RK's acquisition efforts are targeted in areas where economic and demographic trends are favorable for apartment properties.
Over the next several years renter demand will be boosted by favorable demographics, immigration, the return of jobs and low single-family home affordability. Therefore, the gradual ascent of interest rates should be offset by improving fundamentals. In addition to favorable demand, apartment ownership will benefit from slow construction in target markets like ours.
It is our philosophy to institute a conservative business plan in the structuring of our properties. That is why we use modest leverage of 50-60% and coupled with minimum debt coverage ratios (DCR) of no less than 150%. This enables us to meet the specific priorities of our investors which are; 1) Preservation of Capital 2) Income 3) Appreciation.
With favorable demographics and economics, our well-located, quality apartments have the potential for success.
PROVEN TRACK RECORD
We believe real economic profit and preservation of capital are the primary reasons for investing in real estate. This has been our philosophy since our founding and will continue to be our principal investment objective.
The skills and experience of our professionals have combined to produce a consistent, successful record of performance in apartment investing. Since 1976, RK has sponsored over 100 investment programs valued in excess of $450 million. More than 65 of the programs have gone full cycle. The returns demonstrate consistent management performance - a matter of pride for the company. RK is proud that a majority of investors have multiple investments with us and reinvest in our program when properties are sold.
Although RK has a proven track record in providing the potential for a substantial return on your investment, prior performance is just one factor to be considered when making an investment, and investors should recognize that past performance is no guarantee of future results.
Value-Add Private Equity Funds;
RK Properties (“RK”) has been providing private equity opportunity funds since 1976. Each fund is designed with a unique structure through Limited Liability Companies (LLC’s) which provide a diversified portfolio of value-add real estate. The funds are designed to allow investors the opportunity for ownership of institutional investment grade apartments acquired through a disciplined approach to underwriting and investing. RK’s acquisition team has been and will be acquiring acquisitions properties through their pre-existing relationships, off-market transactions and/or owners familiar with RK or the industry. In addition properties are acquired due to the correction and now expansion of the real estate market. The target acquisitions include value-add, distressed multi-family units which may be purchased at a discount to replacement cost positive cash flow, and potential for appreciation.
Tenant – In – Common (TIC) Ownership:
RK has also been providing an alternative approach to direct ownership in real estate through the Tenant-in-Common (TIC) structure. As real estate investors reach pre or post-retirement, there is a need for a unique structure to relieve the real estate owner of the day-to-day intensive management in order to continue with their career, business, or enjoy retirement. The TIC structure provides that opportunity. It allows investment property owners the ability to sell the management intensive real estate and exchange into an institutional investment grade apartment building thereby deferring their capital gains tax. The TIC can also provide the investor with net cash flow paid monthly the pass-through of all tax benefits to offset the net cash flow, and the potential of capital appreciation from the value-add opportunities in the real estate.
In 2006 the IRS approved a new and less complicated way for investors to complete a 1031 Exchange into a securitized investment. The DST structure is a much easier process with the same tax deferral benefits. There is substantially less paperwork and registering and no lender approval for each individual which can slow the process of completing the exchange by 30 to 45 days. Further the DST structure is much more broadly accepted by lenders including the ‘agencies’ or ‘Freddie’ and ‘Fannie’, which makes financing easier and more readily available. And of course the DST structure allows the same benefits at the individual level of exchanging after the life of the investment with us, on your own or someone else.