Lifsey Real Estate & Holdings
and Frantzen Capital Management
have formed Frantzen Tampa Bay Property Fund
, a limited partnership, to invest in distressed residential real estate in the Tampa Bay region.
Partnership team members Michael Via, president and chief investment officer, and Julian Standford "Stan'' Lifsey, Jr., chief executive officer, recently sat down with 83 Degrees
to talk about how the Partnership works in conjunction with Heritage Title Services, Fowler White Boggs
Nav Consulting, Northern Trust
and Old Republic National Title Insurance Co
. to buy, rent and sell homes using resources provided by investors. 83 Degrees: Can you explain briefly how the Property Fund works?
MV: I've worked in the investment business for many years, primarily investing in stocks, and also have experience in working with limited partnerships that lend themselves to the real estate market. I had been approached by a number of investors about exploring new opportunities in the real estate market as investments. Some local, some from all over the country.
SL: My background is in real estate, with Smith & Associates
and now on my own. Everyone obviously knows the real estate market is depressed nationwide. People who see it as an opportunity to invest are looking at their options. Say a doctor in Kansas wants to invest in five properties but he doesn't know where to look and doesn't have the time to do the research. We can put together a portfolio of properties here for him to consider. We partner with property management companies, banks, law firms, and thus can give investors a vehicle to take advantage of the opportunity that is currently in the marketplace. 83D: How is what you do different from what else is out there?
SL: We provide the boots on the ground that the investor doesn't have. We work with property inspectors. We know the buildings. We know what kind of capital investment it will take to make a home turnkey ready before we close on the property. We're very conscious of that value, especially for people out of state, but also for local business people who want to invest even though real estate is not their main forte. They can leverage our knowledge and expertise to make investments.
MV: Real estate investments are very time consuming; it's a laborious process. We do the acquisition and management of the property, and ultimately, the disposition thereof.83D: Why now?
SL: We saw in late second quarter '09 that prices had started to bottom out. You can still find deals out there that are under the average and can never time the market 100 percent correctly. But we think we're 85 to 90 percent in the window. The goal is getting these properties at the bottom of the market. 83D: So you hold the property for sale later?
SL: Our investment strategy for the short-term is the rental component. Each month as employment stays where it is, it becomes harder and harder for the unemployed to stay in their homes or to buy a home as opposed to renting. We can help them by fixing up these properties and making them available for rent. The Tampa Bay area has a higher percentage of renters than many others.
MV: The homes have to be rented to carry the overhead while we wait for stabilization of the market. There is tremendous demand for family homes. Those who've been foreclosed need rental property. We're fixing up houses, making them family-ready, and renting at affordable prices. We're helping people find places to live. In the long run, our investors will capitalize on their long-term investments. 83D: Where are these properties?
SL: We are focused on three counties: Hillsborough, Pinellas, Pasco.
MV: There are 35,000 houses in the region for sale, on the market now. 83D: How do you select the properties?
MV: Location is a big factor. We research all the properties as far as taxes and what they will be going forward. We assess with the help of a management company what rental rate an investor could expect, the amount of money that will be needed for fixing up, appliances needed and so on. We know what price can produce a good yield to carry the home. We figure a price point to determine what our investment model can bear.
SL: All the properties we acquire were built after 2001 when new hurricane building standards went in. They are primarily newer, one story, 3-4 bedrooms. We're trying to appeal to the masses.83D: How will what you are doing improve the Quality of Life for people in the Tampa Bay region?
MV: We're looking to rent to families. The typical family has two kids, a dog and wants a yard. We provide quality homes for them to rent.
SL: All of our rental homes will be turnkey ready. Families can walk right in and live.
MV: We're also putting people to work. Several of our vendors were sitting on the couch before we started. We're putting them back to work fixing up homes, cleaning up yards, painting, selling, handyman jobs. 83D: What is your vision for where this Property Fund will be in five years?
MV: We think the real estate market will return to an equilibrium in five years.
SL: The window for acquisition of properties will close in the next 12 months. There'll be about a three-year commitment for rental properties. Then sales.
MV: The limited partners contribute to a pool of money. Everyone owns a piece of the pool. At the end when we're selling property, they'll get a return on their investment.83D: How can a potential investor check you out to know that you are legitimate?
MV: With Bernie Madoff and others out there, we know of concerns for investors. We offer full transparency as far as the partnership goes. As properties sell, we can show what we're doing. You as an investor can go to the house, kick the tires, see what we have. We're not offering fictitious stock that no one's heard of. This is real property. We're also in the process of setting up a Google Earth
link where an investor can zoom in on each property and take a look at its surroundings. 83D: What's next?
SL: We're still actively raising money, looking for additional partners, investors. We will have closed or have under contract 25 homes by the end of January.
MV: This is a buyer's market. Buying is easy. Dealing with the property is not. Managing it and having tenants is the hard part. We do that part for investors.83D: Any last thoughts?
MV: Tampa is essentially the oldest "city'' in Florida in terms of infrastructure and employment, and for being a "real city'' as opposed to a lot of other places in the state that were built up on retirement or seasonal visitors. People live and work here year-round. That stability makes for a good investment.
SL: I love it here. I'm 32, a third-generation Floridian who chose to move back from New York because of the opportunities here.
Diane Egner, 83 Degrees publisher and managing editor, shares insights from thought leaders by conducting interviews and editing their answers for succinctness. Comments? Contact 83 Degrees.