Real estate asset management firm Golden Pacific Capital is teaming up with Crowdflipr, a real estate crowdfunding platform that provides accredited and institutional investors with access to asset-backed debt and equity securities, to offer a $10M equity participation in a professionally-managed, leveraged investment fund that's focused on acquiring and renting residential properties in the Kansas City area.
Golden Pacific Capital says its strategy is one that capitalizes on the huge demand for rentals in the area, discounts of up to 25% on foreclosures, and the lack of many occupants' ability to secure mortgage financing.
“The Fund is based on its Principals’ extensive experience, including successful acquisition and management of 2,000+ SFRs over the past five years in a range of US markets, including Kansas City,” the firm said in a statement. “The Fund will acquire a portfolio of distressed SFRs over an 18-36 month period which will be professionally renovated and managed to maximize operating income while preserving capital.”
There are multiple exit opportunities in the fund, including selling off individual homes to owner occupiers, or selling the portfolio to a larger institutional investor, the company said. In total, the fund is targeting a net IRR of 16-20% for investors over a six to eight year period.
Interested investors will be given the chance to participate in a limited partnership that's run in an institutional manner, the company said. As such, there'll be institutional-level returns, without the need for a larger investment that such structures normally require. In addition, a portion of the funding will be spent on renovating properties in the portfolio. So far, Golden Pacific Capital has received almost $3 million in commitments since operations began in June 2015.
“Kansas City only recently started to experience home price increases, and has lagged other hot markets such as Southern California, Las Vegas, Phoenix and Miami that attracted hedge fund and private equity investment,” said Ian Fisher, Principal and Co-Founder of Golden Pacific Capital. “Because KC was late to experience price appreciation from its post-recession lows, there is still considerable upside in appreciation as KC returns to an equilibrium value from depressed levels.”