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  • Steven Fletcher

Thoughts and Processes That Drive the Broken Arrow Holding Thesis:

-Be cognizant of current/new/proposed property laws (rent restrictions, overlay districts, short-term rental laws, etc.) Even if the laws don't affect you directly, they might have down stream effects. Gather every input you can. 

-Invest in supply-constrained markets with existing demand. Doesn't matter how nice the units are- if they're in the wrong location, they won't get leased. This is where you need to be an expert in your market.

-Thorough check of property title, permits, variances, easements, etc with the help of legal. Make sure you're not inheriting a property where un-permitted work took place.

-Strong emphasis on conservative underwriting (don't forecast things you have no control over). Be able to withstand a 30% decrease in rents.

-Source the narrative behind the seller(s). Who are they, why are they selling, what else do they own, how do they operate these properties (do they keep rents low to prevent turnover, do they maintain them, quality of tenants, etc). If they own a bunch of other properties, try to make a new friend.

-For renovations: ensure your proposed renovations are allowed from a legal standpoint (get with your architect/GC/lawyer). Get your contractors into the building during the inspection period to point out any major issues, review inspection reports, and provide estimates.

-For renovations: Get in front of any scheduling deadlines, make sure all permit/application information is tight and has been reviewed by qualified parties (if that's legal, architect, GC, etc) to prevent back and forth with city officials. Have your lawyer/architect follow-up with permitting offices as needed.

-Execute construction that renders a unique product. Utilize quality finishes, materials, appliances, you name it. Do everything the right way and don't cut corners during this period. The final product is a reflection of you, your firm, and will ultimately be somebody's home- act accordingly. 

-Always keep significant reserves in operating accounts (this is subjective and depends on the deal).

-Retain the best leasing agents/property managers in the market. Fees are well worth it if they're filling units in short periods of time.

-Continually shop around insurance policies and any other recurring overhead costs. Keep overhead tight.

-Focus on asset classes with low obsolescence risk.

-Buy cool buildings in cool areas and hold them forever.

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