Please fasten your seat belts. Why we may experience some turbulence?

“Be fearful when others are greedy and greedy only when others are fearful.”
- warren buffet

After an amazing run, rental demand momentarily settles with the national vacancy having a 60 basis-point rise during the first half of 2022. Mortgage rates have climbed pass to a post-Global Financial Crisis high, exacerbating the affordability gap, or the difference between an average monthly payment on a median priced home and an average rent payment. The gap has now widened to over $1000 per month, providing demand support for rental units.

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Increasing rents is simply an issue of supply and demand

Unless more inventory comes online in the multifamily sector, we will continue to see good growth in rental rates. Liquidity in the multifamily sector remains strong despite the market turmoil. Banks are over capitalized but have slowed down lending and tightened up the credit markets to brace for future downturn. Single family production has slowed down considerably, putting more upside pressure on the rental market. Multifamily new build starts were at all time highs this past summer but that is a 18 - 24 month lag until construction is complete and products are deliverable to the rental market. But given the rate environment, developers are less confident about new starts.

Blackwood Apartments (South Lake Tahoe, CA)

Units 5 and 7 were quickly rented after rehab was completed.

Unit 5 is a studio unit that costs $1,200 per month to rent.

Unit 7 is a two-bedroom apartment with a monthly rent of $1,950.

The average monthly rental rate at acquisition was $1,090 per unit.

These substantial increases will contribute to the property's long-term value.

READ MORE

Jose Figueres Apartments (San Jose, CA)

69 JoFig Unit 1 is successfully rented for $1,850 per month. This is an increase of $590 over the previous rent of $1,260.

81 JoFig Unit 2 was quickly rented for $1,850 per month. This is an increase of $590 over the previous rent of $1,260.

READ MORE

Leawood Apartments (South Lake Tahoe, CA)

Unit 6 (1/1) rents out at $1,545 per month (includes $50 per month for pets). This is a $645 increase over the previous rent of $900.

Unit 12 (1/1) rents out at $1,495 per month. This is a $695 increase over the previous rent of $800.

READ MORE

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We are keeping a close eye on the labor market

We are keeping a close eye on the labor market, recognizing it strength in today’s economy but seeing cracks as company earnings start to compress and organizations contract to reduce future risk. Some companies have started the lay off process and we see the “work from home movement” getting pushback as companies look to retain employees who can come into the office and let go those that prefer to work from home.

This is a positive for the assets we hold in core markets, such as the San Jose and Redwood City.

For example, “Apple’s aim to have most employees in the office at least three days per week starting in September may be a catalyst for a broader workplace return among South Bay technology companies, but for the metro’s apartments, demand has already come back,” placing the vacancy rate at 3.8% this year (Marcus and Millichap).

Sacramento market has ramped up new multifamily construction with 2022 delivery volume on track to be the largest in more than 20 years, but with new starts slowing down in a rough environment, we still see vacancy rates near 3% levels.

The Deland Apartments
San Jose, CA - 6 units

READ MORE

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The self storage market still exhibit strong growth

The self storage market still exhibit strong growth as robust investment demand generated record inflow of capital and cap rates compressed even further to the mid 5% range nationally, especially in core markets. Our 400+ unit at downtown Spokane, WA is leasing up at a good rate and slowly stealing market share from local competitors who provide a much more inferior product. We are looking at building out an additional 100+ units in the building to boost overall value of the property and desirability from potential buyers.

The Wall Street Executive Storage
Spokane, WA - 414 self-storage units & 7 office spaces

READ MORE

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We remain very active in the market

We remain very active in the market, pursuing potential acquisitions in strong markets where there is a scarcity of inventory (both current and in the pipeline), essentially putting a "floor" on rental rates. Strong, existing relationships will play a role in the future growth of Flite and our investors during this uncertain period. A downturn in the economy can be stressful for many people, but as history has shown, it can also open up many opportunities for great investments.

