We are continuing our frequently asked questions series for syndication, and in this video, we are going to be talking about reducing your risk in investments and how I look at a deal and frame it. After all, the most important thing at the end of the day is capital preservation. I want to be working with operators and sponsors of deals that are really conservative in their assumptions. They are in the right markets, and they also have a team that has a lot of experience in doing these types of projects.
First, Let’s talk about the market. This is very simple. You can look at market data all day long, but I see consistently over and over again, the most important thing is to be in a market in a large city over a million in population MSA for sure, therefore we have diversification in industry. Most importantly, we are looking for a strong job and population growth. That is going to drive rents in any type of opportunity that we get involved with. Dallas and Atlanta would be great! Those are the types of markets to get involved with any time when you are seeing that type of growth.
The second thing we want to make sure in those markets that we are looking at properties, we want to be in the top submarkets. In markets like Dallas, we have twenty-eight submarkets. We don’t want to be investing all over Dallas, we want to be focusing on the top growth markets by rent growth. So future projected rent growth we like to look at those types of submarkets. Maybe the top 10, 15, or 20% of those submarkets are going to be right for us.
Lastly, we want to be looking at properties like Class B Value Add in A areas. We always want to be looking at properties that we can improve and move up towards the demographic in that area.
To learn a great formula for doing this watch the rest of today’s video below:
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