Multi-Family – KVM Apartments group

4-Plex KCThe KVM Apartments group focuses on residential income properties located primarily in Midwestern portion of the USA,  where Cap Rates tend to be higher than in the coastal regions of the USA. We are continually seeking smaller apartment buildings from 2 to 40 units. We target multi-unit properties that are located in stable to growing metro areas, in safer neighborhoods, where there is a “value add” opportunity that has been overlooked by other investors. There are certain elements that our acquisition team is continually searching for when sifting through opportunities as we find them. The basic criteria we utilize to find such value add opportunities are as follows: :

Distressed Properties: As a result of the Great Recession and crash in real estate values that started in 2008′, there are income properties scattered throughout the USA that are over-leveraged, in foreclosure or are Bank Owned. We are continually searching for such financially distressed properties as potential acquisitions as long as they meet our other criteria of being located in a stable local economy and a safe neighborhood.

Poor Management: Poor property management comes in many shapes and colors. From deferred maintenance, unprofessional tenant screening, excessive maintenance expenses, master meters, and more, offer a never ending source of new acquisition opportunities.

Deferred Maintenance: In some cases, we will find properties in which the previous owner siphoned off gross income, instead of allocating portion of gross rents to be used for future property maintenance. This “borrowing from Peter to pay Paul” mentality, results in a gradual physical decline of the property, resulting in lower rents or higher vacancies, or both.

Aging Properties: Older properties that are in need of a face-lift or major renovation, and located in safe and stable neighborhoods, offer a good potential for such a Value Add. Once these needed improvements are completed, a gradual decrease in vacancies and increase in rents are obtained over a period of 6 to 12 months.

Lagging Rents: KVM sometimes find income properties where the current in-place rents are behind the comparable rents for the immediate area and product mix. These below market rents are usually coupled with properties that have deferred maintenance, or have been poorly managed (or both), as outlined above.

X Factor: Seeking below market value multi-family properties with a potential for Value Add is often times an entrepreneurial pursuit. We are always looking for properties that are broken in some way, and sometimes find opportunities that don’t fit in the segments listed above. These X-Factors will vary from area to area, and are dynamic in time and demographics.