1818 Apartments (Sacramento, CA)

Acquired with all units vacant.

All units are 90% complete!

The 1-bedroom units  are expected to rent for $1,925 - $2,000 per month. The 2-bedroom townhomes rents are $2,395. 

On the OM, our rent pro forma was $1,650 for a 1-bedroom and $2,650 for a 2-bedroom. 

We will also charge $100 per space for secured parking and implement RUBS to generate additional revenue.

READ MORE

Harrison Apartments (Redwood City, CA)

Acquired with 60% of the units vacant.

All units are 90% complete!

We are looking list the 1-bedroom units for $2,595 per month and the 2-bedroom units rents at $3,195. 

On the OM, our rent pro forma was $2,250 for a 1-bedroom and $3,100 for a 2-bedroom. 

We are also considering charging $100 per space for secured parking and implement RUBS to generate additional revenue.

READ MORE

Spruce Apartments (South Lake, CA)

Acquired with all units vacant.

The exterior is currently being prepared for painting.

We've started putting up drywall after passing inspections.

Interiors are being prepared for new finishes.

All rehab work is expected to be completed in November.

We intend to visit the site in November to walk the building and address any last-minute concerns before listing for rent.

READ MORE

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Real Estate Investing Real Talk - New episode

Here's a casual catch-up call between Sherwin and Tyler where they dive into a few interesting topics: 5 ways to lower your interest rate, the rising property taxes that Tyler is running into on his personal portfolio, and capital gains exemptions on single-family homes! Enjoy!

Link to EPISODE ► https://www.youtube.com/watch?v=od149RLAnuE

And don't forget to SUBSCRIBE ► https://www.youtube.com/channel/UCMAX-Jgb2MDMtj79QaC1hsw

At Real Estate Investing Real Talk our goal is to share our experiences to help as many people as we can.

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Feel free to connect

We would like to thank our investors for their continued support and trust in us. Our investors can access their latest Flite Quarterly Investor Report on the investor portal.

If you want to catch up, talk about investing, or anything else, please don't hesitate to contact us.

Regards,

The Flite Team

Attention Investors! This is your Captain speaking...

“The key to success is often the ability to adapt.”
- Anthony Brandt

It has been a turbulent few months in the commercial real estate and debt markets, with interest rates rising in an attempt to control inflation. Since the previous quarter, we have been keeping a close eye on the residential and commercial markets, as well as the bond and treasury markets. We anticipate some expansion of cap rates for multifamily assets in the next 6 to 12 months as debt becomes more expensive for borrowers.

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Rising rents could cause some headwinds

Rents have been and continue to rise, preserving valuations, but affordability will be the limit to future rent growth. We are looking at the rental rate and affordability inflection point, as this could cause some headwinds for future rent and valuation growth. The majority of our assets in our portfolio will strive for full market rents, putting them at top valuations when compared to comps. This is especially true of our high vacancy/fully vacant acquisitions, which allow us to lease the units out at full market rents as soon as the value add work is completed.

Leawood Apartments
South Lake Tahoe, CA
1/1 bed/ bath rehab
Rent at acquisition: $900
Target rent: $1,595 (just leased)
Rent increase: $695
View the rehab here

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We remain very active in the market

Despite this, we remain very active in the market:

• Pursuing potential acquisitions in strong markets where there is a scarcity of inventory (both current and in the pipeline), essentially putting a "floor" on rental rates.

• Multiple projects are in the rehab phase, and we're dealing with supply chain issues, labor shortages, and so on.

• Have multiple properties in the disposition phase by working with our broker network to list properties for sale and some sell off-market to strong buyers with clean terms.

Rent growth for both new leases and renewals continued to be greatest in Class A and B communities, which cater to higher-income renters; rent growth in Class C communities was slower. Our properties are primarily located in Class B and higher markets that have strong fundamentals and job growth.

