Investment Strategy

Stuart Acquisition's core mission of protecting and growing our investment partners’ capital begins with our sole focus on multifamily properties. The firm’s strategy focuses on improving Class B & C apartment communities in secondary and tertiary markets nationwide. Historically, multifamily has been the least volatile real estate asset class during downturns while still offering strong upside potential during upcycles. Within multifamily, Class B & C provides one of the most attractive investment opportunities due to the imbalance between the strong and growing demand and limited new supply of these units.

ACQUISTION CRITERA 

The following criteria is used to identify undervalued multifamily properties for acquisition, value optimizations, management and disposition.


Market Criteria 

  • Location: Secondary and tertiary markets that demonstrate consistent rent growth, low vacancy, and a growing real GDP
  • Income: Renters who earn $40,000 or more annually
  • Price: Where rent is 30% or less of the median income


Property Criteria 

  • Multifamily residential apartments
  • Occupancy above 85% 
  • C- to B type properties located in C+ to A neighborhoods
  • 25+ units in the $1MM - $10MM range
  • Underperforming management 
  • Clear value-add opportunities to increase Net Operating Income of the property 


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. 


We are also ultra-conservative when we underwrite deals. For example, we include repairs and replacement reserves “above the line”. In our underwriting we also don’t assume we can operate the property better than existing management. 


VALUE - ADD STRATEGY

The more income the property generates, the more it is worth. When we purchase an apartment complex, we are looking for specific opportunities to increase the cashflow in different areas. 


Value - Add Plays We Capitalize On 

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


Some examples of value-add plays we implement at Stuart Acquisitions 

  • Improve curb appeal by improving landscaping, and building exteriors through new paint and enhanced color schemes
  • 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 Ratio Utility Billing Service (RUBS), a bill-back system to charge the residents for actual usage of utility, such as electric, gas and water.
  • Improve unit interiors with new paint, appliances, countertops, and floors
  • Adding a coin laundry facility to the complex


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Communication, Transparency & Aligned Incentives 


Aligning our incentives with our investors is paramount to Stuart Acquisitions's core values. We structure our deals so that we only profit after investors receive preferred returns. We are an open book to answer any questions or concerns about an investment. Once we close, we provide monthly, quarterly, and annual reports so investors know exactly what’s going on at any given time. We’re there if you need to contact us.