Investment Process
Proven, Scalable and Repeatable Investment Process
1 Sourcing
We proactively look for the best projects available
Hundreds of opportunities for on and off market deals
are received monthly from various sources. They are thoroughly analyzed and funneled using predetermined criteria and the teams expertise.
2 Underwriting
Underwrite projects that meet our set criteria
15+ Deals are underwritten monthly using precise and up
to date underwriting models. Financials are received from sellers or brokers
and used for an exhaustive analysis of the deal’s potential performance.
Different scenarios are considered, assumptions are meticulously made and
constantly validated.
3 Site Visit
The property is toured by one or several members of the LGX team.
Units are carefully inspected, overall condition of the property is validated and the
location of the property is further assessed.
4 Offers
A letter of intent is submitted for selected properties that meet the expectations of our business plan
Approximately one offer is made monthly on properties that
passed the underwriting process and meet all expected criteria.
5 Due Diligence
Thorough analysis and preparation
If the offer is accepted by the owner the Due Diligence process begins.
Over a period of 90 to 120 days all information concerning the property
is carefully revised. Loan origination and fundraising processes are carried out.
6 Acquisition
Following the Due Diligence process the property is purchased
Approximately one in every three deals for which an offer was placed is acquired.
7Active management
Extensive experience in property management drives meaningful value creation
Extensive managing experience drives meaningful Value Creation. We work closely with our main property management partner Axiom Residential and with other of the leading property managers in the US. We actively supervise property managers.
What sets us apart
We work on a project-to-project basis, allowing our investors to choose which projects they want to invest in. We offer specific solutions for specific investors. We welcome Investors from all around the world and help them out throughout the whole process.
Working project to project allows us to have a nimble structure which in turn gives us more flexibility when it comes to choosing the projects we want to execute.
Risk Mitigation in Our Underwriting Process
1970's and Newer: We only purchase properties built after 1970, newer construction is typically easier and more effective to renovate or turn over. Less risk of environmental issues with lead, asbestos and older building methods that increase risk.
Fixed Debt: EVERYTHING we buy, we buy with a fixed rate for a fairly long period of time. This gives us flexibilty to hold or sell the property with no added pressure due to maturity dates, adjusting interest rates or expensive rate caps.
Pricing: We simply will not pay a crazy number. We look at close to 100 deals before we buy one. We bid on several deals but we do so at a price that makes sense to us. We will not do deals just to do deals. Numbers HAVE TO WORK.
Location: We buy in highly desirable areas where we attract good, paying tenants in locations where we know we can sell the property easily.
Exit Assumptions: We buy at cap rates that make sense and exit at what we feel is an above market rate. We make sure our projected exit price per unit makes sense and isn't only cap driven.
Underwriting Assumptions: Proforma Rents below market rent comps. We increase expenses annually. Over budget renovations. Assume increase in vacancy. No more than 4% annual rent growth unless driven by upgrades. Use common sense.
Leverage: We don't go over 70% LTV unless we purchase well below market value.
Management: We have weekly calls with our property manager and keep track of every single line item in our trailing profit & loss statement.
Site Visits: In addition to weekly calls we have members of our asset management team visit the properties on a weekly basis.
Accounting & Tracking: We work with the best Bookkeepers and CPAs avaliable. We constantly look at the financials for our properties. We track trends as they are taking place and adjust accordingly.
Reserves: We put money aside as reserves. We do so during the fundraising process and add to it monthly. If every tenant in a property were to stop paying rent for 2 months we have enough reserves to cover all expenses and debt.
Asset Class: We know multifamily, so we stick to it. We dont try our hand at other commercial real estate classes.
Tax Reassesment: We dont just assume taxes are going up 2% or 3% annually. We contact the county tax assesor's office and find out EXACTLY what we will have to pay and when the reassesment will take place.
Why Multifamily
Historically resilient and over performing CRE assets
Tangible Assets: We invest in tangible assets in solid locations.
Inflation Hedged Assets: Short term contracts allow for constant adjustments to changing inflation.
Appreciating Assets: Multifamily assets have a tendency to appreciate over time,
Diversified Tenants: A larger number of tenants translates to lower dependency on individual vacancies.
Resilient Assets: Multifamily occupancy has remained stable throughout several recessions. Multifamily assets have outperformed other CRE assets during recessions.
Strong Cashflowing Assets in USD: We purchase income producing assets with high occupancy and potential upside.