Blackwood Apartments
South Lake Tahoe, CA
2/1 bed/ bath rehab
Acquired vacant
Rent pro forma: $1,425
Target rent: $1,950
View the rehab here

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The Spruce Apartments - Acquired May 11, 2022
South Lake Tahoe, CA

Flite is pleased to announce that we have acquired the Spruce Apartments, a 100% vacant 12-unit apartment community nestled in the resort town of South Lake Tahoe, California and half a block away from our 13 unit property, Leawood Apartments, and across the street from our most recent acquisition, the 20 unit Blackwood Apartments.  Again, working closely with a local broker and partnering with Clearwater Construction, a well established local contractor, we were able to beat out 7 offers and secure the deal for $2,160,000! 

Investor Details

• $2,160,000 purchase price

• $900,000 capital raise (506b offering)

• $50,000 minimum

• 8% preferred return

• 70/30 equity split

• 2 year projected hold

Projected Returns

• 38.9% projected IRR (Y1)

• 1.39X equity multiple (Y1)

• 23.3% projected IRR (Y2)

• 1.52X equity multiple (Y2)

• 20.6% projected IRR (Y3)

• 1.69X equity multiple (Y3)

See more details at our website below.
https://www.fliteinvest.com/properties-spruce

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The Deland Apartments - Listed for sale
San Jose, CA

Flite is excited to announce that we have decided to list the Deland Apartments in San Jose, California. Deland Apartments is a 6-unit apartment complex with all one-bedroom units situated on a 6,458-square-foot lot. Each unit is approximately 550 square feet, and five of the six units have recently been renovated with new appliances, kitchens, bathrooms, and other features.

San Jose City College, Valley Medical Center, and Fruitdale Station are all within walking distance, and all major freeways are easily accessible. New developments in the area, combined with San Jose's consistently growing market, make this building an excellent investment for anyone looking to expand their portfolio. The subject property has been fully renovated and stabilized with market rents in almost all units, assisting in increasing cash flow while limiting maintenance costs.

We acquired this property in May 2020 for $1,550,000 and currently listed for $2,398,000.

Investment Highlights:

• 5 of 6 Units Fully Renovated

• New Appliances, including Dishwasher

• New Washer and Dryer

• Dual Pane Windows

• Stabilized Rents (increased rents at an average of $491)

• Close Proximity to All Major Freeways, San Jose City College

• Walking Distance to Downtown Willow Glen

See more details at our website below.
https://www.fliteinvest.com/properties-deland

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Real Estate Investing Real Talk - New episode added!

In this episode, Tyler (a fellow Flite Investor) and Sherwin chat about the concept of merging Real Estate Investing with the Crypto world! They chat with Kenny Schumacher (a fellow Flite Investor), founder of Closin, which is an investing platform built to tokenize real estate, allowing investors to buy fractional shares of property.

Topics we cover in this episode:

Why is there a need to bring real estate and crypto together?
What’s the minimum investment?
When is cash flow distributed?
What are the returns?
What’s the difference between Closin and Fundraise or RealtyShares?
Can anyone invest?

Learn more about Closin and connect with Kenny at: https://closin.com/

Enjoy the episode! And don't forget to SUBSCRIBE ► https://bit.ly/328t2UG

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Market Activity

We continue to see strong buyer interest in multifamily and self-storage properties in core markets (such as Sacramento) and have ample capital to deploy. We are also seeing price softening in tertiary markets and areas with much higher inventory growth, both of which Flite does not invest in. When it comes to putting their money in a vehicle that can not only generate yield but also preserve capital during a downturn, the volatility of the stock market and high inflation make real estate a safer bet.

Strong, existing relationships will play a role in the future growth of Flite and our investors in the coming recession. This includes relationships with brokers, lenders, and other commercial real estate players. A downturn in the economy can be stressful for many people, but as history has shown, it can also open up many opportunities for great investments.

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Feel free to connect

We would like to thank our investors for their continued support and trust in us. Our investors can access their latest Flite Quarterly Investor Report on the investor portal.

