Alpha Bama Investors (along with Alpha Bama Properties) is seeking real estate equity partners for acquisition and development of collegiate rental housing adjacent to the University of Alabama in Tuscaloosa, AL.
As an objective, we only seek properties that are proximate to campus and pedestrian to classes within a 15-minute walk. Generally, this focuses our interest in the area between the Caplewood neighborhood to the north, 13th Avenue to the West, 15th Street to the south and Hackberry to the east. With most of the real estate in this confined area closely held by a small group of investors, opportunities are hard to come by. Naturally, the scarcity of product along with tightly controlled zoning regulations produces a very stable and valuable real estate market. As such, our investments seek moderate income with equity growth.
When we identify the right opportunity, our objective is to move quickly. Therefore, we are looking for capital commitments from partners in the range of $100,000 to $200,000 per property. We expect that the equity capital from any acquisition will be fully subscribed prior to executing any contract for purchase.
Well capitalized, the Principals of Alpha Bama Properties and Alpha Bama Investors are placing our own capital in each investment. Historically, we have invested the majority of the capital, and provided the loan guarantees and recourse on behalf of the ownership entities. As we have traditionally utilized low leverage financing, 50% to 65% loan to costs, we have been able to find numerous sources of debt capital during challenging market conditions. We will continue to seek ways to reduce or mitigate personal guarantees but will continue to invest our own capital into each acquisition. We manage the properties ourselves and believe we do it better than the competition.
Performance wise, our last three purchases were made at projections of 6.5% to 7.0% year one, unleveraged returns. All are currently exceeding these projections. As we target newer properties in the best locations, we expect rental growth and controlled expenses to move those unleveraged yields to over 9% by year 10 of the investment. Assuming a 10-year hold, we are targeting IRRs in the 12% to 14% range, conservatively.
To view our upcoming projects, please click here