LEAN estates investment begins long before yours. Successful results are the product of a well thought out plan, which is why we implement an engineering approach by developing what Industrial, Manufacturing and LEAN engineers call, a Process Map or Process Mapping.
We begin by clearly defining every step of our process by defining standard tasks, assigning subject matter experts and establishing a timeline or Takt Time to each step in the process.
Our assembly-line like business model is strategically designed to produce a service that maximizes the value of the property and your investment.
1 Day - 3+ Months
Prescreen | Assess Opportunity | Drive By | Track Potential Acquisitions
During the assessment stage, we identify potentially viable properties and measure them against our strict acquisition criteria. We prescreen the property to ensure it meets certain basic requirements. Once assured of this we assess opportunities presented by the property that would make it appealing to renters. This is followed by a “drive by” which lets us see firsthand the quality and potential of each property – it also supports our ‘gut check’ of the viability of a given potential opportunity. The last step in the assessment phase is tracking the potential acquisition. In many cases, deals that may not work initially, return to us under different terms.
2 - 4 weeks
Market Research | Shop Rental Comps | Start Underwriting | Assess Value-Added Potential
The analysis stage of the life-cycle is where we begin our evaluation of determining the best use and highest potential of each property. We do this through reviewing detailed market research and shopping rental comps in the area of the subject property. At this point, we begin the underwriting process and the development of our “Dashboard” underwriting analysis. All of this is geared towards helping us assess the value-added potential of a given property.
3. Due Diligence & Negotiation
2 - 6 weeks
Physical Inspections | Unit Walks & Lease Audit | Financial Inspections | Staff Interviews | 200-point Due Diligence Checklist | Shop Debt Term Sheets | Deal Committee Review | 2-Year Budget
Before we negotiate the contract, we start our due diligence process. Our goal at this stage is to have a good handle on all material risks that could significantly impact the returns over our ownership timeframe. Once under contract, we dive deep, digging up all pertinent information. To get the best results, we conduct a thorough physical inspection of the property, walk each unit and audit all leases. We scrutinize historical financial statements and interview the in-place property staff.
In all, we have a 200+ point checklist, which our dedicated team reviews again and again to assure we have all our checks and balances in place. Based on our findings, we work closely with our lending partners to obtain term sheets/engage brokers to represent LEAN estates in making offers to help structure the deal to maximize rewards versus risk. Our Deal Committee review is the final step where a go/no-go decision is made – this is where our collective years of experience helps ensure all significant risk are adequately addressed. If a “go” decision has been made and our negotiated terms have been agreed upon, we proceed to the next phase: Acquisition – less than 4% of the properties we see make it through this stage.
30 - 45 Days
Business Plan/PPM | Debt Terms Finalized | Entity Formation/OPAGs | Finalize Dashboard | Equity Funding | Develop Value Add Scope | Rehab Kick-off & Planning | Staffing & Take-over Prep
Once the decision is made to acquire a property, there are critical steps to close on it. We prepare and deliver a business plan, finalize debt terms, form an entity and finalize our underwriting. We meet with our investor partners to help them understand the project. We have a series of meetings to develop our value-add scope for the property, which includes meetings with our vendor partners to obtain bids to assemble our renovation budget and re-shopping the rental sub-market to verify and update assumptions. Prior to acquisition, we’re making staffing decisions for the property and preparing for takeover of the property.
5. Value-Added Rehab & Reposition
1 - 3 years
Takeover & Transition | Renovate & Reposition Asset | Frequent Renovation Meetings | Property Management | Ongoing Site Visits
This is where the rubber meets the road and where the bulk of the value-add happens. Our dedicated team is focused on value creation, which to us means spending dollars wisely, ensuring we don’t over improve, but being aware of market trends so that we are positioning ourselves for where it will be. This phase includes all of the activities included in Asset Management phase.
We believe a successful real estate investment should provide some level of cash flow throughout the life of the investment. By maximizing a property’s potential, we can accomplish this goal, in addition to capital preservation and appreciation at the time of sale.
6. Asset Management
2 - 5 years
Property Management | Review Performance Reports | Monthly Financial Reviews | Monthly Investor Updates | Conduct Site Visits | Quarterly Investor Statements | Annual K-1s/1099s | Generate Cash Flow
Our Asset & Property Management team takes a kaizen approach, where we focus on continuously optimizing the performance of the property and our portfolio. Our goal is to maximize cash flow to investors while balancing the needs of the property and the community. We initiate asset improvements through comprehensive strategies that enhance the resident experience through renovations, rebranding and resident service.
3 - 6 months
Prep Property | Select Broker | Market Property | Close Sale | Make Final Distribution
Our Disposition strategy is to sell when market conditions warrant balanced with a predetermined holding period. We believe a successful real estate investment should provide some level of cash flow throughout the life of the investment in addition to capital preservation and appreciation at the time of sale. Where it makes sense, we love aligning ourselves with long-term investors who are comfortable with holding time frames of 5 to 10 years or more – and are interested in growing passive income. Our goal is to maximize investment returns for the owner by ensuring an appropriate capitalization structure while focusing on optimal property performance.