The multifamily apartment business serves such a vital role in providing housing for people across the country and the world. We live to serve our Residents, our employee team members, our Investors, and the community at large. Here are a few core tenets that we at Avid Realty Partners hold the sacred day in and day out:
This is a get-rich-slow venture. We do not believe in get-rich-quick schemes and recognize just how rare it is to create large amounts of wealth quickly. Typically those ‘opportunities’ turn out to be nothing more than high-pressure scams. We are transparent that investing in Real Estate is a get-rich slow (but steady) venture. We work hard to roughly double investors’ money net of fees over five to six years…safely, securely, and predictably. Further, these investments are Illiquid, and thus not for everyone. However, for the right investor, those with a longer-term horizon, not in need of immediate liquidity, and for those uninterested in living the daily yo-yo action of the stock market, real estate is a stable investment with meaningful tax benefits, reliable cash distributions, relatively low investment risks, and, usually, the return of your principal investment with a significant gain. In other words, Real Estate investments allow you to diversify your portfolio by owning bricks-and-sticks hard assets, enjoy tax benefits, and get rich slowly while we do the hard work of identifying true value-creating deals
We don’t buy just to buy, we need asymmetric risk/reward to purchase a deal. Avid Realty Partners’ investment team very carefully vets each new investment opportunity, analyzing hundreds or thousands of deals for every deal we buy. We never buy just for the sake of buying, or to grow the organization, as we have seen with so many other emerging manager platforms. We need asymmetric risk/reward in order to purchase a deal…we need practical certainty that a deal will generate returns for our investors. Our dual corporate missions are to provide safe and comfortable housing for our tenants, and to provide the best possible risk/reward returns to our investors and partners. Growth will be the organic result of excelling at these two objectives. Regarding current market conditions, there is limited economy-wide distress, with only signs of financing distress among some bridge debt borrowers. Further, multifamily Sellers continue to hold firm on pricing, with a sizable bid/ask spread versus Buyers. For us, this means we must look even harder for a deal that makes sense in a higher interest rate environment…and we refuse to settle! We refuse to accept “close enough” deals! We have to have practical certainty. Our collective underwriting process needs to yield 15%-18% project level IRRs with realistic rent growths, defensible exit caps, an inflation-adjusted expense structure, and renovation costs that reflect today’s reality. We are always going to provide ourselves and our investors with intellectual honesty in our identification of value-creating deals!
We love buying beautiful assets, but they are not always the best value-creation vehicles. We love buying beautiful Class-A assets that show well, have amazing amenities, and that newcar smell. But these deals are often priced to the moon, and may not enable us to deliver the returns that we expect of ourselves as an organization. This is the gray area is where firms are made or broken. At the end of the day, overpaying for grandiose assets is not how we are going to build this platform. We fall in love with risk/reward adjusted returns, growth trends, demographic trends, and the look and feel of a property all relative to our purchase price into the asset. A property that has been mismanaged, has comps in rent growth, or is located in a geographical area that is about to explode, will provide enhanced value creation for our investors. We have to stay objective and analytical to manage risk and deliver zero realized losses in the future.
Investors are Welcome to Reach Out
We continue to make decisions focused on long-term value creation. We are working to diversify our firm with new acquisitions, and improve the management of our current assets. We continuously seek high-net-worth individual investors and well-capitalized institutional partners to work within a variety of potential structures. We take great pride in two simple principles: 1) operate with Integrity in everything we do as a firm every single day, and 2) Deliver top-flight execution to those that put their trust in us. This includes Investors, Employee team members, Residents, and the community as a whole. We are interested in hearing from you, please reach out with thoughts, questions, or to make an introduction to our Team.
All the best,
Craig, James, Jim, Mary, Jeff, Luis, Omar, Sebastian, Kevin, and Irene
Avid Realty Partners