In the upcoming editions of The Distribution, we will emphasize a crucial aspect of our focus at BLVD: expense reduction. Currently, one of the major challenges in our business is the need to minimize operational expenses due to rising costs in labor, insurance, taxes, and other related items. As part of our strategy when acquiring a new asset, we plan to implement measures to reduce costs, specifically targeting areas such as taxes, utilities, insurance, and other miscellaneous expenses.

Starting with the most significant expense category on most multifamily Profit and Loss statements – taxes. One effective way to minimize tax costs is through the appeal process, a right afforded to every property owner. While it's typically unnecessary as we generally evaluate a new proposed tax value during acquisition, recent instances have surfaced where buildings are listed for sale below their assessed value. In such cases, part of our business plan involves purchasing the building and utilizing the appraisal in the sale process to appeal taxes. It's important to note that, thus far, we've considered this to be a potential upside in our underwriting, and we haven't structured any offers contingent on securing a lower tax assessment. Nonetheless, we conduct an annual review of our existing portfolio and enlist legal assistance to assess our proposed tax amounts, determining if there are grounds for appeal.

Outside of appealing we also have certain incentives we can take advantage of through state programs. We're excited to share that several of our properties have been approved by the 4d Housing Incentive Program offered by the State of Minnesota. This approval promises significant tax savings that will positively impact our portfolio. The program underwent enhancements in March 2023, with a substantial increase in investment, marking a clear commitment to supporting property owners.

For further details on the 4d Housing Incentive Program and to explore a specific implementation example, Click Here

Acquisitions Update

We maintain an active presence in the market, having reviewed and analyzed 12 multifamily investment deals in February. Out of these, we extended two offers. Beyond transactional activities, we continue to nurture and expand our networks within the broker, investor, and capital markets domains. We consistently collaborate with our connections to uncover off-market opportunities. This persistence has yielded several possibilities, and one of them materialized into the submission of an offer.

In addition, we've been enhancing our data analysis procedures and refining our deal tracking systems. This effort is instrumental in monitoring the market, optimizing our deal flow, and deepening our comprehension of seller trends. In February, our deal flow analysis indicated a notable bid-ask spread, with properties seemingly lingering in the mid to high 5% cap rate territory at the average asking price. Our offers were targeted at suburban deals in the Twin Cities, and while we reached the best and final stage on one, we ultimately lost the bid due to pricing considerations.

Looking ahead, we're excited for the rest of the year. Deal flow is increasing, and sellers are becoming more realistic about sales prices, setting the stage for promising opportunities.

Thank you for reading and your interest in BLVD Ventures. We look forward to having you follow along. Feel free to reach out anytime with questions and connect with us further using the button below.