At Task Force Capital, we, the general partners (also referred to as sponsors, active investors, or operators) find our project from a variety of sources, oftentimes coming through trusted broker partners and a vast network of professional connections in the commercial real estate arena who know our model and earmark deals for us as they come across their desks.

Our formula to find the right deal formula is broken down into two mission-critical criteria:   

1. The Location of the investment

   The area where the investment is located needs to have a Landlord and business-friendly environment, above-average economic drivers such as Job and population growth, and an advantageous affordability gap.

2. The Capitalization Rate of the investment

   The Investment needs to prove an above-average capitalization rate. This is why we reject many of the projects brought to our table, even if they are located in what would be considered prime areas.These two criteria are only the first stage of the intensive due diligence we put every investment through. 

   Of those deals we receive, roughly 25% will merit our full analysis and move on to the next stage.

Once a project is identified, we analyze and cross-reference dozens of data points to ensure the project not only satisfies our investment philosophy, but also has a large untapped profit potential that will require minimal investment to maximize our returns. You will also hear this process referred to as underwriting.

Our goal here at this stage is ensure that we analyze the property conservatively, meaning that we factor in worst-case scenarios, and we stress test our analysis to account for "what ifs." Doing this will lower the ROI projections, which means by the time we present you with the projections, you can be confident that we are not giving you pie in the sky projections just to convince you to invest with us. Word gets around. What we absolutely want to avoid is for you to tell other potential investors that we didn't deliver on the returns we projected when you made your investment.

Remember - we are investing a significant amount of our own capital into this same property... likely more capital than you will invest. Not only do we have some skin in the game, we have our professional reputations on the line!

We formulate a business plan whose ultimate objective is to increase the value of the property over a three to five-year period. We achieve this goal through a process of forced appreciation. What does that mean?

Unlike single-family homes and non-commercial multifamily, which are valued by comparable properties (the values of which are out of your control) commercial properties are valued by how much income they produce, referred to as Net Operating Income (NOI). To calculate NOI, You simply subtract revenue from expenses. Therefore, anything that we can do to increase revenues or decrease expenses (factors that are in our control) will increase the NOI, thereby increasing the value of the property. That's forced appreciation, not hoped-for appreciation. We control and increase this value through a number of initiatives that we establish when we take ownership of a new property.

Examples of things we can do to increase revenue

-Raising rents through: bringing below-market rents up to market rents, property upgrades, and unit upgrades 

-Premium parking spots

-Adding paid storage units 

-Adding paid package delivery boxes

-Offering premium wi-fi service

Examples of things we can do to decrease expenses

-Utility updates such as energy and water-efficient fixtures - which helps to combat climate change as a side benefit

-Individual metering for each unit 

-Lower property management costs

-Lower maintenance costs

Each of our team members brings a different set of skills and experience: marketing, construction/rehab, asset management, etc. We bring our analysis and business plan audit to the larger team and ask them: "does this make sense? Are you confident that we can execute this plan? What variables did we not consider?" We decide as a team if the plan if feasible and if we will be able to do what we aim to do for all of our investors: under-promise and over-deliver!

For apartment properties specifically, we take the analysis and business plan to the most reputable and most highly experienced operators at the Brad Sumrok group for further scrutiny. As a member of this apartment investor group, we have exclusive access to their most experienced underwriters, who specialize in vetting deal analysis. What do they get out of it? First, if it pencils out, they just had a good deal served on a platter that they will want to invest in. Second, we can't raise capital within the Sumrok group unless it has been vetted first. That's how they protect their investors from deals that don't make sense and ultimately the Sumrok brand. What do you get out of it? You can be confident that this deal has been scrutinized by experts in the industry who are willing to put their own money into it!

With the deal approved by our third-party auditors, we the general partners will make an offer on the property.  While there may be several bidders on a given parcel, what makes our offer stand out is the immediate financial backing we bring to the table. Sellers aren’t just looking for the highest offer - they are looking for the best offer, which means the highest one that is most likely to close in a timely manner. Not only do we have all of our deals prequalified by our institutional lender, but each member of the general partnership team is prequalified, ensuring that when it is time to close the deal, the seller can be confident that our funds are guaranteed to be available at closing. 

The general partners will notify the seller that we intend to make an offer. Then we will negotiate the terms with the lender and the seller (sometimes the seller is the lender!). When all parties have agreed upon the terms, we generate a contract for sale.

In addition, the general partners will pay to the seller (out of our own pockets - not yours) an agreed-upon amount of earnest money. That way the seller knows we are serious about closing the deal. It has to be a sizeable amount of money that the seller knows will hurt if the general partners don't come through on the deal. We the general partners all understand that we will lose that earnest money if we don't close the deal.

