Multifamily
Investment Opportunities
Investor Information: Multifamily/Apartment Buildings
Sbrana Equity Group specializes in medium and large multifamily investment opportunities (8 units and above).
Investor Responsibility
Investors who express interest in this type of real estate opportunity, and plan to buy using a traditional mortgage, would need to qualify on their own using one of our preferred lenders, or their own. To secure their position as owner/investor, the individual or group of investors would be responsible for the Earnest Money Deposit which is generally 1% of the purchase price (and it is 100% refundable if the deal falls through). Upon closing they are responsible for transferring the capital required to fund the deal. They would also be responsible for their own tax situation; though we have connections with real estate focused CPA’s that we’d be more than happy to refer.
Sbrana Equity Group Role and Responsibilities
Sbrana Equity Group will serve as the operator of the property for the life of the project unless otherwise agreed upon. They will be responsible for the project analysis, acquisition, pre-closing logistics, any and all renovation, property management, tenant search and placement, rent collection, maintenance requests, unit turnover, investor payouts, tax document distribution, LLC documentation and upkeep, selling process, and anything else associated with the ongoing operation of the project. The investor should have very little, if any, ongoing responsibility of the project. An investors primary responsibility is to invest the initial capital, and collect their cash flow. Sbrana Equity Group will handle just about everything else.
Project Hold Period
Investors should expect to hold the property for a minimum of 7 years; however depending on the entity structure and percentage control the investors holds, they could have full autonomy to sell at any point. Sbrana Equity Group simply recommends they hold for a minimum of 7 years to ensure maximum profitability. We understand there are circumstances when a property might need to be sold prior to the recommended timeline, and that is completely doable.
Annualized Returns for apartment buildings range from 17.00% - 28.00%
Every multifamily investment is unique and may offer varying returns depending on a number of factors. The annual return expressed above (AAR) is the combination of cash on cash return from the cash flow received, and any profit from the sale of the property on a 7 year and 10 year sales analysis. Sbrana Equity Group uses “cash on cash return”, and “Average Annualized Return” (AAR) as the two main metrics to analyze deals/project returns.
Sbrana Equity Group strategically targets underperforming assets that can be renovated or improved upon in order to reach maximum profitability both in short term cash flow and long term sales price.
If you have other questions or you are interested in investing, let’s set up a time to talk more!
Project Example
Sbrana Equity Group partnered with two Investors to purchase this 12 unit apartment building in Louisville, Kentucky for $935,000. Upon purchase it had a 50% vacancy rate and needed $300,000 of renovation work. The total capital contribution for the investors was $388,688.56, or $194,344.28 per investor. The expected annualized return for this property after a 7 year sale is between 19.00% - 25.00%, and the annualized ROI at a 10 year sale is between 28.00% - 33.00%.
Cash Flow Analysis
Beginning in year 2, the cash flow produced from this property grows each year based on a market average 5% annual rent increase. The cash on cash return percentage expressed at the bottom of the analysis is only based on the pure cash flow versus the total capital contribution. This analysis does not include any profit from the sale of the property.