Please don't hesitate to contact us if you want to catch up, talk about investing, or anything else.

Regards,

The Flite Team

Flite 2022 Q1 Updates!

“Success is the maximum utilization of the ability you have.”
- Zig Ziglar

We hope everyone enjoyed the first quarter of 2022. The mood was different one year ago and definitely so two years ago when the pandemic just started. We look forward to what this year continues to bring as we enter hopefully the endemic phase of Covid. The Flite team continues to maximize our experience in real estate, architecture and design, management skills through all project phases, construction experience, and accounting/ finance assessment to bring added value to real estate investments. 

Leveraging our backgrounds - 29 units under rehab

We are currently rehabbing 29 units throughout our 8 active properties. We’ve also begun work on the exterior of some of our properties in preparation to hopefully exit this year. K1’s have been issued and utilizing our experience in tax and risk management, we were able to coordinate and maximize deductions for our investors.

The Blackwood Apartments - Acquired March 8, 2022
South Lake Tahoe, CA

Escrow has closed on March 8, 2022 for Blackwood Apartments and the acquisition is complete!  This is a 20-unit apartment community nestled in the resort town of South Lake Tahoe, California and acquired off market through our broker relationships. Flite would like to congratulate everyone who invested in this deal and welcome our new investors aboard!

Investor Details

• $2,925,000 purchase price

• $1,150,000 capital raise (506b offering)

• $50,000 minimum

• 8% preferred return

• 70/30 equity split

• 3 year projected hold

Projected Returns

• 22.1% projected IRR (Y3)

• 1.82X equity multiple (Y3)

• 21.7% projected IRR (Y5)

• 2.28X equity multiple (Y5)

See more details at our website link.
https://www.fliteinvest.com/properties-blackwood

The Spruce Apartments - Currently under escrow
South Lake Tahoe, CA

We are currently under escrow to acquire Spruce Apartments, a 100% vacant 12-unit apartment community also located in South Lake Tahoe, California and half a block away from our 13 unit property, Leawood Apartments, and across the street from our most recent acquisition, the 20 unit Blackwood Apartments. With the addition of Spruce Apartments, we are able to take further advantage of the economies of scale in terms of renovations, overall costs, and property management strategies, which will benefit all properties we hold in this market.  

Investor Details

• $2,160,000 purchase price

• $900,000 capital raise (506b offering)

• $50,000 minimum

• 8% preferred return

• 70/30 equity split

• 2 year projected hold

Projected Returns

• 38.9% projected IRR (Y1)

• 1.39X equity multiple (Y1)

• 23.3% projected IRR (Y2)

• 1.52X equity multiple (Y2)

• 20.6% projected IRR (Y3)

• 1.69X equity multiple (Y3)

The Wall Street Executive Storage - 33.4% Occupied!
Spokane, WA

Flite would like to provide some exciting updates for Wall Street Executive Storage! After closing escrow on December 10, 2021, we started with a clean slate on January 1, 2022 and by the end March 31, 2022, we were able to achieve 26.1% occupancy!  And as of today, physical occupancy has increased to 33.4% with 17 units on reserve!  This is ahead of the schedule we projected during acquisition.  Flite and StoragePro have been working feverishly on strategy and marketing to increase occupancy as quickly as possible.

See more details at our website link.
https://www.fliteinvest.com/properties-wall-street

Real Estate Investing Real Talk - New show added!

Our fellow investor, Tyler, and Sherwin just released a latest video on their Real Estate Investing Real Talk show on YouTube where we chat with our good friends, Tommy and Jeff, who are General Partners in the large multifamily investing world.

Tommy and Jeff go into detail on how they got into their first deals, how they build relationships, how syndications are structured, and so much more! ENJOY!

