Investments

Having survived and prospered through several real estate cycles, the type of investments offered may change as markets change. We focus on minimizing risk and maximizing cash flow. 

With an undergraduate degree in Sociology and a passion for Economics, Smith watches the markets carefully as world events, interest rates, inventory, and industries affect regional markets. For example in the 1980s in the Texas Depression and Savings and Loan Crisis, single family residences that were foreclosed by FHA or VA were excellent investments while retail, office, and industrial properties languished. Later, properties, including land, were purchased from the Resolution Trust and deep discounts. Hard-money lending offers better fixed-rate income returns than purchasing and laddering bonds or investing in a typical mutual fund. When foreclosed properties are purchased at the courthouse steps, an assessment of value, a site visit, and a title search is done prior to bidding at auction. Partners are always personally invested in the assets along with the LP investors. 

Today, we find that the best investment involves multi-family properties with 100+ units, preferably 200-400 units. Target IRR (internal rate of return) is 15% per annum and target cash-on-cash return is 8-10% per annum. Some investments fare much better than the pre-determined target returns. The last investment return element available are the capital gains that will be realized after renovations are completed and the property is sold. 

An additional benefit to investing in multi-family properties that have a value-add elements is the bonus depreciation available on this type of property. Many of our investors are high-income professionals who are able to minimize income tax liability by being able to take advantage of the short-term depreciation elements provided by a cost segregation study. At the end of each year, an Internal Revenue Service form K-1 is provided to each partner used for tax reporting that provides, income, expense, and depreciation afforded to the partners. Investors may also invest through 1031 exchanges and solo 401(k)s.

Whatever and wherever the investment, a careful analysis will be made before the first dollar is spent so we can be as confident as possible that the maximum return on the investment will be achieved. Present investments are located from California through Florida.