Investor’s Guide to Evaluating Private Real Estate Opportunities

May 25, 2023

As a busy physician with limited time, your financial investments still require careful consideration and protection.  We know that adding real estate to your portfolio improves returns and reduces risk.  But what are some of the key factors to look at when looking at a deal?  The recent Houston apartment foreclosure has shed light on the importance of safeguarding investor capital. In addition to deals we sponsor, I am also a passive investor in deals from other sponsors, so I understand the concerns you may have. Allow me to share some key factors to consider and explain how Apta addresses them to ensure the safety and growth of your investment.

Economic Risks

To protect your investment, it is crucial to assess both macroeconomic and microeconomic risks. Macro risks involve considering the demand and supply dynamics in the area. Are there enough people with sufficient income to sustain the property you are investing in? Additionally, are there an excessive number of apartment complexes available compared to the demand? On the micro level, you and your sponsor should examine the property’s location in relation to desirable factors like job opportunities, good schools, low crime, convenient access to major highways, retail amenities, and recreational options. While avoidance of all risk is unrealistic, assets situated in areas with minimal environmental risks such as flooding or other natural disasters are preferred. All of our assets have strong macro and micro economic fundamentals even in this downturn.


The lender plays a significant role in investment deals, often determining their success.  At Apta, we recognize this and take great care in selecting lenders and negotiating favorable terms. We ensure transparency regarding the interest rates, fixed or variable nature of the loan, and any rate caps associated with variable rates. Additionally, we consider whether the loan is recourse or non-recourse.


Determining the appropriate level of borrowing is essential for managing risk. Often referred to as leverage, it can be a double edged sword.  While more debt carries greater risk, it also offers more potential upside in a booming market. On the other hand, less debt reduces risk and provides greater protection during economic downturns. At Apta, we strike a balance by leveraging our assets between 50% and 60%. This approach allows us to mitigate risk while still capitalizing on market opportunities.

Capital Stack

The capital stack is simply a list of all the players who have money in the deal based on priority of payback of their investment.  We believe in simplicity when it comes to the capital stack, ensuring transparency and clarity for our investors. At Apta, our capital structure consists of the lender holding the debt and all the limited partners holding the equity. We avoid additional complicated layers such as preferred equity and mezzanine debt.  These layers are beyond the scope of this article, but if you look at a deal with these terms, a thorough understanding is recommended.  Our streamlined approach prioritizes the interests of our investors and minimizes complexity.

Break Even Occupancy (BEO)

As the name implies, in simple terms it is the occupancy that determines whether an asset makes money or loses money. Understanding the break-even occupancy level is crucial in assessing the financial viability of an investment.  Our assets maintain BEO levels ranging from the 60s to the 70s, providing a comfortable margin of safety. Moreover, we take pride in consistently achieving high occupancy rates, with all our assets currently operating at over 90% occupancy.

Track Record and Financial Strength

Experience and liquidity matter.  Now more than ever, one should check in with the track record of the sponsor especially during previous economic downturns.  Are the sponsors willing to take bullets for the investors and do they have enough cash if required to support an asset without a capital call?  At Apta, we encourage investors to conduct thorough due diligence on our track record and capabilities. Our proven history of successful investments has generated positive returns for all of our investors. We understand that trust is earned, and we aim to build it through our commitment to transparency and delivering results. Furthermore, our strong financial position ensures we can weather storms and seize opportunities, never previously having to call additional investor capital, offering you peace of mind.

When it comes to protecting investor capital, Apta stands out as a reliable and trustworthy partner. We are very large investors in each of our deals to align our interests with our investment partners. We diligently consider macro and micro risks, prioritize favorable lending terms, manage leverage effectively, simplify the capital stack, maintain strong BEO levels, and have a track record of success. Our financial strength and commitment to our investors’ interests ensure that your investment is in capable hands. Join us at Apta and experience the security and growth you seek for your capital and take advantage of the opportunities that only recessions can create.

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