Commercial Multifamily Real Estate Investing with
a National Perspective
EM Capital is a privately held real estate investment firm located in Boston MA. We acquire, and operate commercial multifamily properties with strong cash flow in select US cites with positive growth indicators.
We focus on markets that exhibit strong job and population growth, with positive indicators that these trends will continue.
Through a disciplined investment approach, we acquire cash-flowing commercial multifamily real estate properties with long term capital appreciation potential.
Value is added to these properties through superior asset management, and tactical capital improvements that maximize cash flow. The properties are held for a period of 3-7 years and sold when they have achieved their return targets. The cash flow and returns on sale contribute to outstanding risk-adjusted returns to our investors.
Property Acquisition Criteria:
·Residential Multi-Families: 50 units and up
·Property Condition: C Class or better, unless located in an excellent area
·Location: C / B+ and up
·Minimum Occupancy: 75%. Will consider lower occupancy on properties with significant upside potential.
·Property is undervalued compared to competitors within the sub-market
WHY INVEST IN REAL ESTATE?
Real estate is secured by a physical asset and is a historically stable investment. In the vast majority of cases, an investment property will retain its value and appreciate over time. If you make your monthly mortgage payments and have the correct insurance, it is very unlikely that you will experience a total loss on a real estate investment.
Robert Kiyosaki, the author of Rich Dad Poor Dad, claims that there is money to be made even when the market crashes:
"Real estate is a long-term hold. It’s not liquid. I don’t care if the market is up or down. What I’m looking for is a bargain. I make most of my money when the markets crash. I made most of my money in 2007. I made even more money in the subprime crash. I don’t care about the overall economy or the markets."
Because people will always need a place to live, real estate can be a safe way to invest your money in something that’s always in demand.
Diversification, stock market investment alternative
Hedge against inflation
Tax advantages / Tax strategy tool
Why Invest in Multifamily properties?
There are many categories of real estate, single family homes, land, industrial space, office buildings, and REITS to name a few. A major advantage to investing in multifamily properties is risk. Investing in a multifamily property from a small rental, to an apartment building is less risky than other real estate classes due to it's inelastic demand, people always need a place to live. Additionally, multifamily properties reduce risks associated with vacancy due to scale. The more units you have under one roof, the less risk you have. If you have a single family house and you lose your tenant, you’ve lost 100% of your income. In some instances, this could be your entire profit for the year. If you have a 50 unit building and lose a tenant, you still have sufficient rental income to cover the property costs, and generate cash flow. The best reason to scale up your investing to larger multi-family properties is that cash flow is always greater than that of a single family, due to the size of the deals, and the operational economies of scale achieved through density.
The larger cash flows and larger property size of multifamily allows you to hire professional management companies to manage the property operations, eliminating the day to day operational work, and leaving more time to manage the asset to maximize return for investors.
The value of a commercial property like an apartment complex is based on the revenue it generates, unlike single-family homes which are based upon “comparable properties” and market conditions. This provides a mechanism for increasing the properties’ value through increasing operating income that is decoupled from the local residential real estate market.
Rehab, cosmetic /physical improvements and better management can have a greater impact on the value and cash flow of a multifamily than on a single-family house.
You probably know a few people who have made a lot of money flipping single family houses, but if you look up people who have become extremely wealthy through real estate, you’ll realize that they did it through owning commercial real estate like multifamilies.
EAST BOSTON, MA
Residential properties in the East Boston Neighborhood of Boston. They were identified due to their proximity to city backed development projects, and strong growth potential spurred by the Big Dig highway reconstruction project which improved neighborhood access to the Boston Financial District. Today, many large scale projects are in the works, and many have been completed. The neighborhood has experienced significant growth, and the properties have provided strong returns through a full market cycle. We are currently converting the properties to condominiums and will reinvestment the proceeds in other emerging markets.
This 5 unit property located in Salem MA was purchased in late 2016. Salem was identified as a growth market that was benefiting from Bostons's rent growth, yet with more favorable pricing. The property was purchased, and a repositioning plan was implemented that improved management and completed targeted renovations. The NOI was increased by 40% over a two year period and the property was sold in early 2019 for an annualized rate of return on equity of greater than 60%
This 44 unit multifamily property was purchased below market value in late 2018. Athens GA was choses due to it's large population and job growth. Athens recently jumped 34 spots to number 8 on the Milken Institute's annual Best Small Cites report 2018. After acquiring the property, we changed the property management, and are implementing a value add plan that involves the staged renovation of every unit over a two year period. The expected hold period for this property is 5 years.
This 24 unit multifamily property was purchased below market value in late 2019. Tallahassee Florida was choses due to it's job and population growth as well as the stability associated with the government and education jobs in the area. Tallahassee jumped 35 spots in the Milken Best Performing Cities report, which is a strong indication of Metropolitan Area health. After acquiring the property, we changed the property management, and are implementing a value add plan that involves exterior CAPEX and the staged renovation of the unit interiors over a two year period. The expected hold period for this property is 8 years with strong cash flow, and above average returns.
This 67-unit multifamily class C property built in 1975 was purchased well below market value in 2019. The property has not had any significant upgrades since construction. Upon acquisition, a new property manager was put in place and extensive CAPEX and value add plan were implemented The expected hold period for this property is 5 years with strong cash flow, and above average projected investor returns.
EM Capital LLC
129 Newbury St. 2nd Floor
Boston, MA 02116