Investment Strategy
Buy properties at wholesale prices; resell properties at retail prices:
The key to the company’s investment strategy is in purchasing properties at wholesale prices. At the heart of the company’s strategy is the ability to identify and secure good deals, targeting properties that can be purchased for at least 20-25% less than retail value. If targeted correctly, purchasing discounted, below-market properties can immediately provide positive returns. We can either assign the sales contract to another investor (for a profit) without taking possession of the property; rehab and resell the property at a retail price; or hold the property as a long-term rental investment.
Maintain adequate cash reserves within the company:
Debt management and cash flow is of paramount concern for the company. We carefully manage the company’s cash flow situation, never allowing our cash reserves to fall below a predetermined level.
Make offers based on our Maximum Purchase Price worksheet:
To consistently achieve positive net profits, the company has developed a spreadsheet to forecast each property’s net cash profit opportunity. The formula is based on determining the bottom line amount of net profit the company can expect from purchasing a property. Every offer to buy is based solely on whether the investment is a sound business decision. Simply, if the numbers suggest the property may prove to be a successful investment, then an offer is made for the property. The offer price is determined by the formula – which limits our risk in estimating the properties net worth to the company. We limit the number of offers on the table at any given time to the amount of liquid cash accessible; any investor or partnering opportunities present; and the amount of credit we have available.
Build and rely on a team of professionals:
We actively build and proactively use a team of professionals with deep experience in real estate investing. The team includes an attorney skilled in real estate; an accountant; several contractors that work consistently with real estate investors; several mortgage brokers and private money lenders; a title company; and a network of like-minded real estate investors. We enthusiastically participate in our local real estate investment association, taking advantage of the educational opportunities as well as the opportunity to meet other investors.
Establish and follow a goal-based timeline:
Setting goals and then following through with each goal is imperative for planning our business. We recognize that investing in real estate cannot be entirely planned, as the actual speed at which properties are purchased and resold is not something we can accurately predict. Nor can we predict market conditions. Following a goal-based timeline keeps us moving forward in achieving our objectives.
Develop and follow exit strategies for each property and for the company:
We have a clear strategy for the intent of each property before we make an offer to buy. Just as importantly, we’ve developed an internal Operating Agreement that clearly defines how the company functions, including specific methods regarding how to cease all company operations, close the company, pay all debts and divide the company’s assets between the owners.
Buying, Holding and Selling Properties
We follow a straight-forward process for identifying, buying, holding, and selling property. The process includes:
- Lead Generation
- Researching Properties
- Determining the Maximum Purchase Price
- Making Offers
- Financing
- Rehabbing
- Holding Properties as Rentals
- Selling Properties
Lead Generation
Key to the company’s strategy is a marketing plan designed to attract motivated sellers into our lead generation program. The plan is based primarily on generating leads from regional Internet advertising; maintaining a property database; developing a letter-writing campaign targeting pre-foreclosure property owners; displaying signs prominently in our targeted neighborhoods; and networking within our local real estate investment community. We’ve included a detailed marketing plan within this business plan.
Researching Properties
Once leads are established, we research the properties to determine whether we should present an offer to the owner. We use two primary means of researching properties.
First, we use a proprietary Maximum Purchase Price worksheet to help us determine whether to pursue a property. The worksheet is a vital component in deciding to make offers on properties, as it helps determine several important factors: the retail value of the property; the maximum wholesale price we can offer for the property; the amount of cash required for buying, rehabbing, and reselling the property; and the likely net profit for the company when we resell the property. We review the worksheet in detail in the following section.
Additionally, we research the property by accessing the County Assessor and Treasurer’s records. Specifically, we’re looking for how much equity the owner has in the property and if any liens are recorded against the property.