Market Activity

We continue to monitor the markets we invest in during this phase of the pandemic. How do we know the markets we invest in are hot? We know because we have made offers on properties, competing with multiple offers, some almost $1M over asking price. We also have notified eligible residents of rent raises and are able to lease out rehabbed units at higher rent rates than a year ago.

We would like to thank our investors for their continued support and trust in us. Our investors can access their full Flite 2022 Q1 Investor Report on the investor portal.

Please feel free to reach out to us if you'd like to touch base, talk investing, or anything else you'd want to discuss.

Regards,

The Flite Team

Flite's 2021 Highlights!

“Year’s end is neither an end nor a beginning but a going on, with all the wisdom that experience can instill in us.”
- Hal Borland

Happy New Year! We hope everyone enjoyed the holidays! We are thrilled to end the year strong and have the opportunity to spend time during the holiday season with our families. This much needed break allowed us to reflect on a very successful year filled with new acquisitions, profitable exits, expansions into new markets, and diversifying our asset classes.

After a slow first half of the year, business picked up in Q3 as we exited the Palms at Watt in Sacramento, CA after executing a full cycle value-add strategy. We also  acquired two multifamily properties, Leawood Apartments in South Lake Tahoe, CA and 1818 Apartments in Sacramento, CA. Then we closed out the year in Q4 acquiring two additional properties, Harrison Apartments in Redwood City, CA and Wall Street Street Executive Storage in Spokane, WA, further expanding our markets and investing in our very first self-storage deal! Flite has now acquired 12 assets total and exited 5 so far in less than 36 months.

Why invest outside of our core markets and in different asset classes? Why not just concentrate on locations and assets that we know? Whether we invest in multifamily locally or out of state or venture into self-storage, our investment thesis and goals remains the same…

To find heavy value add / value management opportunities in prime markets that allows us to force appreciation and yield the highest returns for our investors in the shortest amount of time.

Every business looks to expand and grow, which is why we are seeking opportunities outside of our core markets to explore options for our investors. We plan to take our experiences from our past projects and continue to leverage our skills and backgrounds in architecture, construction management, tax and risk management to provide diverse investment opportunities for our investors and build their wealth, protect capital, and capitalize on the tax advantages of real estate.

The multifamily market remained strong throughout these two years of Covid and we anticipate it to continue this coming year. Strong in-migration combined with housing shortage will benefit the markets we invest in. The self-storage industry outperformed all other commercial sectors in 2021 as the pandemic only fueled the industry.  We will keep a very close eye on interest rates and inflation figures but we anticipate that the multifamily and self-storage asset classes are positioned for a strong and healthy 2022.

Thanks to all of our investors who helped us become so successful and we welcome our new investors who joined our team this past year. We are grateful for your trust and support and we look forward to a prosperous New Year!

See below for our 2021 Year End Review!

The Wall Street Executive Storage
(Acquired December 2021)
Spokane, WA - 414 self-storage units & 7 office spaces

Flite is pleased to present the Wall Street Executive Storage, a fully renovated, 414 unit, brand new self-storage facility with 7 office units and bulk storage located in the heart of downtown Spokane, Washington. This is an off-market deal presented to us through our broker network and the team was able to secure the deal for $6,000,000. Construction of the Wall Street Executive Storage completed in December 2021 and was delivered fully built out and 100% vacant.

Investor Details

• $6,000,000 acquisition

• $2,500,000 capital raise (506b offering)

• $50,000 minimum

• 10% preferred return

• 70/30 equity split

• 3 year projected hold

Projected Returns

• 21.5% projected IRR (Y3)

• 8.0% cash on cash return (Y3)

• 1.67 equity multiple (Y3)

• 18.8% projected IRR (Y5)

• 10.5% cash on cash return (Y5)

• 1.93 equity multiple (Y5)

See more details at our website below.
https://www.fliteinvest.com/properties-wall-street

The Harrison Apartments
(Acquired November 2021)
Redwood City, CA - 15 units

Flite is excited to present Harrison Apartments, a wonderful and almost half vacant 15-unit apartment complex located in a highly desirable area of Redwood City, California. Working closely with our Marcus and Millichap broker team, we were able to quickly secure the deal below market pricing and off-market for $6,000,000. The property is located in an excellent residential neighborhood with many amenities nearby, including Whole Foods a block away, Safeway, retail shops and banks within walking distance as well as the Redwood City train station.

