Mid-Month Update October 15, 2013
Below are projects in which Altus is currently involved. Please contact us if you are interested in participating in any of the projects that are not yet fully funded. Note that they typically fill up fast. It has been several years since we haven’t been able to execute on a transaction we liked due to lack of investment funds.
Multi-Tenant Fund: We are close to an official launch of our new fund, the Altus Multi-Tenant Income Fund. We are waiting on a response from the State on our entity filing and some documents from our attorney and then we will officially able to launch the fund and accept investments. We are excited about this particular opportunity as we like to be able to offer fund investment options to investors for a myriad of reasons: diversification of risk, economies of scale, etc. The current real estate and socio-economic environment is such that we feel this is a great vehicle to produce strong cash flow to our investors, weather economic gyrations, take advantage of the current cheap debt environment, and realize benefits from increasing rent over time. We feel we can supply a strong, growing, and consistent cash return to our investment partners. With the added benefit of depreciation, investors may be able to enjoy their cash flow close to tax free. We will have documentation ready within the next couple weeks. Please contact us if you are interested and we will add your information to the list of investors to receive the full prospectus package. We are raising $5M and we will not accept more than $1M from any single investor.
Single Family Fix and Flips: We purchased two flip properties this past month both of which are already under construction. The combined expected profit of the two flip properties is over a $100,000 and both should be completed and resold within the next few months. In addition to the two new flips, we also have two other large rehab projects (over $150,000 in repairs/improvements/location) and two smaller projects (~$50,000 in improvements per location).
Additionally, we currently have 15 condos on a single purchase agreement in contract. We expect to close this transaction by the end of the month. Most of the condos are currently rented and the ones not rented will be rehabbed and resold. As the leases expire on the rented units they also will be resold. We are still accepting investments in this opportunity but it is filling up fast. We’re looking for an additional $200K to close out funding for this ~12 month project.
Shallow Well Oil: This opportunity has been put on hold. While we believe there is a chance to make money through investments in this area and even possibly through the people we with whom we were working, we do not feel comfortable enough with the documentation provided to us to move money into the opportunity. So far the company in which we were going to invest has shown little interest in improving their documentation for the protection of the investors.
Retail Building: This past month we went into contract on a retail building in Sebastapol, CA. There is some upside through leasing two vacant units and additional upside in simply cleaning up the accounting. Due to the financing that will accompany this property, the purchase amount of investment needed is relatively minimal. This is a perfect project for a patient investor who wants a combination of cash flow and appreciation and can use the benefits of great depreciation. We are fully funded on this project and depending on the seller, hope to close within the next couple weeks.
Office Building: Within the last week we had a contract accepted on an 18,000 sq ft office building in Santa Rosa, CA. There is currently a national tenant occupying 70% of the space and providing enough rent to give the property a 9.3% cap rate on current income. There is substantial upside in this property through repositioning the building to other/additional tenants, but the ultimate value of this property is that it is a long term cash machine based on fully stabilized rents overlaid with great loan terms on the building post-stabilization. We will begin raising approximately $1.05M for this opportunity in the next few weeks once we receive seller documentation.
Redevelopment: We continue to work on the two mobile home park conversion projects that have been mentioned in past mid-month updates. Progress is slow and we are in the process of renegotiating with the sellers based on information discovered during our due diligence. Depending on the outcome of the negotiations each of these projects will pencil out to be either profitable or ones we will walk away from. We don’t know yet which way they will go.
If you have any interest in any of these investment opportunities, I encourage you to contact our office so that we can set up a time to have a conversation and learn more about your investment profile. I look forward to sharing more news in future newsletters about the value and benefits of investing with Altus.
Altus Equity Group, LP