The Maximum Purchase Price Worksheet
The decision to buy and sell any property is based on an evaluation using the company’s Maximum Purchase Price worksheet. Using the worksheet for each property allows the company to apply a formula-like approach in our effort to consistently generate positive net profits. The worksheet breaks down the decision-making process into a simple
The worksheet is a formula-based MS Excel file consisting of thirteen simple areas, labeled as Sections A through L. The premise of the worksheet is straightforward. First, we estimate the price at which we realistically could resell the property. We refer to this as the retail value of the property. After estimating the retail value, we then forecast
the property’s net profit potential by subtracting all costs associated with acquiring, rehabbing, reselling, and profiting from the resale of the property. The number we come up with is the maximum amount we would pay for a property, which we refer to as the wholesale price. Again, the business model of the company is to only buy properties for wholesale prices, then either resell the properties at retail prices or hold the properties as long-term rentals.
How the Worksheet Works
Property Acquisition:
We’ve launched the company with the development of the Property Acquisition division. The role of the division is to acquire, hold, and resell residential real estate properties. The properties are viewed as inventory assets of the company, purchased for the purpose of bringing net profits into the company when the properties are resold or refinanced.
Investor Participation Opportunities:
We plan to seek passive investors to provide working capital for each acquisition, with payback of the initial investment and a percentage return-on-investment to the investor when the property is sold.
Property Management:
The Property Management division will be responsible for managing all properties that the company holds as long-term rentals. Additionally, the company can provide property management services to real estate investors for a fee.
Real Estate Brokerage:
We may establish a full-service real estate brokerage to handle all internal transactions for buying and selling the company’s properties, along with providing brokerage services to real estate investors and individual home buyers and sellers.
Mortgage Financing:
We’ll investigate developing a division specializing in investment financing for investors and individuals seeking real estate financing, primarily through private money loans.
Complete Investment Services and Consulting:
The company may create a division that advises real estate investors in their long-term investment strategies and provides comprehensive services for their investment needs. The goal is to provide a one-stop solution for an investor through a combined packaging of our divisions and resources: Property Acquisition; Investor Participation Opportunities; Property Management Services; Real Estate Brokerage Services; and Mortgage Financing.
The worksheet is a formula-based MS Excel file consisting of thirteen simple areas, labeled as Sections A through L. The premise of the worksheet is straightforward. First, we estimate the price at which we realistically could resell the property. We refer to this as the retail value of the property. After estimating the retail value, we then forecast
the property’s net profit potential by subtracting all costs associated with acquiring, rehabbing, reselling, and profiting from the resale of the property. The number we come up with is the maximum amount we would pay for a property, which we refer to as the wholesale price. Again, the business model of the company is to only buy properties for wholesale prices, then either resell the properties at retail prices or hold the properties as long-term rentals.
Section A: Property Address
In the first section, we simply note the address of the property:
Section A: Property Address
5808 Any Street 00000
Section B: Comparable Property
The next section notes the best comparable property that’s sold in the neighborhood in the last few months. This information is generally found in the regional Multiple Listing Service (MLS), which can be accessed by a Realtor. The information includes the comparable property’s address; the square footage; the price for which the property sold; and the subsequent cost per square foot. The cost per square foot is the price the property sold for divided by the square footage of the property.
Section B: Comparable Property
5808 Any Street 00000
Best Comparable Sold Property:
5381 Any Street 00000
Section B: Comparable Property
5808 Any Street 00000
Cost/Sq. Ft.
$150.00
Our Investment Funnel:
-
Proprietary Sourcing:
We utilize advanced data analytics and off-market networks to identify properties with the greatest potential for forced appreciation. -
Value-Add Execution:
Our construction team determines the most impactful renovations, prioritizing cost-effective improvements that drive the highest ARV (After-Repair Value). This includes:
- Structural and cosmetic repairs.
- Optimizing floor plans.
-
Strategic ADU construction
to maximize the property's density and income potential.
