FAQs
Are your assumptions accurate?
We work to make conservative assumptions and always seek to underpromise and overdeliver. Additionally, we always present three scenarios - our expected case scenario, our upside scenario and our downside scenario. While we don’t have a crystal ball and there is always risk, we have found this methodology works well for us and our investors. We feel this helps us set appropriate expectation and to regularly communicate how we are stacking up to these assumptions.
How much are you personally investing?
While each investment opportunity is different, we seek to personally invest 10-30% of capital raised in each of our real estate investment projects. Our personally committed capital is clearly outlined in each opportunities’ offering documents.
How are you different?
Each real estate sponsor is a little different and each brings their own ‘secret sauce’ to their work. This is at least partly due to real estate investment being not purely scientific but also an art. There are real estate sponsors with various backgrounds which influences their style. Rich is a CPA, a real estate broker, a native of San Diego’s South Bay and a third generation real estate investor. One of his investors calls his style ‘Steady Eddie’ and he think that fits well. He is always considering the downside and looking to protect our investments. If we can leave a little on the table for some significant added security, we’ll do it. We are methodical, conservative in our assumptions and in it for the long term.
What are you doing to protect downside?
Real estate is a cyclical business and we are constantly looking to protect our downside. Examples of how we accomplish this include locking-in long term interest rates, tying long term commercial leases to inflation and negotiating leases and loan renewals well before they are due. Additionally, we never highly leverage our investments (have a lot of debt relative to the property value). We feel people most often lose money in real estate when they HAVE TO sell - and all these help us avoid that.
What makes your deals different?
Our focus is long term wealth preservation and growth. We invest in properties we want to own for the long term and invest in them, our tenants and the team that manages the properties accordingly. We don’t look to make a quick flip and move on to the next building. We make regular incremental improvements and treat our properties like a business we want to have for the long term - a business that pays our investors regular income for the long term. We don’t highly leverage our investments or poorly maintain the building to maximize short term cash flow - we create value through improving them and creating community with our tenants, our company and our investors. We make investments you would be happy to leave to your heirs one day.
What fees do you charge?
Fees vary from deal to deal; however, we carefuly structure our fees to align our goals with our investors’ goals. As we focus on long term investment hold periods, we do collect some fees to help us ‘keep the lights on’ and manage our investments, but a majority of our compensation is earned as our investments perform and we benefit along with our other investors.
Return Investors.
Over 81% of our investors have invested in subsequent real estate investments offered by our group when given the opportunity. We take this as the second highest form of compliment - second only to referring their friends and family to invest with us as well.
Who are the key people on your team?
A great place to start is our team page; however, like most real estate investment sponsors, we rely on an exceptional team outside our direct organization. From contractors to designers, lawyers to CPAs, inspectors to insurance specialists, we have assembled an excellent team to protect and grow our investments. We also have an exceptional Board of Advisors helping to guide our big picture and navigate bumps along the way. To learn more about these, visit the Strategy section of our Resource Center.
What are the best/worse scenarios?
When we present each our investment opportunities to prospective investors, we present an expected case, a downside and an upside scenario. We feel this helps our investors have appropriate expectation given we do not have a crystal ball. We always seek to underpromise and over deliver and have made lots of happy investors.
Are you preparing for a downturn?
The short answer is yes, always, as a rule: we are preparing for a downturn. While it is always important to buy right, we feel our strong underwriting protects us from buying really wrong. Additionally, our strategies help bring us solid returns even if we don’t buy at the bottom of the market. Our first priority is capital preservation. Second is long term improvement and maximizing our returns on our investments.
Who manages your properties?
Balboa Asset Management is a fully vertically integrated firm and we self-manage our investments. For our investments in Chula Vista, we have built out Chula Vista Realty specifically to manage our investments there.
What is the hardest lesson you learned?
We have learned a lot of lessons in Balboa’s nearly 10 year history and in each of our real estate experience prior to our founding. That being said, the hardest has been that there are no perfect properties or tenants; however, by being patient and implementing exceptional strategies, systems, and processes, we can still achieve exceptional results.
Can I see your portfolio’s performance?
Absolutely, we take pride in our portfolio and all that we have accomplished so far. In order to download details of our portfolio, please follow this link.