Our Investment Methodology
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Our team is made up of experienced real estate developers with over $500m in project completions. In addition to being a real estate developer, Mohammad is a licensed attorney who has led over $600m in M&A that included performing unparalleled diligence, negotiated deal terms, and structured post-closing execution plans. We leverage our diversified experience and take a wholistic approach to our investments. We source properties, negotiate attractive terms, work with our dedicated lenders, and maximize returns through value-add execution.
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We are hyper focused on value-add multifamily product in key markets with durable demand and low vacancy rates. The benefits of our local relationships through years of broker dealings and real estate developments is passed to our investors.
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Institutional investors focus on CORE and CORE+ product…great for reliable, low yield returns. But not great for short term appreciation in value. We focus on sub $25m acquisitions that are ignored by the big players, but present an opportunity for higher income and significant appreciation potential.
Our Approach to Diligence
Our data matrix includes:
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The economic environment for new residential development in the market area. Including construction costs, land vacancies, zoning and regulatory challenges, developer activity and lender commitments.
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Both, current Net Operating Income (NOI) and our projection of what the NOI can be after executing value add opportunities.
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Understanding how to pro forma an accurate cash-on-cash return for a value add opportunity.
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Local vacancy rates are useful to determine the supply/demand dynamic for a given product in each market.
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1, 3 and 5 radius analysis for population, median age, median income, number of employees, owner vs. renter ratios, and other key metrics.
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Analyzing walkability score, available transit, commercial POIs, and where the community is going gives our teams an edge in local markets.
Our Thesis on Investment
Market trends present a rare opportunity to deploy capital for the acquisition of multifamily properties in key markets that are experiencing extraordinary demand against constricted supply. Short and long term residential rental outlooks remain very strong. Add to this the increasing interest rates and we believe investment in multifamily value-add assets presents investors with a very attractive opportunity to create a strong income producing portfolio with significant appreciation potential.
Owning vs. Renting Costs
For the first time in over two decades, the cost of owning a residence is over 30% higher than renting*. In some markets, owning a home is more than 40% more expensive than renting. Compare the costs against the constricted supply of residential product and the short and long-term rental outlooks remain extremely strong.
*Based on the latest reports prepared by John Burns Real Estate Consulting, an industry advisory firm based in California (read the report here)
Why Multifamily
A 53% decrease in housing supply since 2008 and a 31% increase in multifamily construction costs since 2019 resulting in a decline in starts has increased residential rental demand significantly. Through our diligence process and local relationships, MSL is positioned to acquire value-add multifamily product in markets with vacancy rates at less than 5%. This offers our investors steady cash-flow producing properties with significant appreciation multiples through the coming years.
Despite the market uncertainty, we see an exciting opportunity in real estate — particularly multifamily value-add product. Residential rents are increasing by 2-4x the current inflation rate. Residential supply remains constricted due to a decline in starts and a shortage of homes coming out of the pandemic. MSL Capital is uniquely positioned to capitalize on this opportunity.
Mohammad Bataineh, CEO, MSL CapitalExplore our Case Studies on investment properties.
Long-term supply and demand imbalance exists across the residential rental sector.
↓ 53%
Decrease in pace of new home supply since 2008
↑ 31%
Increase in multifamily construction costs since 2019
↑ 5.5%
Increase in 30-Year Mortgage rate as of 2022
↑ 20%
Home price appreciation (YOY)
Severely constricted supply, together with increased construction and homeownership costs have created an ideal investment opportunity for multifamily value-add properties. MSL Capital leverages its resources to source the best deals for our investors.
Mohammad Bataineh - CEO, MSL Capital