Exit Strategy:
We execute a seamless exit, leveraging our in-house expertise whether it’s a quick sale to a retail buyer or professional property management for a rental hold.
| Investment Goal | Primary Strategy | Typical Time Horizon | Risk Profile |
| Capital Growth | Fix & Flip (SFH/ADU) | 6-12 Months | Moderate |
| Income Generation | Buy & Hold (SFH + ADU Rental) | 5+ Years | Low to Moderate |
| Immediate Equity | Distressed Asset Repositioning | 12-24 Months | High |
Investment Goal Primary Strategy Typical Time Horizon Risk Profile
Capital Growth Fix & Flip (SFH/ADU) 6-12 Months Moderate
Income Generation Buy & Hold (SFH + ADU Rental) 5+ Years Low to Moderate
Immediate Equity Distressed Asset Repositioning 12-24 Months High
Invest With Us
Apex Capital & Development offers opportunities for accredited investors seeking to participate in high-yield, secured real estate projects. Our investments are backed by tangible, hard assets and managed by a team with a proven track record in both finance and construction.
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Marketing Plan
We have one primary goal in our marketing efforts: to generate leads from motivated property owners that result in our purchasing their properties for wholesale prices.We use several strategies to generate leads from motivated property owners. A marketing budget for each strategy is included in the Profit and Loss forecast in the Financial Plan section of this business plan. Our six primary marketing strategies include:
Maintaining a Property Database:
We maintain a database of all leads generated, allowing us to manage information for a large number of properties and maintain contact with the property owners. The database includes detailed information on each property that we collect from the property owners. We also subscribe to a local foreclosure service and import their weekly reports into the database. Each property entered into the database includes all relevant information regarding the property, including the Maximum Purchase Price worksheet and information on any offers we’ve made on the properties.
Automated Letter-Writing Campaign:
We actively utilize the database in our on-going marketing efforts by generating letters to property owners that have contacted us and to property owners in the region that are in preforeclosure or foreclosure.
If we’ve identified a target property and submitted an offer to the property owner which was not accepted, we continue to pursue the property through an automated letter writing campaign. The letters are a reminder to the owners that we are still interested in the buying the property and are available to discuss the property at any time.
Additionally, we generate letters to local property owners that are in preforeclosure or foreclosure. These property owners are highly motivated to protect their credit ratings and rid themselves of a property they cannot afford. Typically, these property owners have been notified of default by their mortgage lenders. We locate these property owners through a list provided for a fee by a local preforeclosure service. The list is imported into our database and we send letters to the properties owners on the list, typically one per month for three months during the preforeclosure and foreclosure period. We target property owners in specific neighborhoods that fall within the median to above-median house prices in our region.
All marketing letters are automatically generated from the database, triggered by predetermined mailing dates based on the preforeclosure and foreclosure timelines specified in our state. Letters are automatically personalized for each property owner and mailed directly to the owner.
Website and Internet Advertising:
The company maintains a website that’s primary purpose is to generate leads. The website generates leads by driving highly targeted traffic from keyword searches on primary search engines, such as Google, and through regional Pay Per Click (PPC) advertising programs. When motivated property owners arrive at the website, the owner is encouraged to fill out a simple online questionnaire that provides the company with essential property and contact information. The form is then automatically mailed to the company and recorded in the company’s property database. We immediately contact the owner, research the property, and determine whether an offer is appropriate.
Signs:
We place signs in targeted neighborhoods to constantly remind the community that our company is available to help them sell their home quickly for cash should the need arise. The signs are left in place and checked once a month. Before paying for and installing the signs, we checked our city’s sign ordinance to make sure we complied with the city’s signage codes.
Investor Networking:
We believe that our competition can also be one of our strengths. By actively networking with the investor network in our community, we’ve built a list of investors to whom we can market our properties. We seek out good deals on buying properties and tap the network when we’re marketing properties to sell. Additionally, because we have an ‘and/or assigns’ clause in our sales contracts, we can assign any sales contract to another investor without ever taking possession of the property. We are active members of our community’s real estate investor association and take advantage of their education courses and industry contacts.
Collateral:
We maintain printed marketing collateral that supports our marketing efforts, including business cards and brochures. We freely distribute our marketing collateral at every opportunity. All of our marketing collateral prominently displays the company’s website address, which is our least expensive and most productive source of leads.