Real Estate Fund - Mid-Year Update
By Datta Khalsa, Broker
The first 6 months of 2022 have been a busy and productive period for the local real estate investment fund I help manage, between streamlining our inventory and pressing forward on our various development projects which had been delayed by the pandemic.
This Spring, we held a groundbreaking ceremony with our partners for the 15-unit townhome development we are collaborating on in Soquel, and construction is underway: The front house has been moved to its new location, grading and drainage preparations are completed, and the plumbing and foundations are starting to take shape
Our 20-unit townhome project in Phoenix is nearing completion and is in contract with all contingencies removed and set to close by the end of June: The interiors are down to final paint, flooring and appliance details, the pool area is being graded with the deck being formed, and the walkways, driveways and aprons are taking shape in preparation for final paving of the main entry drive.
And with the help of our dedicated task force’s oversight which included over 6 months of weekly Zoom meetings, the Missouri hotel we invested in is finally open and selling out rooms. This is a 55-unit hotel in the heart of Branson, Missouri—the Entertainment Capital of the Midwest, where the renovations involved a complete interior and exterior update, including the pool and grounds. The rebranding was done with the help of one our largest investors, who also happens to be a skilled designer, and as the project neared completion, we sent a delegation from our management team to help ensure the final product would meet our standard.
We also refinanced our debt to help cut the fund’s overhead, and have steadily trimmed any non-performing inventory as we prepare for a healthy bump to our bottom line, which has been staying lightly in the black. Within the next month, our investors will start to see their year-to-date earnings jump back up to double digits with the proceeds from the Phoenix project.
Our vision now turns to new opportunities to carry the fund forward with continued success through what we see as a likely recession environment, and our strategy is a renewed commitment to stay close to our core values of seeking investments that offer a steady cash flow in addition to their upside potential.
Current projects under review include the purchase and stabilization of several promising projects, ranging from a 39-unit apartment complex in Texas, to a small bay multi-tenant industrial park of 32,355 rentable square feet on 2.07 acres in Sacramento, and we are focusing our search on investments with projected cash flows of between 7-9% and with targeted returns of at least 20% over the next 5 years.
It has been exciting to see our current projects taking shape, and it is equally exciting to find new opportunities to provide a stable investment with projected returns to keep our investors ahead of the curve.