped roofing systems.
● We look for properties with at least 80% occupancy or those requiring renovations that are strategically located with potential for value enhancement.
INVESTMENT OBJECTIVES
● Scale & Valuation: We aim for properties with 40 or more units valued between $2 million and $50 million.
● Revenue Expectations: We seek a 7-10% Cash on Cash return and a minimum Debt Service Coverage ratio of 1.25.
● Asset Grading: Our interest lies in C- to B+ grade properties situated in C- to A neighborhoods.
● Construction Era: We focus on properties built from 1975 onwards.
● Market Position: We target regions on the cusp of strong immediate and sustained economic development.
Investment Strategy Our Method
Land Fortuna adopts an active and strategic approach to uncovering prime investment prospects. We prioritize fostering solid connections with community brokers to secure access to off-market deals and Bank Owned Properties (REO). We take the initiative to scout for properties and directly contact owners to avoid over-reliance on market-listed properties.
Our investment methodology is grounded in rigorous due diligence. We thoroughly assess each asset to determine its physical condition, legal standing, and accurate valuation, laying the groundwork for our investment choices on a foundation of well-researched insights.
From the onset of the evaluation stage, we craft a customized financing strategy that takes into account the property's characteristics, refurbishment needs, anticipated duration of the investment, and investor goals. Generally, we plan to hold each property for a period of 3 to 5 years, consistent with its specific business plan.
Our investment philosophy is characterized by regular and meticulous market evaluations. We analyze the market demand factors such as employment trends, population movements, demographic transitions, absorption rates, and local regulations. We give preference to markets with limited supply, which are likely to offer sustained stability and growth. In contrast, we steer clear of markets with a glut to avoid the pitfalls of surplus inventory.
Following this disciplined approach, we are committed to pinpointing and seizing value-driven opportunities while carefully balancing risk, ensuring the protection and prosperity of our investors' interests.
Development Trajectory Approach
A Strategic Approach
Approach the acquisition as investing in a dynamic business entity, rather than a mere structure. Its valuation is deeply tied to its ability to generate income. In acquiring an apartment complex, we focus on uncovering tactical avenues to augment income streams, leveraging what's commonly referred to as "Value Plays" or "Value-Added Strategies."
OPPORTUNITIES WE EXPLOIT
● Inefficiencies from self-managed properties
● Subpar management company oversight
● Neglected repairs and upkeep
● Elevated vacancy rates
● Rents set below the prevailing market rate
VALUE-ADD EXAMPLES
● Enhancing the property's exterior appeal with better landscaping, and additional amenities like dog parks, and carports can justify higher rents from residents.
● Acquiring properties with rents at least 10% below the market rate presents an immediate chance to uplift rents and thereby property value.
● Instituting a Ratio Utility Billing System (RUBS) to pass water and sewage costs to tenants based on usage, encouraging conservation and curbing operating costs.
● Upgrading units with fresh paint, modern appliances, upgraded countertops, and new flooring.
● Introducing a coin-operated laundry, adding both service and revenue.
● Adjusting below-market rents to reflect current market conditions.
DEVELOPMENT TRAJECTORY
In the real estate domain, the 'development trajectory' signifies the growth and evolution of a locality, manifesting in economic vitality, infrastructure enhancements, and ascending property valuations. As urban areas grow and transform, they spawn new conveniences, business districts, and transit routes, heightening the area's appeal for dwellers and investors alike.
Such progression magnetizes businesses, generating employment opportunities and invigorating the local property market. With the region's advancement, real estate values typically rise, presenting opportunities for profitable investment and an enriched lifestyle for the community.
Our Approach
● Properties located within these zones tend to rapidly increase in value.
● These are often hubs for fresh construction activities.
● They attract families and individuals, signaling a thriving community.
Optimal Investment Returns
Channeling investments into the trajectory of development yields substantial returns in comparatively shorter periods.