Taurean Global Profits from Real Estate Apartment Complexes
by Malcolm Katt
June 2008
This is a sponsored article. Investor Concepts is not responsible for the claims made by this article. Please seek the advice of financial professionals before making any investment.
If you’re an investor looking for long-term asset growth with moderate income, better-than-average returns and minimal capital risk, consider multi-family real estate. It has been estimated that approximately seven in ten millionaires made their money by investing in real estate, and leveraged multi-family real estate provides the ideal balance between risk and reward. It is considered the least risky of real estate investments and is largely recession-proof and inflation-proof. There is a steady demand for quality rental apartments, whereas office, retail and industrial spaces have periods of high vacancy. During an economic slowdown, like the current one, the demand for rental accommodations increases as people are less inclined to purchase a dwelling. During inflationary periods, which will probably happen sooner rather than later, rents usually increase along with consumer prices.
Favorable Indicators
It is difficult to lose money when intelligently investing in apartment buildings. This is especially true in the current market where foreclosures, distress sales, and motivated sellers in the US are providing incredible opportunities--a buyer’s market. Factors pointing to success:
1. Most economists believe the US is already in a recession or about to enter one.
2. Inflation will rise substantially due to the massive increase in liquidity by the US Federal Reserve.
3. Prices of single-family homes will still experience a prolonged price correction, so the prospect of owning a house or condo is unappealing.
4. Banks and other lenders will tighten their lending criteria or stop lending all together.
5. Credit has dried up for sub-prime borrowers, which is stimulating the rental market.
Why apartment buildings?
For those deciding where to put their money in this economy, apartment buildings are an attractive vehicle:
1. Inflation protection - In a recessionary environment, apartment buildings are one of the most attractive asset classes to own because it offers a hedge against inflation.
2. Economies of scale - It takes the same amount of effort to close on the purchase of a condo as it does on an apartment building.
3. Purchasing - Banks consider them a low-risk asset class, so financing is available even in a tight lending market.
4. Value creation - There are economies of scale in the renovation and improvement.
5. Market volatility protection - If a large property is professionally run and attractively maintained, vacancies are easier to fill than a single-family dwelling.
Capitalizing On Opportunities
The Taurean Global Latitude One Multi-Family Limited Partnership is being offered to investors to allow them to capitalize on opportunities in high quality apartment buildings in both the US and Canada. The partnership is expecting incredible returns. The historically high strength of the Canadian dollar provides Taurean Global with considerable buying power. Mortgage rates are at low levels, so by locking in long-term mortgages now, they can keep their cost of capital low while the income from their investments should increase with inflation. With a 2:1 leverage ratio, their objective is to generate an overall Internal Rate of Return (IRR) of 20% for their investors with minimal downside risk. They should be able to accomplish these attractive returns by purchasing apartment buildings that are considerably undervalued, increasing their value through operational excellence, and then either re-financing or selling the properties. Maximum value should be created within a five-year period, at which point the proceeds are returned to the investor or used to generate more gains through reinvestment.
Taurean’s general strategy is to buy buildings that have been neglected by their owners and that need substantial physical upgrades, capital improvements and professional management. After making these changes, the property should appreciate by increasing cash flow and re-positioning in the market.
Taurean monitors several markets in order to identify which best suits its value creation model (acquisition, improvement, harvest). Then it hand picks the most promising properties to add to its portfolio--typically properties with 15 to 100 units. Their attention is currently focused on opportunities in Portland, Oregon and Montreal, Quebec, and they are closely watching Dallas/Fort Worth and parts of Florida for additional opportunities.
Tauren’s Apartment Complex Acquisition Criteria
Tauren’s purchase criteria has so far produced magnificent results:
* The property must produce an attractive yield by year two.
* The property must support a mortgage of 65% long-term value (LTV) at the time of purchase.
* The property must be located in an area that shows promise for dynamic growth.
The Taurean Global Team
General Partner Douglas Thiesen has been involved in financial services since 1984. He was responsible for the purchase of 13 properties in the US and Canada, and the sale of six properties, all at substantial profits. Every property that he was responsible for was operating profitably within a year of purchase and no investor ever lost money during that time. General partner Arnold (Alf) Kaech is focused on developing Taurean’s business platform.
Interested investors should visit www.taureanglobal.com for a comprehensive list of questions and answers or contact the General Partners for a personal consultation.