Equity Management – What is it and who is CapitalVest, Inc?
Drawing upon its 40 years of apartment brokerage experience, CapitalVest, Inc., a sister company to Sterling Property Management, Inc. provides equity management strategies for seasoned apartment investments that have reached maturity.
How does an apartment owner know when their investment has matured? When the current equity position is inverse from the equity position at the time of acquisition, the investment is deemed mature.
For example, if an apartment owner’s down payment (initial equity position) at the time of acquisition is 30% of the purchase price and the purchase financing is 70%, said investment is deemed matured when the equity reached 70% or more and the loan balance is 30% or less.
When the above inversion occurs, an apartment owner has lost his/her leverage; however, what has been gained is the strategic ability for repositioning appreciated equity via a 1031 tax-deferred exchange into a larger apartment community(s). Although the intended objective is to expand the apartment owner’s holdings, the purpose is to increase cash flow and the potential for a greater rate of capital appreciation.
Another more conservative option for accomplishing this equity management strategy is to continue on with ownership in conjunction with repositioning net refinance proceeds into another apartment investment.
Consistent with both of these equity management strategies of repositioning soft dollars (appreciated equities) to expand one’s real estate holding, is the dual objective of increasing investment yield associated with cash flow and capital appreciation.
Client references are available upon request.