Our multi unit portfolio: Alternative to over heated stock market
The case for buying this portfolio vs. others
Alternative to the overvalued stock market
The stock market is historically overvalued, using what is widely considered the most accurate meausure of all, the CAPE10 (see Wikipedia here). This rental property portfolio, by contrast, is fairly priced, stable, predictable, and shows a good chance of returning a fairly steady 8-12% cash flow and an overall 22% return on investment both short and long-term. This prediction is based on our historic performance. We sold our two largest buildings in 2017 & 2021 and our overall annual return (IRR) was 37% per year over 7 years and 41% annual IRR over 10 years. I certainly wouldn't suggest that you'll get that return with any of the remaining buildings because they are more established, turn-key and stable. But I do believe a 20% annual CAGR or IRR return on your money with these properties is very attainable with decent management.
Above average condition
Because we have owned other businesses that have funded our living expenses, we've been able to put much of our real estate cashflow back into updates and renovations, making these rental properties as trouble free as possible so that they are easy to manage.
Attractive to good tenants
Our goal is to always be "best in class". There will be times (as economic cycles wax and wane) that there will be more tenants than available apartments in the area. When that happens, we want our apartments to stand head and shoulders above the rest. And we promise that they do. At least 3 out of 4 prospects tell us that our units are the nicest they've seen so far. We have very high standards in regards to our tenant selection process. We have high income & rental history standards and require substantial pet fees and security deposits. Our average vacancy rate has been between 1 & 2 percent annually since 2010. This compares to 5%-7% state-wide.
Full maintenance and management team in place
We have a great team in place: heating, plumbing, electrical, and other maintenance people have worked for us for years and are well integrated. One contractor handles 80% of our maintenance, (and even some management), and has been with us more than 7 years! We can help facilitate a management company for any buyer, or even manage the portfolio for you for a year or so if you prefer, for a fair rate.
The future
Although we have done many upgrades and raised rents regularly as appropriate, there is still room for potential income increases. Our rental rates are mostly still below fair market rents. Our standard operating policy is to leave rents mostly unchanged during a tenant's residency, in essence rewarding those tenants for longevity. Once a tenant leaves, we reassess, make some updates, and raise the rent accordingly. Therefore, most of our units that have longer-term tenants are below market rental rates for the area.
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