WHAT WE INVEST IN
We invest in both existing Single Family Rentals (“SFR”), and acquire land to invest in Build-For-Rent (“BFR”) Communities. SFR is an emerging asset class that has recently been minted as an institutional quality class of investment, measured by its resilient and stable cash flow yields, and strong growth fundamentals due to the nation’s lack of supply. With a total market cap of 5 trillion dollars, institutional ownership accounts for a 2% total market share. New demand for rental homes is expected to increase by 4 million by 2028, with a majority of that demand going into SFR over apartments. ECH is positioned as long term investors in the SFR asset class, and we believe there will be strong fundamentals to allocate significant investment over the next 10-15 years.
Single Family Rentals (“SFR”)
Through our proprietary, tech-enabled acquisition platform, ECH is able to deploy capital into existing SFR’s with precision and speed. Leveraging internal data dating back from 2010, we have determined which submarkets, and which type of home produces the best risk adjusted return on investment. All assets are stabilized with the highest quality finishes to not only attract the highest quality tenant, but to also reduce the likelihood for repairs and maintenance. And finally, all assets are “future proofed” with the latest smart home technology to provide our residence an experience not otherwise found in the average rental home.
Build for rent communities is a brand new concept that combines purpose built SFR communities, with Multifamily-type amenities such as pools, dogs parks, and open space for families. Although this trend is new, we believe the BFR asset class will be the new benchmark for single family rentals for many years to come. This strategy offers sponsors the ability to scale the volume of new units efficiently, and provides investors the means to deploy large sums of capital while achieving greater economics than otherwise provided with traditional scattered SFR portfolios.
ECH is able to capture above-average returns in the BFR asset class by being involved in the full development cycle. Typical home builders prefer to purchase ready-to-build lots at a premium. Whereas ECH chooses to enter the cycle from the inception of the land, rezoning, and entitling the project which allows us to roll those otherwise “premiums” directly to the bottom line. With a carefully curated team, and also through strategic partnership, ECH can proficiently execute the following stages of the development process:
- Acquisition of land off-market, at a discount to market value
- Land Entitlement
- Land Development
- Construction of Building Units
Once the communities are built, and leased to qualified tenants, ECH refinances the property with a fixed Freddie Mac loan, at the lowest interest rates offered to the real estate industry.
THE INVESTMENT CYCLE
Acquisition – Through ECH’s strategic selection process, we target, negotiate, and purchase off-market investment opportunities in locations that are positioned to grow. Once the asset is in escrow, the executive team collaborates through a disciplined due diligence process to determine if the asset not only meets our return requirement but also aligns with our investment thesis.
Construction – Value is added to the asset through the construction process, which is why a detailed construction plan is built prior to owning the asset. All materials are sourced in bulk directly from manufacturers to save cost. Smart home technology, quality materials, ideal floor plan, and exceptional workmanship is critical when attracting the most qualified tenants, at the highest rent rates. We believe quality assets thrive in both good times, and turbulent times.. **Add in-house general contracting**
Refinance – Once construction is complete and units leased up, the asset is refinanced with a favorable mortgage. Because the value increased through the construction process, refinancing with a quality loan will return a majority of investor capital, significantly increase the cash flow, and increase returns to our investors.
Asset Management – In-house property management gives ECH complete control over revenue, operational expenses, and risk. It’s our mission to provide an overall enjoyable experience to our residents. We believe exceptional customer experience not only protects our assets but also decreases vacancies.
Sell or Refinance– ECH is extremely versatile with regard to exit strategy. If the asset has rapidly appreciated, and we believe the asset will continue to grow, we’ll choose to refinance, distribute tax free proceeds to investors, and continue operating the asset. Conversely, if we believe the asset has reached its maximum value, we’ll choose to exit entirely.
Reinvest – When investor capital is returned through either a refinance, or sale, repeat investors will be given priority on current and future investment opportunities.