Investments
Every investment starts with a plan, but it is the execution of that plan that makes or breaks a business. Our execution comes from a combination of art and science, using our years of experience and intuition in conjunction with data-driven decision making.
The Sapphire strategy is straight forward: only invest in projects with a clear, favorable return-risk imbalance. But how does that work? In order to prove out our thesis on any given project, we focus on the concept of demonstrability in both directions:
- Prior to acquisition, can a project’s theoretical upside be demonstrated and backed up with hard data?
- Prior to acquisition, can we (i) establish all of the project’s most likely risk factors and (ii) calculate each factor’s probability of occurrence based on the subject tolerance to the broader macro environment?
We achieve this standard of proof through a variety of means, including absorption studies, MSA historical growth trajectories, market analysis, and other demonstration proofs-of-concept. In a value-add renovation project, for example, recently renovated units done by prior ownership may serve as strong proof-of-concept data points, while time-to-lease figures and market comp comparisons can aid us in understanding absorption in that submarket.
While proving out upside is incredibly important, it is the minimization of risk where our investments ultimately shine. By staying strict through investment in middle-market properties, we negate the exposure felt by properties on the high and low end of the market during economic downturns. By studying competition intensively, we ensure our capital plans never overexpose the property. And by operating leanly, we maintain low expense ratios and high profitability, maximizing returns while building up the safety cushion.
Interested in investing in our next deal?
Sign up to become a Sapphire Investor