Strategy
Multifamily Asset Class Poised for Continued Demands
Low Multifamily Construction Plans
More restricting lending guidelines have initiated new construction for multifamily properties to be near 40-year lows. Hence, it is cheaper to buy vs. build.
Declining Home Ownership
The demand for rental units has increased. Rising home values and demanding underwriting standards have been the result of declining homeownership rates (from a peak of 69% in 2004 to a near 20-year low of 64.5% in 2018).
Renting Trends
The heavy population of millennials in the U.S. is reshaping the rental market. Millennials make up 57% of the U.S. population. A 2019 homeownership report concluded that millennials do not want to buy and prefer renting long term with such a large portion of the population being under 34 years old, these rental trends are expected to grow.
Increased Class B and C Demand
There is a strong increase in demand all over the U.S. for B and C class properties. Mostly due to renters insisting on more affordable options. Additionally, because of the expected increase of income variance and wage gap across the country.
Market Lacks Sophisticated Buyers & Owners for Class B/C Properties
“Low Hanging Fruit” Opportunities
Fratelly aims for properties where the owner is absent, or there is a misalignment between the owner and property management, or lack of knowledge, experience, and approach. Altogether, providing Fratelly with an opportunistic advantage to acquire deals and to procure underperforming assets comparative to others with similar quality. We quickly recognize operational improvements to be best in class owners/operators.
Increased Exit Pool
Repositioning lets us alter the property into another asset class of real estate. This strategy increases the value by changing the usage from one that was previously less demanding, to one now with a greater demand—equaling a greater return on investment. To illustrate, assets from Class B/C to Class B+/B build a greater buyer pool when exiting. Asset class B/C apartments serve a fundamental need at an affordable level regardless of economic cycles; in tougher economic climates, Class A- and B+ renters may be forced to trade down to Class B/C multifamily assets. Specifically during downturns, occupancy levels in B and C multifamily.
Tangible Asset with an Attractive Risk-Adjusted Return
We always perform a comprehensive sensitivity analysis, which includes several possible results from variables outside of investment control. Additionally, an example of three financial variables are price, down payment, and loan to interest.
Acquisition of Tangible Assets
Fratelly’s investment strategy concentrates on obtaining hard assets with essential collateral and value of the land. Along with price opportunities with much a lower replacement expense. This helps us not to fail in the instance where the market goes down, resulting in decent gain with the market rises again.
Distribution of NOI After Debt
Fratelly pays cash returns based on NOI from generated income after debt service.
Investment Strategy
Investment Strategy
Fratelly’s approach is to cash in on beneficial demographic trends and supply and demand changes through the deliberate acquisition of B and C class multifamily properties. We aim to enhance the value of investments by renovating while still maximizing returns for investors. Also, to provide residents with a better quality of life. We strive to acquire assets well located in populated areas where employment is high, and public transportation, grocery stores, and public schools are easily accessible. We create value by implementing strategic business planning, repositioning, and renovating. build.
Asset Management Strategy
Fratelly takes a proactive approach to asset management to guarantee the business plan is executed successfully. An in-house property management company manages every asset we own. Our performance of our portfolio and NOI growth is credited to our resilient onsite operations and operating platform. They are providing us with a competitive advantage. We center our attention on enhancing our residents’ quality of lives and living standards by creating safe communities. Ultimately, attracting high-quality tenants and reducing turnover rates.
Property Management
Property Management Overview
Here at Fratelly, we own and operate our property management company. After encountering many obstacles from hiring third-party property management companies for B and C class multifamily properties. We were dissatisfied with their standards and quality of service and quickly realized the market is lacking in industry-leading management companies for this sector. They simply were not paying attention to detail, lacked the necessary systems and processes needed, and had poor customer service of the personnel. So, we decided to take matters into our own hands and provide the quality and maximize the value that we expect.
The objective is to make sure that all of Fratelly’s properties maximize on every level. From marketing, tenant retention and fulfillment, management of expenses, boosted revenue, and overall management—all to maximize the NOI while ensuring investors transparency on all levels.