Investor Details

• $6,000.000 acquisition

• $2,150,000 capital raise (partnered with one of our previous investors who funded the entire capital raise)

• 8% preferred return

• 70/30 equity split

• 18 months or less projected hold

Projected Returns

• 34.8% projected IRR (12 month hold)

• 1.35 equity multiple (12 month hold)

• 21.4% projected IRR (36 month hold)

• 1.73 equity multiple (36 month hold)

See more details at our website below.
https://www.fliteinvest.com/properties-harrison

The 1818 Apartments
(Acquired September 2021)
Sacramento, CA - 12 units

Flite is pleased to present 1818 Apartments, a 100% vacant 12-unit apartment community in the heart of the vibrant Downtown-Midtown, Sacramento neighborhood.  Working closely with our Colliers International broker team, we were able to secure the deal, off-market for $2,630,000. 

Investor Details

• $2,630,000 purchase price

• $950,000 capital raise (506b offering)

• $50,000 minimum

• 8% preferred return

• 70/30 equity split

• 18 months or less projected hold

Projected Returns

• 42.7% projected IRR (12 months)

• 1.43 equity multiple (12 months)

• 26.1% projected IRR (36 months)

• 1.80 equity multiple (36 months)

See more details at our website below.
https://www.fliteinvest.com/properties-1818-apartments

The Leawood Apartments
(Acquired September 2021)
South Lake Tahoe, CA - 13 units

Flite pleased to present Leawood Apartments, a well-kept 13-unit apartment community nestled in the resort town of South Lake Tahoe, California. Working closely with our Marcus & Millichap broker, we were able to secure the deal for $2,030,000. 

Investor Details

• $2,030,000 purchase price

• $800,000 capital raise (506b offering)

• $50,000 minimum

• 8% preferred return

• 70/30 equity split

• 3 year projected hold

Projected Returns

• 21.9% projected IRR (Y3)

• 1.81 equity multiple (Y3)

• 23.1% projected IRR (Y5)

• 2.22 equity multiple (Y5)

See more details at our website below.
https://www.fliteinvest.com/properties-leawood

The Palms at Watt
(Exited August 2021)
Sacramento, CA - 11 units

Flite is pleased to announce that escrow has closed on the sale of 3911 Watt Ave, Sacramento, CA and we have received proceeds from Title. This is another successful project where we took the property from it's existing condition, rehabbed 9 of the 11 units, rehabbed the exterior, and sold much earlier than anticipated. 

Exit Details

• $1,250,000 (acquired November 2019)

• $1,800,000 (exited August 2021)

• 18.05% IRR (20 months hold period)

See more details at our website below.
https://www.fliteinvest.com/properties-watt

Please feel free to reach out to us if you'd like to touch base, talk investing or if you'd like more information about these deals and want to be updated on future investment opportunities!

Happy Prosperous New Year!

Real Estate Investing Real Talk

Imagine if you were mic'd up when talking to a friend, fellow investor, broker, or lender, and chatting about the world of investing in real estate. Wouldn't it be great to be a fly on the wall and listen in on that conversation? Well, that's the concept of this show!

Just LAUNCHED a new YouTube channel with by friend, Tyler Jahnke, called Real Estate Investing Real Talk!

First Episodes ⬇️

☑️ Why Listen to REI Real Talk?

☑️ Simple Habits to Invest in Real Estate!

☑️ Painful Lessons from Buying Your 1st Property!

Please help support us by liking/ subscribing to our channel!

REAL ESTATE INVESTING REAL TALK