At McKee Capital Group, we use a conservative and focused approach to select investment deals offered through real estate syndications. With an emphasis on multifamily housing, our portfolio includes $250M assets under management across over 3,400 units with participation as both a managing partner and limited partnerships.
Targeted properties are located in the Southeastern United States, focusing on regions from Florida to Texas, including the Carolinas. We choose to buy in states with landlord and business-friendly laws and high net population growth. Within those states, we target tier 2 and tier 3 cities.
Tier 2 Cities are developing regional real estate markets with high growth opportunities. The cities have the infrastructure needed to support the growth, but the markets are not saturated. City populations generally range from 1 to 5 million.
In 2022, major second-tier markets include Austin, Dallas, Atlanta, Miami, Raleigh, and Charlotte. Population growth has outpaced general population growth, with areas seeing net gains ranging from 10 to 30%.
The search for affordability, lower cost of living, employment growth, and smaller tax bills drive demand for housing in Tier 2 markets. According to Redfin, the number of families relocating to affordable metros in the first three months of 2021 was more than twice the number of relocations in 2020. U-Haul reported that Texas and Florida ranked second and third with the highest one-way moves into the state. North Carolina and Georgia were also in the top 10.
Tier 2 cities are excellent for multifamily housing because demand outstrips supply and business growth keeps wages competitive.
Tier 3 Cities have underdeveloped markets with lower populations and, in many cases, need additional infrastructure to support growth. City populations range from 100,000 to a million residents. When cities actively solicit business development, they can provide an excellent investment for multifamily housing as they develop into a tier 2 city.
Investment Class Focus
In addition to seeking regional markets with a substantial job and housing growth, we vet individual properties for value-add potential. Within our target markets, we seek 100 units to 800-unit apartment complexes with occupancy rates above 80%. Property rank as class B and occasionally class C assets built between the 1970s and 2010s.
Ideal properties are undervalued, with rent growth and rehab potential to force appreciation and deliver above-average returns.
Class B multifamily properties are quality apartment complexes in good neighborhoods. They tend to fall in the middle of the road with regard to amenities and design, leaving room for rehab projects to drive revenue. The units appeal to working-class families that need a safe and comfortable place to live without the higher cost of luxury accommodations and amenities.
Class C multifamily properties tend to be older units in fair condition, not located in prime neighborhoods. Buildings have a lower acquisition price point, but tend to require higher renovation budgets. These units can provide excellent cash-on-cash returns.
Targeted Returns For Investors
We aim to provide gains within the following ranges based on past deals, although specific returns are not guaranteed.
- IRR of 14 – 18%.
- Investment hold period of 5 to 6 years.
- Preferred return of 8% (cumulative)
- 10% cash-on-cash return
- 2X return during the holding period
Typically minimum investments for properties under $30 million in purchase price typically have a minimum investment of $50K, and those over $30 million in purchase price typically have a minimum investment of $75K.
If you are interested in learning more about investing with McKee Capital Group, watch our introductory video here.