Business Platform:
Z-21 Development, Inc. is focused on high yielding, investment opportunities, which typically require $200,000 to $2,000,000 of equity capital. Investments are underwritten to yield an opportunistic return in excess of 25% annually over a one to four year investment horizon.
Distressed Residential Investment Platform:
Z-21 Development, Inc. business plan is to acquire distressed residential assets on a single asset or portfolio basis. Our team has extensive residential and commercial real estate experience. These disciplines include; renovation, repositioning, marketing, and sales of these types of assets. Our renovation and repositioning opportunities will be focused on distressed assets that are in need of work to add substantial value. These opportunities will be limited to a scope of work that will take no more than 90 days to complete from the time of closing. We are very focused on mitigating carry costs caused by loss of rental income or a delay in a prompt asset to market sale as a result of the repositioning. Other acquisitions will target new build luxury homes in which the developer has reached agreement with its lender to exit with a short sale or where the bank has foreclosed.
We anticipate an average hold time on each asset of 1.5 years. Our objective immediately after closing is to complete any needed capital improvements to be able to realize the full potential of the market. In most cases we will rent the home for a period of one to two years, and then sell the asset when the market fundamentals are favorable to exit the investment.
Our business plan is to acquire distressed homes that are completed at a price no more than 45% of replacement cost, and a minimum 25% below current market value, or 40% below stabilized market value. We are also positioned to purchase residential lots that are ready to build to upon at no more than 25% of current market value We are able to identify a strong pipeline of homes that fit within this investment criteria as a result of our strong broker and bank relationships. Extensive due diligence is completed when underwriting these distressed investment opportunities.
We believe that the window of opportunity is limited to take advantage of the depressed residential values, and that we will see prices start to rise mid 2010. Residential Real Estate Brokers are reporting strong rental demand for single family homes, it is expected that there will actually be substancial pent up demand for these rentals by June, which will yield favorable rental rates. The high barriers to entry will result in it being the first sub-market to recover.
Z-21 Development, Inc. will manage our disciplined business plan by properly managing risk to reward with each opportunity, maintain a clear focus on our exit strategy for each investment, and mitigate all carry cost, by minimizing renovation time lines, aggressively marketing each home for rental and or sale if an acceptable yield can be realized in the short term. We will be flexible meeting market demands for potentially short term rentals or furnished rentals that generate a rental premium to drive the greatest yield.