Youngfield’s OCPs are a small team of highly specialized and experienced operators in the highly undervalued German property market. Led by Finbarr Flahive, Youngfield’s German partner company has very strong contacts in the banking and financial sectors there, allowing opportunities to be identified and closed before they hit the market. However, it is the business model as a whole that generates large amounts of money. Finbarr’s team of accountants, tax experts, attorneys, investment managers, bankers, and property managers combine to make big money from commercial investment properties. These are the four principles Youngfield uses to guarantee great money returns.
1. Distribution
This is where various investors pool their money to buy a property much more expensive than any one of them could afford individually. A German limited company is formed with a shareholders agreement. Foreign investors have the same property rights under the law in Germany. The company is a full owner of the property and there is only one property per company. Typical loan-to-value ratios are 65%.
2. Buying strategy
Substantial value is built into the deal at the time of purchase due to the off-market purchase. Through Youngfield’s German banking and finance partner’s extensive network of contacts, the right opportunities can be seized quickly when they arise. Comprehensive structural and legal due diligence is conducted on the property and this enables the management team to identify and quantify opportunities to increase performance during the property and / or add value through repairs and improvements.
3. Property management
The typical investment will have been neglected to some extent and the management team will have to catch up to bring it up to its potential. The Chemnitz Medical Center is a classic example of this, where there was considerable empty space when the property was taken. In the months leading up to completion, deals were made with new tenants to fill most of the vacant space with current market rents, upon completion. Although structurally perfect, the building was somewhat neglected and was renovated as part of a strategy to seek modest rental improvements for existing tenants. The continuous improvement schedule is monitored every month.
4. Sales strategy
The typical Youngfield deal is five to seven years and this is specified in the shareholder agreement. Coming to this point, the market will be praised for an exit that will be completed in that time frame. Unlike paper values, the property does not sell in a day and the property managers together with the rest of the team will decide when is the best time to sell.