The contract isn't a done deal yet. It's contingent upon the general partners' satisfaction that the property is in the condition that the seller claims. So the Task Force Capital team begins a thorough onsite due diligence process to inspect every inch of the given property with the help of trained specialists in the fields of plumbing, electrical, engineering, and roofing. We want to get a refined picture of the property's condition, which will give us more accurate rehab and improvement estimates. That way we can refine our business plan. We may even find at this stage that given the property's condition and the data points that our inspection generated, the deal may not be as profitable as we had first projected. So we either re-negotiate the terms, or exit before we get ourselves (and you) into a deal that doesn't meet our criteria. We the general partners may forfeit our earnest money, but we protect our capital, your capital, and our reputations.

Now that the conservative analysis is validated by the due diligence inspection, the general partners bring the investment details to you, the limited partner investor. We establish a LLC. The LLC is the legal entity that will own the property - NOT the general partners as individuals. When an investor makes a "soft commit," we hold their place in the capital stack (or pooled money) until that investor or another investor signs the subscription agreement and wires funds to the LLC. You can invest with cash funds, or you can invest using IRA funds out of a Self-Directed IRA (SDIRA). Don't have a SDIRA? We can refer you to a service to help you establish one.

You as an investor will sign a contract to become a limited partner in the LLC - "limited" meaning that you are a legal partner, but you do not exercise executive decision making over the LLC as the general partners do. The contract you sign with the LLC is what protects your capital and provides legal recourse if necessary.

The general partners sign closing documents.

The general partners put into the place their plan to increase the NOI and hence the property value by either increasing revenue, decreasing expenses, or both. In addition, the general partners will take responsibility for all legal, financial, administrative, and managerial aspects of running the property. They will monitor the property's financial performance and make operating adjustments as necessary to ensure that the business plan stays on track to hit the projections that were presented to you in Stage 8.

During Stage 8, the general partners will inform you what the projected cash distribution percentage will be. Barring financial headwinds (such as the rate increase environment of 2021-2024), you will receive a percentage of the property revenue according to your initial investment capital. Sometimes the business plan does not call for cash distributions until late in the investment period due to increased revenue being dependent on the completion of significant upgrades.

Throughout the investment hold period (usually three to five years), the general partners will regularly inform the limited partners of the progress of the business plan and the financial performance of the property. This often comes in the form of a quarterly email update or a virtual meeting. This stage provides a lot of value for you as a limited partner because you can pay as much or as little attention to what is going on as you want to. Perhaps you are interested in furthering your education as an investor and you want to learn from the general partners' experience as the business plan is underway. Perhaps you want to know the finite details of the financial performance. This is your opportunity to request detailed information from the general partners. As a limited partner, you are legally entitled to transparency in the dealings of the LLC.

Perhaps you want to be a truly passive investor, and you don't want to be bothered by any details outside of "how much money did I make, and when will you wire it to me?" You are well within your rights to sit back and just watch the returns on your investment land in your bank account!

As the business plan drives up the NOI, the difference between the value of the property and the debt stack, or equity, goes up. Refinancing provides an opportunity to capitalize on that equity and place you, the investor, in a better financial position. Refinancing the property may or may not be part of the initial business plan. It is for most value add apartment deals. Sometimes an auspicious opportunity to refinance presents itself, either through good financial performance well ahead of projections, or through interest rate or other changes in the lending environment.

Most commercial syndications will aim to execute the business plan in three to five years. The goal of the business plan is to increase the value of the property by increasing the NOI. Now that the property's value is higher, it's time to sell it for a profit that you will get a piece of!

Selling a commercial property is an intensive process that requires the expertise of the general partners, and possibly of a commercial broker. Finding a potential buyer is a delicate process in itself. There are several ways to find buyers: using personal networks, discreetly informing previous buyers, listing off market through word of mouth, formally listing on the market, using a broker - the list goes on. How you find a buyer can affect the sale price and the terms. Since a potential buyer needs to go through all of the stages listed above, they will want detailed financial records, which the general partners will prepare. The general partners will negotiate the terms of the sale, another delicate process that requires expert knowledge of the asset class and the projected market conditions, not just current market conditions.

Why would anyone want to purchase this property now that it is much more expensive and the cap rate is lower, meaning the potential to increase the profitability of it is lower? Remember, you and the general partners, as a team, were willing to take a moderate and highly calculated risk to multiply your investment capital. Leveraging debt was one of the pathways to do so. There are other investors out there, such as pension fund managers or REITs, that are not as interested in multiplying their investment capital as much as they are interested in preserving it. They may use much less debt or none at all to purchase this property. Think of it as you in your post-retirement years. In order to preserve your capital, you will shift your portfolio to lower risk/ lower return investments, like bonds. After executing our business plan, the property we are selling is more like a bond fund: low risk with stabilized and consistent financial performance.

Once the property is sold, the general partners will wire back to you - or your IRA - your initial investment capital (return OF investment) as well as your share of the equity profit (return ON investment). We aim to multiply your money by 1.7x-2.5x in the span of three to five years. We are confident that our performance will make investing with us again an easy choice!