Strategy
Vansen Capital Partners implements a proven and simple strategy, we partner with investors to acquire commercial real estate properties in premier, high-growth markets and leverage our experience, partnering with local expertise, to improve the property, reduce expenses, increase income and achieve high-yield returns, while providing quality rentals and services to our tenants.
Our Real Estate Investment Strategy
We follow these 6 metrics to evaluate real estate investment opportunities.
Markets and Investment Criteria
Location, Location, Location.
One of the most important and fundamental rules in real estate.
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We only consider locations with a growing population, strong and diversified economy, low unemployment, high job growth rates and rental demand that is outpacing current supply and forecasted supply growth.
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Detailed analytics are reviewed for each asset's location and submarket to ensure the best opportunity for successful business plan implementation, safest preservation of capital and maximized return on investment.
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Current Investment Criteria
The current markets we are reviewing for investment are located in the major cities / metropolitan areas in United States and Canada with strong economic growth forecasts.
We select assets located in A or B class locations that are C+ to B+ class properties with a value-add opportunity that allows significant rent growth based on current market rental rates.
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Sample Investment
The information contained on this page is strictly for illustrative purposes and does not guarantee future results
Hold Period
5 Yrs
Preferred Return
7%
Projected Average Annualized Return (AAR)
17%
Capital Invested: $100k
Year 1
Cash Flow
$3,500
Refinance
Asset Sale
Total Payout
Year 2
$5,000
Year 3
$10,000
$60,000
Year 4
$8,000
Year 5
$8,500
Totals
$35,000
$60,000
$90,000
$90,000
$185,000
Initial Investment:
$100,000
+
Investment Proceeds:
$85,000
=
Total Return:
$185,000
Explanation of this Sample Investment:
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In this sample investment, an investor (Limited Partner) makes a $100,000 investment in the Syndication. The operators (General Partners) acquire the asset, complete the value-add reposition (renovations, expense reductions, etc) increase rents to market rents or better, stabilize the operations with increased annual Net Operating Income, thereby increasing the value of the asset/property. The operators (General Partners) facilitate a refinance of the loan at the end of year 3 and sell the asset/property at the end of year 5.
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Investor (Limited Partner) Returns:
In years 1 and 2, even with lower occupancy due to the renovation strategy, the investor (Limited Partner) would receive $3,500 (3.5%) and $5,000 (5%) annual cash returns from operating cash flow.
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In year 3, once the value-add reposition is completed, the operating cash flow would increase and the investor (Limited Partner) would receive $10,000 (10%) annual cash return from the operating cash flow for that year. As well in year 3, the operators (General Partners) refinance the loan with a new, larger mortgage on the asset/property based on the increased Net Operating Income and property value. From the refinance proceeds, the investor (Limited Partner) would received a repayment of $60,000 (60%) of their original investment. At this point the investor (Limited Partner) would have received a total of $78,500 (78.5%) repaid to them from their original $100,000 investment, and have maintained their full original equity in the syndication.
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In years 4 and 5, the investor (Limited Partner) would receive $8,000 (8%) and $8,500 (8.5%) annual cash returns from the operating cash flow (note this is lower than Year 3 due to the increased mortgage payment from the refinance).
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At the end of year 5 the operators (General Partners) would sell the asset/property and distribute proceeds from the sale to the investors (Limited Partners), equaling $90,000.
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In total, the investors (Limited Partners) would have received their $100,000 investment returned and an additional $85,000 from cash flow and proceeds from the refinance and sale for a total payment of $185,000. This equates to a 17% Average Annualized Return (AAR), a 1.85 Equity Multiple (EM) and a 16.8% Internal Rate of Return (IRR).
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With the Preferred Return structure in this investment, the investors (Limited Partners) must receive their preferred return of 7% before there is any distribution of annual cash flow or refinance/sales proceeds to the operator (General Partner).
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Remember, every syndication and asset/property will have unique opportunities and risks. An experienced operator (General Partner) will prioritize the expedient return of your investment. Operators (General Partners) are generally incented to outperform their projections so as to receive an upside on their percentage of the proceeds.