Strategy

Manifest Capital Group’s core mission is to protect our investment partner’s capital by focusing solely on class C or B multifamily commercial properties. Our strategy centers on seeking value-add opportunities involving undervalued rent, renovation upgrades, and incorporating income producing vehicles into the property.  Once this strategy is executed and the property is stabilized, we would typically sell after a 3-5 year hold for a large profit.

MARKET SEGMENTS

• Age: The 18-35 year old market segment is 22% of the U.S. population
• Income: Renters who earn $40,000 or more annually
• Price: Where rent is 30% or less of the median income
• Retiring Baby Boomers are scaling down and enjoying maintenance free multifamily living

PROPERTY CRITERIA

• Multifamily residential apartments
• Pitched roof construction preferred
• Occupancy above 80% with the exception of properties that require renovation, providing properties are well located and present value-add opportunities 

TARGET VALUES

• Size and Price: 50+ Units up to $15MM range
• Returns: 7-10% Cash on Cash, Minimum Debt Service Coverage ratio of 1.25
• Type: C- to B+ properties located in C- to A areas
• Property: Vintage 1975 or newer
• Location: Emerging market areas with indicators for strong and long-term economic growth

HOW WE CHARACTERIZE EMERGING MARKETS

• An increase in population which shows people moving in, rather than leaving the area
• Big Employers moving into the area which creates jobs 
• Rising rents and property values 
• Local government dedicated to attracting jobs
• Markets starting to absorb oversupply

Through extensive research, we analyze many indicators to identify emerging markets in the US. We start out by performing thorough market research that includes the following areas:

• Job Growth Report
• Population Growth
• Path of Progress Reports
• Local Economic Reports & Trends
• Chamber of Commerce Reports
• And many more factors

Each asset undergoes a thorough due diligence process to confirm the physical and legal status of the property and to confirm valuations to ensure achievable investment strategies.

Early in the asset evaluation phase, the debt and equity financing strategy is developed based on a number of factors such as property type, magnitude of renovations, expected hold period and investor objectives. Each asset is typically held 3-5 years depending on its exact business plan.

INVESTMENT DISCIPLINE

Asset selection involves a systematic, routine evaluation to identify favorable demand characteristics, i.e., job and population growth, demographic shifts, supply absorption rates and positive local legislation.

Markets with supply constraints receive most favorable underwriting. Markets with signs of oversupply such as surplus land, changes in zoning and increases in building permits are avoided.  

Think of it as a business rather than a building. The more income it generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cash flow in different areas. These are called “Value Plays” or “Value Adding Components”.

VALUE PLAYS WE CAPITALIZE ON

• Below market rents
• Deferred maintenance
• Mismanagement cause by owner self-managing
• Poor supervision of management companies
• High vacancies

Some examples of value-add plays we implement at Manifest Capital Group:

• Improve curb appeal: by improving landscaping, adding dog parks, carports, etc. Residents will pay more when a property is in better condition and has amenities.
• Purchasing a property that is 10% or more under current market rents. This gives us the opportunity to increase rents and immediately increase the value of the property.
• Implement a water and sewage bill-back system to charge the residents for actual usage. Most apartment owners pay for all the water. When we bill back the residents it helps offset expenses and increase the cash flow. Through this system residents tend to become more frugal and will decrease overall operating expenses.
• Improve unit interiors with new paint, appliances, countertops, and floors
• Adding a laundry facility to the complex

Our criteria for property acquisition is designed to ensure maximum returns for our investment partners. This criteria includes the following:

• Cap Rates: +/-6% or higher
• Cash on Cash Returns: +/- 7 to 10% or higher
• Debt to Service Coverage Ratio:  1.25% or higher. 

These metrics are essential indicators of a property’s potential for strong cash flow and equity growth. We carefully evaluate each opportunity to ensure it meets this criteria.  If so, we are confident in our ability to generate positive returns for our investors.

After the property is acquired, our goal is to provide our investment partners with exceptional returns on their investments. We have set strict criteria for potential opportunities to ensure that they meet this goal. Our focus is on properties that offer the following returns at a minimum:

• Annual Cash Flow: 7-10% per year through rental income 
• Equity Gains:  9-12% per year by forcing appreciation due to renovation upgrades and incorporating income producing vehicles
• Average Annual Return:  16-22% upon exit through the sale of the property.  This is what we communicate to investors.  However, often times we will exceed these values.

We understand that real estate investments are a long-term strategy, but we aim to maximize returns in the shortest time frame as well. Our syndication team of experienced professionals thoroughly evaluates each opportunity to ensure it meets this criteria, so our investors can expect consistent and robust returns on their investment.