Profits from Property: 4 Principles for Making Big Profits from Commercial Investment Property
The Youngfield OCPs are a small team of highly specialized and experienced operators in the highly undervalued German real estate market. Led by Finbarr Flahive, Youngfield’s German sister company has very strong contacts in the banking and financial sectors there, allowing opportunities to be identified and closed before they hit the market. However, it is the business model as a whole that generates a lot of money. Finbarr’s team of accountants, tax experts, attorneys, investment managers, bankers, and property managers combine to make big money from commercial investment properties. These are the four principles Youngfield uses to guarantee big money wins.
This is where multiple investors pool their money to buy a property much more expensive than any of them could individually afford. A German limited company is formed with a shareholders’ agreement. Foreign investors have the same property rights under the law in Germany. The company fully owns the property and there is only one property per company. Typical loan-to-value ratios are 65%.
Substantial value is built into the deal at the time of purchase due to off-market purchase. Through the extensive network of Youngfield’s German partner in banking and finance, the right opportunities can be acted upon quickly when they arise. Extensive legal and structural due diligence is carried out on the property and this allows the management team to identify and quantify opportunities to increase performance during ownership and/or add value through repairs and improvements.
3. Property management
The typical investment will have been neglected to some degree and the management team will have to catch up to bring it to its potential. The Chemnitz medical center is a classic example of this, where there was considerable vacant space when ownership was taken over. In the months leading up to completion, deals were struck with new tenants to fill most of the vacant space at current market rents, upon completion. Although structurally perfect, the building was somewhat dowdy and was renovated as part of the strategy to seek modest rent improvements for existing tenants. The continuous schedule of improvements is monitored every month.
The typical Youngfield deal runs for five to seven years and this is specified in the shareholders’ agreement. Coming to this time, the market will be praised for an exit that will be completed in this time period. Unlike paper values, the property does not sell in a day and the property managers along with the rest of the team will decide when is the best time to sell.