Mid-Month Update September 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. However, they generally fill up fast. It has been several years that we haven’t been able to execute on a transaction we liked due to lack of investment.
Single Family Fix and Flips: We have closed on several flip purchases since our last mid month email and all are moving ahead as per plan. We are scheduled to close on the purchases of two additional properties next week and both are already funded in full. We have an additional two properties that look like strong potentials but are on hold while details are worked on the sellers side of the transaction. Only part of the money has been raised for those possibilities. The total project profit for the two flip properties we are scheduled to purchase next week is forecast to be approximately $80,000.
Redevelopment: We are continuing work on the two mobile home park conversions that were mentioned in the last mid month update (West Sacramento and San Luis Obispo). Both have substantial upside and have downside protection through the current rental operations. The mobile home park conversion process is arduous in nature and in both cases we are continuing to work through the questions to make sure the projects are viable. The property in San Luis Obispo looks to be the most imminent to needing funds. The conversion process will take between 18 and 30 months and should have strong upside potential for the investors. Additionally, based on the current income statement projections, cash yields are scheduled to be in 6 – 8% range until the project is approved (at which time there is the jump in value). For investors with a longer time horizon there will be opportunity to remain in the project after the conversion. Stage two of this project is the construction of 127 rental housing units. As is standard in most of our investment structures, we earn no upfront fees and investors will earn a preferred return prior to Altus receiving any compensation. We only make money when our investors make money. These are great opportunities for investors looking to juice their returns but still having a concern for capital preservation. Please contact us if you are interested in this type of investment.
Multi-unit Fund: The Altus team likes to be able to offer fund investment opportunities to investors for a myriad of reasons: diversification of risk, economies of scale, etc. In studying various market opportunities we have become more and more interested in the current apartment investment environment. As such, we are forming an apartment fund that will follow a buy and hold strategy. 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 benefit from increasing rent over time. We hope to have the investor overview information available for investor review within the next 10 – 14 days with the full prospectus documentation to follow. We feel we can supply a strong, growing, and consistent cash return to our investment partners. With the additional benefit of depreciation, investors may be able to enjoy their cash flow close to tax free.
Shallow Well Oil: We are continuing to research the shallow well oil opportunity and continue to believe it might be a great addition to an investment portfolio. Shallow well oil is far less risky than deep well drilling. Conversely, a shallow well isn’t going to send anyone directly to retirement. As a reminder, each investment group will be $250,000 and will buy 1/5 of 5 different wells (to further spread risk). Altus Equity Group or its principals will be the lead investor on each of the groups which will be structured in such a way as to provide a preferred return to the investor with Altus Group only being compensated after the preferred returns have been paid. Additionally, there are some fantastic tax benefits associated with this type of investment. The minimum investment amount will be $25,000, which will buy two of the 20 available units per investment group. Originally we hoped to raise investment in August or September but due to delays in obtaining the necessary information, this is being pushed back at least until October. Stay tuned for more information.
Retail Building: We are close to having an offer accepted on a multi tenant retail building in Sonoma County. The seller is a local bank who will carry the financing at favorable terms. 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 the purchase the 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.
If you have any interest in any of these investment categories, 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