The resurgent economy provides multifamily housing equity financing opportunities on a level not previously seen due to the expectation of the capital markets. Multifamily housing equity financing comes principally from the 1031 exchange (i.e.: DST portfolio investments, etc.) market that drives developers to it because the object of the 1031 is to protect a capital gain over the preference for the highest economic return. While this may prove to be facile over time, multifamily housing developers need to be cognizant of these factors and provide product that meets the capital market expectations.
The biggest issue facing the multifamily housing equity financing market segment is the holding period for some of these investments and the attending amount of investment loss severity risk exposure these investments unintentionally create. The risk is a function of the following elements combining to create a potential storm:
- Going in cap rates on multifamily rental properties are at historic lows still, thus investors are paying a hefty premium to the developer upfront and then hoping cap rates will be the same or even lower in order to come out ahead 10 years from now; and
- The advancement of technology in the 21st century just about guarantees a major market disruption will occur in the property’s local market area over that 10-year period, thus exposing the investors and lender to significant loss severity risk; and
- The layering of entities and agreements just about ensures that very little accountability for a disaster is the expected outcome.
How are we to deal with this?
The INVIZEN Real-Time Status (or RTS) system is designed to provide real-time, proactive protection against loss severity risk for the entire term of the investment holding period. The secret is in the unique underwriting engine of the technology that functions in real-time called (you guessed it – the Real-Time Underwriting Program). The idea behind INVIZEN is to give the market exactly what it has always wanted but could not have – the ability to sleep at night because the entire investment is re-underwritten each and every month because the RTU operates in a real-time environment. The RTS system is a complete end-to-end solution and that means we can maximize liquidity protection so that a bankruptcy petition resulting from a liquidity crisis is virtually eliminated on a rolling, forward-looking basis for the entire term.
INVIZEN offers the only end-to-end solution specifically-designed to help end loan and investment losses in CRE securities private placement offerings by addressing the totality of the underwriting and due diligence issues in a real-time, proactive environment that only gets started with pre-closing due diligence. The INVIZEN RTS program is designed to help prevent the key risks from becoming future asset impairment problems while also proactively managing and/or deterring investment fraud, management performance and foreclosure default event exposure.
INVIZEN was purposely built to provide underwriting and due diligence reviews with one singular goal in mind: preventing future loss on capital investment made today.
To understand the INVIZEN value proposition is to understand the basic processes that attend the underwriting goal of using independent information to determine the value of an income-producing business asset. INVIZEN automates these processes so the cost of underwriting drops dramatically and the speed of processing increases dramatically as well. The underwriting happens in real-time and that means we can give CRE NNN property investors the luxury of future investment performance assurance by re-underwriting the transaction each and every month of the investment holding period to give you up to 24 months of advance notice of changes in the market, the asset or operations that may have an impact on the future income-generating capacity of the market, property and site. These notices can be both good and bad. INVIZEN has artificial intelligence at its core and computers don’t care if you have trash, it will still be another man’s treasure.
There is so much more to the INVIZEN Real-Time Status Asset Care Protection Program that INVIZEN was intentionally designed to support:
- CRE Developers & Sponsors. Developers and sponsors seeking capital financing have the advantage of a systemic solution that provides the support needed to increase the odds of a successful capital financing outcome.
- Investors & Lenders. Investors and lenders seeking to participate in commercial real estate securities private placement offerings and other credit instruments have the advantage of a systemic solution that provides the highest practical investment performance assurance we can contrive.
- Broker-Dealers & Registered Investment Advisors. Securities broker-dealers and registered investment advisors on both the buy-side and sell-side of the transaction have the advantage of a reporting system that provides FINRA compliance support, protection from future investment fraud claims, increased transaction velocity and the opportunity to increase their operating margins – all in one package.
What does you investment portfolio have in the way of protection? Thought so…
Find out more about what INVIZEN can do for your portfolio by contacting INVIZEN today at 832.663.9634.