The Brenrik Group, LLC (also referred to as “the Company”) is an existing business starting a new venture in its operations. Based in Westport, Connecticut, the Brenrik Group is an investment company that plans to purchase, rent, and manage multi-family housing units that attract a specific market segment of middle-income earners. The Company will investigate investment opportunities throughout the U.S.
By leveraging industry expertise and performing efficient property acquisition, the Brenrik Group will operate to obtain a substantial market share in emerging real estate markets.
The market for multi-family housing units presents a favorable climate from which to launch Brenrik Group’s nationwide property investment plan. During the next five years, 2.3 million additional rental homes are expected to be constructed in the U.S. With record-breaking foreclosures in the U.S. and millions of families seeking lower cost, transitional residences, the Company proposes its multi-family home investment plan at an opportune time. The Brenrik Group will target individuals ages 18 to 34 with incomes of $35,000 and less. More than 22% of Americans are ages 18 to 34, and per capita income is $27,916. The Company will operate in the $31.3 billion Apartment Building Operators industry in which average businesses earn $4.0 million annually. The Brenrik Group’s main competitors include other multi-family investment companies such as Equity One, The Lind Company, and Westbrook Company.
The Brenrik Group recognizes the importance of operating with a marketing strategy that will effectively saturate the market it intends to reach. It has therefore outlined a promotional plan that includes Internet advertising, print media ads, banner advertising, flyers, and radio advertisements. Its nationwide campaign will be outlined to effectively bolster brand awareness and draw in new tenants. The Company will also remain cognizant of the shifting market changes within the real estate market and will adjust its advertising campaign as needed to more effectively increase awareness with prospective clientele.
The Company will be owned by Dr. Erik Slovin. Dr. Slovin is the president of The Brenrik Group. Dr. Slovin is a key player in the acquisition and management of multi-family properties in emerging markets. He possesses a Bachelor of Science degree in psychobiology from Binghamton University.
To achieve the Company’s objectives, the Brenrik Group is seeking approximately $2,000,000 in total funding for each property acquired through outside investments.
The Company’s mission statement is as follows:
“To provide quality housing at an affordable price for middle income earners.”
1.2 Company Ownership
The Brenrik Group is a Limited Liability Company (LLC) registered in the state of Connecticut. The Company is owned by Erik Slovin (100%).
1.3 Company Location The Brenrik Group will be located in Westport, Connecticut.
2.0 Products and Services The Brenrik Group is an existing property investment company that specializes in capitalizing on unique emerging markets and equitable properties. The Company will likewise examine markets and properties that meet its high standards for investment return. The Company’s properties will include the following:
• Acquisition • Management • Multi-family
2.1 Product and Service Description The Brenrik Group will streamline the property acquisition and management. First, the Company will establish the proposed market sustainability by analyzing market trends, employment, and demographic characteristics. Next, The Brenrik Group will expedite the property acquisition process with its experienced personnel. Finally, the Company plans to provide superior management and customer service to retain tenants at each multi-family housing unit.
Acquisition: The Brenrik Group plans to exercise its property acquisition expertise to obtain 33 properties with a total of 5,000 apartment units. The Company will investigate property acquisition opportunities in emerging markets throughout the U.S.
Management: The Company will manage its property units to maximize return on investment. This will include marketing to potential tenants, maintenance, and customer service.
Multi-family: The Brenrik Group plans to focus investing in the purchase of multi-family housing units. Multi-family units offer the additional advantage of long-term rental agreements and higher monthly revenue.
3.0 Market Analysis Summary
The Brenrik Group plans to investigate and pursue emerging market opportunities for equitable real estate ventures throughout the U.S. In recent years, the foreclosure crisis has added to the demand for lower cost housing such as multi-family housing units. According to the BBC, 1.7 million foreclosures occurred throughout the U.S. in the first eights months of 2007.1
Foreclosures this year are expected to put two million families out of their homes. These families will likely seek residence in less expensive homes such as rental units. Notwithstanding the impact of foreclosure remains the immanent growth of the rental property market in the U.S.
3.1 Market Segmentation Based on the aforementioned market analysis, and reasonable assumptions regarding the renter population, the Company has designated the following group as its main target market:
• Age range: The Brenrik Group will target individuals ages 18 to 34 throughout the U.S. This market segment comprises approximately 22% of the U.S. population, according to U.S. Census Bureau.
• Income: Per capita income in the U.S. is $27,916, according to U.S. Census Bureau. The Company will target individuals who earn $35,000 and less annually.
3.2 Market Needs Housing is a necessity. For many, renting a family-size housing unit is a transitional move. For others, renting family homes is a means of saving money or avoiding the expensive purchase of a home. Regardless of the particular needs that each renter faces, family housing units remain in high demand in the U.S. due to current market trends and the inherent and growing need for homes. This is further amplified during the foreclosure crisis. The Company will operate to meet an ever-present demand in the U.S. for family rental homes by purchasing, renting, and managing multi-family housing units.
3.3 Industry Analysis The Brenrik Group will operate in the Apartment Building Operators industry (Standard Industrial Classification 6513) which includes “establishments primarily engaged in the operation of apartment buildings. Apartment buildings are defined as containing five or more housing units.” More than 109,000 establishments comprise this nationwide $31.3 billion industry. The average company reports annual earnings of $4.0 million while employing six people.
