STRATEGY
OUR STRATEGY
Medemer Capital follows a disciplined and targeted approach to real estate investing. We emphasize the creation of value through select capital improvement projects, developing an exceptional team for operating and managing our portfolio, and maintaining affordability for our residents in the face of challenging economic uncertainty. Our strategy includes an eight step process as outlined below.
STEP 1:
Deal Sourcing
Medemer reviews hundreds of real estate transactions every year to find the right deal that fits our investment objectives within its risk profile. We work with a number of sources including commercial real estate brokers, property managers, and existing landlords to source the right deal. Our disciplined underwriting and prudent assumptions result in just around 5% of deals qualifying for further pursuit.
STEP 2:
Market Research and property analysis
We conduct thorough research of each market we look to invest in, including review of macroeconomic fundamentals such as job and population growth, market vacancy trends, supply and demand trends, and rent growth. Properties are compared based on current condition, location, age, and future potential to identify properties that are undervalued and poised for significant upside growth.
STEP 3:
Financial planning
We review current financials and prepare a detailed budget for each deal we review. Financial planning takes into account expected capital improvements and renovations, expense reduction strategies such as tax appeals and operational efficiencies, and potential rent growth strategies.
Part of our financial planning includes a study on rent affordability and maintaining rents that are affordable for the local area. Our goal is to provide exceptional housing for residents, at an affordable price, with minimal displacement of the existing tenant base.
STEP 4:
Secure Financing
Once a deal has been underwritten and demonstrated feasibility and profitability, we source the capital for each of our deals. This includes identifying lenders to provide mortgage debt and potentially financing any capital improvements, and also sourcing equity capital to complete the transaction.
STEP 5:
Property Acquisition
Property acquisition includes negotiation of purchase price and deal terms, due diligence, and finally closing the transaction. Our thorough due diligence process includes lease audits, property inspections, environmental reviews, an appraisal, and title searches.
STEP 6:
Property Management
Real estate investment is largely a people and team business and part of Medemer’s strategy involves sourcing a stellar local property management company to partner with on each of its deals. A property manager we choose to work with has to demonstrate an ability to attract and retain tenants including an effective marketing strategy, lease negotiations, and strong tenant relations history. We regularly review property management performance and make necessary improvements to add value as opportunities come available.
STEP 7:
Optimize Performance & Add Value
Once the property has been acquired and property manager has been selected and onboarded, we execute on our investment strategy. Our typical business plan includes property renovations to create value, operational efficiencies, and improvement of tenant relations by adding amenities or addressing tenant concerns.
STEP 8:
Exit Strategy
While we typically plan for an ideal exit strategy, our goal is to always have flexibility with exit strategies to return investor equity capital. Our typical deals have a hold period of five years with a property sale to exit. Other exit strategies include a refinance or recapitalization to return initial investment of our equity partners.
When considering an exit, Medemer Capital constantly reviews market conditions, financial goals, as well as legal and tax implications to identify the ideal exit strategy.