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Steven Fletcher

Having a sense or lens of possibility is a pre-requisite for creating value.


Few things look good from the onset.


Need to view them from the perspective of what they could become to ultimately play the game.


Comes down to refining the lens through which you source potential to ensure it's actually feasible.

Steven Fletcher

Inspections are one of the most important parts of the acquisition process.


They’re our opportunity to assess/source/confirm:


-Condition of all MEP

-Structural or foundation issues

-Environmental issues

-Total scope of work

-Costs for each portion of the renovation

-Lease agreements, rents, occupancy

-Legal and title issues

-A litany of other items (do 50 cats live under the property, is the neighbor always screaming at people, etc.)


We conduct a full house inspection by a licensed general inspector.


Specifically, one who has a background in construction and is familiar with our development process (we’re not worried about peeling paint).


We also do a plumbing inspection to assess the condition/material of all pipes and sewerage taps- these are done by licensed plumbers.


Sewerage issues can turn into a finger pointing game between owners and the city- something we’re always careful to inspect.


Through these reports, we verify the age/condition of all MEP and structural components.


2002 water heaters mean we’ll be accounting for this replacement cost, watch out for cast-iron.


While doing inspections, we’re also pulling all permits associated with the property to ensure no un-permitted work took place.


If the property is in turn-key condition and you can’t find a permit, not a good sign.


We then bring in our sub-contractors to provide estimates for each scope of work.


From window and siding to plumbing, we need a firm idea of what each portion of the renovation will cost and how long it will take, while still accounting for the unknowns in the form of contingency budgets.


Nobody knows what’s behind the walls, so we need to account for that what if.


We’re looking to ensure that we can add value and then rent these apartments in a profitable, long-term manner.


The inspection process allows us to solidify the inputs that determine the above.

Steven Fletcher

Moses Kagan inspired post:


We often get asked how many doors we operate.


An understandable question to get an idea of how much real estate somebody owns/operates.


However, door counts can be misleading.


Let me explain:


We’d much prefer to own 50 doors in a Class A area where we can receive the top-end of market rents and ultimately attract high quality tenants.


On the other side, we could operate 150 doors with a median rent of $800, in sub-prime areas.


5-plex in a desirable location with $12,000 in gross rents > 15-plex on the outskirts of the city with $12,000 in gross rents.


Given the choice of the two, we’d prefer properties located on good dirt vs. seeking out density.


Taking it a step further, we’re dealing with less tenants/leases/complaints given the smaller headcount but still receiving comparable gross incomes.


Prime locations with access to amenities typically appreciate at a higher rate than others and have more consistent demand.


With that said, we prefer to sacrifice scale for quality (location, renter base, general trajectory).

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