3.4 Competitive Comparison
The Brenrik Group is aware of the need to evaluate its competitors. A detailed analysis of the competitive landscape will prepare the Company for any mitigating market variables that may arise. To this end, The Brenrik Group has located the following main competitors (refer to Section 4.1 Competitive Edge for the Company’s competitive strengths):
Equity One The Lind Company Westbrook Company
• Strengths: These businesses include just a few of the multi-family housing unit investment and building operator groups operating in the U.S. In recent years, the services provided by these companies have set the standard in the industry for what is expected.
• Weaknesses: All are established companies that need to go through a laborious approval process to act on a deal, and rarely are able to make instant decisions to move quickly to close a deal.
4.0 Strategy and Marketing Summary
The Brenrik Group has established a brand that encompasses its core values and central operational goals. This has created an opportunity for the Company to establish its reputation and build a loyal base of clients.
The Company’s goal through its marketing strategy is to saturate the intended audience, build report with investors and prospective clientele, and garner sales to promote Company growth. Initially, The Brenrik Group will use print media saturation and will expand its strategy to include Internet ads and flyer distribution. Furthermore, as the Company becomes aware of shifting market needs and the demands of its customer base, it will adjust its advertising methods to more effectively reach new customers.
The Brenrik Group intends to achieve the following objectives:
• Create relationships with key individuals for the purpose of purchasing properties • Form key relationships with investors and deal makers • Purchase 150+ in unit properties • Own 5,000 apartment units in five years
The Company’s strengths and advantages in the target industry are detailed below:
4.1 Competitive Edge The Brenrik Group intends to build upon its inherent strengths in order to establish itself as a leader in the local real estate industry. The Company will capitalize upon its competitor’s weaknesses by highlighting the following strengths (also see: 2.1 Product and Service Description):
• Exceptional service to tenants • Focus on establishing key relationships • Simple business transactions and interactions for all clientele • Company always closes on time and meets deadlines • Talented, experienced, and highly trained management team • Widespread marketing tactics will reach a large segment of clientele
4.2 Marketing Strategy The Brenrik Group understands the importance of operating with a continuous marketing strategy that effectively saturates the target audience and builds solid name recognition in the community. The Company has chosen the following direct and indirect advertising channels to promote its services:
Tenants: To reach a nationwide segment of prospective tenants, the Company will implement methods and simply and cost effectively enhance brand awareness. These tactics are outlined in greater detail below:
• The Brenrik Group will pay close attention to the development of its website, as this is a key point of contact for individuals seeking available housing and corporate information. The site will clearly outline available services, and all necessary contact information. In tandem with its website, the Company will use Cost-Per-Click (CPC) Internet advertising with Google AdWords and Yahoo!
• The Company will place large banner signs on the outside of its acquired properties clearly displaying its name, logo, and phone number. This will attract foot and vehicular traffic and has the potential to draw in an expanded segment of customers.
• The Company will develop full color flyers with all needed contact, website, and Company information. These will be distributed to prospective tenants throughout the cities it intends to reach and will serve as a continuous marketing tool.
• The Company will advertise in print publications widely read and circulated throughout the country. These may include: the major newspapers in the city in which the Lindahl Group is acquiring properties. The Lindahl Group has chosen these publications to maximize exposure of its product to the intended client audience.
5.0 Management Summary Erik Slovin, President
Erik Slovin has extensive real estate acquisitions experience. He has been the president and owner of The Brenrik Group since 2008 and has previous real estate acquisition experience dating back to 1995. In this position, Dr. Slovin acquires and manages multi-family properties in emerging markets. Dr. Slovin earned his Bachelor of Science degree in psychobiology from Binghamton University.
5.1 Financial Plan Financial projections are based on the following assumptions:
• The Company purchases 3 apartment buildings in Year 1, 5 in Year 2, 10 in Year 3, 15 in Year 4 and 15 in Year 5. • Each apartment building has 125 units on average. • The purchase price of each building is on average, $1.5 million. • The Company holds each property for an average of 3 years then sells each with a $600,000 gain • The company incurs 6% transaction costs on each sale. • The Company finances 80% of each purchase with bank lending. • Each unit is apartment building is expected to reach 92% occupancy within 6 months of purchase.
The financial plan below spells out the use of funds, net sales, and profits from increased sales. Certain assumptions were made. As with any long-range projection, accuracy is based on reasonable estimates of return on investment and past performance. The Company believes the following numbers are attainable and reasonable. However, actual results will vary.
6.0 Projected Profit and Loss The projected profit and loss for the Company shows substantial growth even though additional marketing, operating, and interest expenses are incurred. It should be noted that sales subtracted by direct cost of sales equals the Company’s gross margin. Additionally, the profit before interest and taxes is reached when operating expenses are subtracted from the gross margin. Finally, the Company’s net profit is calculated by subtracting interest expense and taxes incurred from the amount representing the profit before interest and taxes.
6.1 Projected Cash Flow The important factor in the cash flow analysis is that the Company never runs out of cash while in periods of non-profitability. The cash flow supports the Company’s operations adequately and allows the Company to expand through more aggressive marketing.