Broken Arrow Holding
1.) Focus on supply constrained markets
2.) Underwrite and utilize leverage conservatively
3.) Don’t speculate on future interest rates, rents, or anything else we can’t control
4.) Target locations where we have a competitive advantage
5.) Execute quality work and do things the right way
6.) Hold good assets indefinitely and manage them diligently
How an embedded sense of urgency contributes to your internal flywheel:
One of the prominent concepts in Sam Zell’s, “Am I Being Too Subtle” is the importance of moving quickly.
For us, this idea takes shape in several forms:
Communication:
We always seek to answer emails/calls/texts within a few minutes of receiving them.
Brokers:
Brokers hold the keys to opportunities, it’s crucial they know our story/menu and we take every call to stay around the hoop.
Need to be readily available to analyze deals, provide feedback, and do so within minutes of receipt.
Good things don’t hang around for long- we position ourselves to be at the top of the funnel and ready to act if need be.
Otherwise, we’ll be sifting through deals that 10 others already passed on.
Investors/Partners:
If somebody entrusts us with their hard-earned capital, there is no excuse to not return a call or field questions right away.
Capital is the life blood of any real estate business, and our network substantiates this need.
Steward every cent, operate with full transparency, and ensure direct lines of communication are established.
Permitting:
Even if typical timelines are 6 months, you better have a point of contact within the city office and be checking on the status of applications at least every 2 weeks.
The longer it takes to receive approvals, the more holding costs we’ll incur.
Goal is to have the city officials/inspectors know that somebody is monitoring this application and will be constantly circling back until they sign off (likely me).
Construction:
Most projects go awry during the construction phase.
To mitigate any hiccups- we create tight budgets/schedules, and tie payments to the completion of scheduled work.
We’ve worked with our contractors before and they understand we need quality work and to return assets back into commerce as fast as possible.
Once that final punch list is complete, sprint to close out permits or secure your certificate of occupancy.
Leasing:
Talented leasing agents are well worth the expense.
Potential tenants are likely sending the same request for other buildings, crucial that you’re quick to respond and can work around their schedule.
9pm leasing tour because the tenant works until 8? No problem.
Vacancy is a slow killer, shoot to have new leases signed before the existing tenant is moved out.
Property Management:
Our goal is to source good people for the nice units we provide and ultimately keep them for a while.
Keeping people happy requires a proactive approach and nobody likes to wait 4 days for something to be fixed.
The sense of urgency takes form in active management: maintenance requests are responded to within minutes, common areas/exteriors are cleaned on a bi-weekly basis, preventative maintenance is executed, etc.
48 hours of no responses is a recipe for anger.
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An embedded sense of urgency better positions you for future opportunities and contributes to the efficiency of your operations over time.
This might sound crazy to some
But there is such a thing as making your apartments "too" nice.
Layering marble into every corner of a unit doesn't necessarily equate to top of market rents.
Many more variables at play:
1.) Location (most important)- you'll have more more leeway to build nicer product in desirable markets but there's a firm distinction between Class A and luxury. Make sure you know where you stand.
2.) Square footage- the most beautiful 400 sq.ft apartment in the world is still 400 sq.ft and you'll be capped on the rents you can charge given the size of the space.
3.) Floor-plan/unit location- If the apartment has no natural light and an entrance that opens up to a bathroom, tenants won't care too much about the tile.
With that said, we renovate our buildings into Class A product and don't cross over into luxury.
We know our target tenant base (young professionals), where they want to live, and what they're willing to spend.
Through integrating all these variables, we ensure that we're maximizing quality and ultimately securing rental rates that justify the work.