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Three-story 48-unit garden-style apartment complex. Class C building built in 1978 with a secured entry, on-site parking, and laundry facilities. The property is situated in a quiet neighborhood minutes from downtown Emmaus, which was voted one of the “Top 100 Places To Live”.
✔ Strong Going-In Capitalization Rate/Low Per Door Price: The going-in capitalization rate is ~6.6% (subject to due diligence) at 97% occupancy on Red Knight & Yarusi Holding’s net operating income, and projected conservative stabilized capitalization rate of ~7.1% at exit, compared to recent sale comps outlined in the sale comps section for traditional Class C & B apartment complexes in Emmaus and the Southern Lehigh Valley submarket, providing an opportunity for arbitrage post-new management and capital improvements.
✔ Below Market Rent Apartments: Rents are close to 19% below market on the apartments conservatively. Increasing the rents to market after light capital improvements such as new kitchen countertops & laminate flooring, will greatly increase the value of the property. Emmaus is not subject to any rent control, like neighboring submarkets in Northern New Jersey might be.
✔ Operational Upside/Efficiency: There is currently no professional management company in-place for either complex, which creates an operational upside as well as cost reduction from payroll.
✔ Strong Submarket: Vacancy rate for Lehigh Valley 1 and 2 star apartments is 3.6% with 2.6% 2018 rent growth and there is no new 1 and 2 star ) multi-family inventory expected to be completed over the next 5 years. Rent growth was projected conservatively at 3% post-renovations, starting in year 3.
Internal Rate of Return
15%
Total Equity Multiple
1.61x
Minimum Investment
$50,000
Average Cash on Cash
11.25%
Creating financial independence through horizontal income is the core focus for this private equity company. Purchasing Hotels, Self-Storage facilities and 100 unit apartment complexes. Increasing the value through business efficiencies, technology, and medium-to-heavy construction.
His 15 year career in finance as an Investment Strategist, helping high net worth individuals with portfolio management. Previously raising +$1.1 Billion in equity and debt assets.
Gamma Income is set to build a private equity company that is investor centric with a passion for showing people a more creative ways to get financially independent.
Managing Director
This Confidential Memorandum (“Memorandum”) is submitted on a confidential basis for use solely in connection with the consideration by a limited number of prospective investors of the purchase of interests (the “Interests”) in a limited liability company formed for the purpose of acquiring multifamily properties in Newton, NJ. Its use for any other purpose is not authorized. This Memorandum is for the review of only those persons to whom it has been distributed and may not be reproduced or redistributed, in whole or in part, nor may any of its contents be disclosed to anyone other than the persons to whom it is submitted.
This Memorandum does not constitute an offer to sell securities. A limited liability company shall be formed to acquire the properties described in this Memorandum (the “Holding Company”). The Holding Company will own the properties, and interests in the Holding Company are being offered to potential investors. All investors should read the Operating Agreement of the Holding Company (collectively, the “Governing Agreements”) in their entirety, together with this Memorandum, before acquiring an interest in the property through the real estate investment vehicle.
In making an investment decision, investors must rely on their own examination of the real estate investment, the Holding Company, the Governing Documents, the property, and the terms of the offering, including an examination of the merits and risks involved. See also “Risk Factors” contained herein.
This Memorandum has not been filed with or reviewed by the United States Securities and Exchange Commission (“SEC”). The Interests have not been registered under the Securities Act of 1933, as amended (the “Securities Act”). These Interests have not been recommended by any federal or state securities commission or regulatory authority. Furthermore, these authorities have not confirmed in any way the accuracy or determined the adequacy of this document. Any representation or warranty to the contrary is a criminal offense.
Each prospective investor should proceed under the assumption that they must bear the economic risk of investment in the Interests for an indefinite period. Since the Interests discussed herein may not be resold except pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, each investor will be required to represent and warrant that such investor is purchasing the Interests for its own account and not with a view toward any distribution of such purchased Interests in violation of the Securities Act.
The Interests are subject to restrictions on transferability and resale and may not be transferred or resold except as permitted: (i) under the Securities Act and the applicable state securities laws, (ii) pursuant to registration or exemption therefrom, or (iii) otherwise pursuant to the Governing Agreements. Investors should be aware that they are required to bear the financial risks of this investment for an indefinite period of time.
The statements, estimates, and assumptions as to future operations, revenue, and net income of the property are based on the best estimates available. Certain projections of operations within this Memorandum were prepared for internal purposes and were not prepared with a view toward public disclosure or compliance with published guidelines of the SEC regarding projections. They have not been compiled or reviewed by independent accountants, and accordingly, no opinion or other form of assurance regarding such projections is expressed.
Additionally, because such projections are based on a number of assumptions and are subject to significant uncertainties and contingencies, there is no assurance that the assumptions will be realized, and actual results may likely vary significantly from those shown. The distribution of these projections should not be relied upon in purchasing the Interests offered herein.
The information contained in this Memorandum is as of the date hereof. Neither the delivery of this Memorandum at any time nor any sale made pursuant hereto shall imply that the information contained in this Memorandum is correct as of any time subsequent to the date set forth on the cover hereof.
This Memorandum does not undertake to provide the detailed disclosures required in connection with registrations under the Securities Act. It is expected that an investor contemplating an investment in the proposed transaction will conduct an independent investigation and analysis in the exercise of its own due diligence and that a decision to invest will be based solely on such independent investigation and analysis. For the avoidance of doubt, the property discussed in this Memorandum is not a security for purposes of the Investment Advisers Act of 1940.
The purchase of an interest should be considered a highly speculative investment. Investment in the real estate investment vehicle is designed only for sophisticated persons who are able to bear a complete loss of their capital contributions, including any additional capital contributions, in the real estate investment.
Prospective investors are not to construe the contents of this Memorandum as legal, business, or tax advice. Each prospective investor should consult its own attorney, business advisor, and tax advisor as to legal, business, tax, and related matters concerning this offering. Neither the real estate investment, nor the Holding Company, nor any affiliated entity is making any representation or warranties to any offeree or purchaser of the Interests and the property regarding the legality of an investment therein by such offeree or purchaser under appropriate investment or similar laws.
– Warren Buffett
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