Thank you for following along with Flywheel Equity, the multifamily investment company focusing on central NC.
We want to start this month’s newsletter by re-confirming our investment thesis. You should, after all, know what we are looking to acquire and why.
Our thesis is that affordable housing in medium density secondary markets is at a premium. That the floor of this market is rising faster than the ceiling on luxury rentals.
We see the workforce segment of the market as only increasing in size while continuing to be underserved by new development. This creates a growing demand and stagnant supply dynamic, which will continue to drive rent growth of these assets in these markets.
We aim to provide, and manage, housing that serve the upper end of this workforce population.
We explained our rational in more detail in this LinkedIn post if you’d like to dig deeper.
So How's it Going?
So how is it going identifying and evaluating properties that match this thesis?
We are targeting C to B class assets in the Raleigh and Greensboro areas of NC between 30 and 120 units in size of 1970s and newer build. Most of the opportunity we see is in value-add/heavy renovation properties given how much of a premium stabilized properties are going for.
Deal flow remained light in the final quarter of 2020. There were a few off market opportunities we loosely pursued, but value remains elusive.
With the new year we are starting to see increased activity, though I suspect finding properties that meet our value criteria will be challenging. Our best bet is to identify an off-market (direct to seller) or broker pocket listing. But, to nobody’s surprise, that’s what everybody else is searching for as well.
We will remain active on this front and will let you know when we have an opportunity to share. Our goal will be to have our next acquisition under contract in the first half of 2021.
Portfolio Performance
The performance of our current portfolio was strong to close out the year. We had some of our best collection months in our stabilized properties.
At Morris Manor, our largest and heaviest renovation property, we continue to accelerate our renovation progress and have leased more than half of renovated units at full market rates. If we continue this progress through January we will consider raising our market rate. This would be an incredible vote of confidence for our business plan.
Media & Articles
At Flywheel Equity, education and transparency are our top two values. We’ve written two articles recently that may help you understand some of the more esoteric aspects of the business:
- Demystifying Commercial Real Estate: Yield Maintenance vs. Step Down – Which Agency Loan Prepayment Option Should You Choose?
- How to Get Brokers to Take You Seriously
Ryan continues to make the rounds and was interviewed by the Millenial Millionaires Through Real Estate podcast. If you’d like to hear how Ryan got started in real estate and how we’re evolving the business, feel free to have a listen here.
