We are long-term thinkers–and longer-term believers in Central Texas. We love the art and science of crafting a new deal, in understanding the local landscape (political and figurative), supporting a business plan, and creating alpha for our investors.
Within our geographical backyard, we want to have the ability to execute assets and business plans that we believe in. Build-to-core investments align with that vision – but it may be an investment strategy that many are unfamiliar with.
Build-To-Core Investment Strategy
In this blog post, we explore what Build-to-Core is, and why it presents a unique investment opportunity for investors, from an Austin-based real estate investment firm’s viewpoint.
What is Build to Core?
Build-to-core is a long-term investing strategy that encompasses all steps from building an investment to holding it. It’s about constructing a project from scratch (“build”) and holding onto the stabilized property for the long term where you can generate stable and consistent cash flows– ”core” type returns.
Where most development groups are looking to build an asset and get it leased up and sold, there is added value in holding the asset and operating it for the long-term. For us, we partner with local homebuilders to craft an asset that meets the demands of the sub-market. But what makes or breaks a deal is the hands-on operations. While our partners handle the building and construction (ensuring our lessons learned from operating newly built assets are accounted for), we are responsible for the success of the asset. We manage the lease-up process and the day-to-day asset management over the lifetime of the investment.
Ground Up Development Investment Opportunities
When we think about a build-to-core investment strategy here in Central Texas, there are a few aspects that stand out to us that make it unique.
Controlling Build Quality
When you build a property from the ground up, you can tailor the design, quality, and features right from the beginning. We are thinking about these as longer-term investments, so we weigh the upfront construction cost as much as the total cost of ownership and the impact on our future repair and maintenance costs as we operate the asset. Does it make sense to install a flooring product that will last 5+ years vs one that likely needs replacing in 2-3 years?
Technology Integration and Demand
With more and more people working from home, Central Texas residents expect easy Wifi access and smart home technology. During the build phase of the project, we can integrate smart home tech seamlessly into our designs and work with internet providers to provide Wifi to residents.
In the same vein, ground-up developments offer an opportunity to meet market-specific needs. Whether it’s luxury condos near the business district or single-family homes in the outskirts, being rooted in the Austin community gives us a nuanced understanding of what the market truly needs.
Alignment with Construction
With build-to-core, there is a shared vision for the business plan and time horizon for the asset between the developer and the operator. There is also a shared and transparent budget and alignment on how everyone gets compensated in the deal. That has helped strip out a lot of unnecessary costs and enables all parties to have transparent conversations about budgets, material selections and other items that pop up. Big picture, we think that helps create some built-in equity into the asset.
We’re here to provide the local expertise and investor-first approach that can make your investment journey both profitable and fulfilling.
If you’re interested in investing in Austin’s burgeoning real estate market and want to explore the unique opportunities that build-to-core offers, feel free to reach out to us.
Andrew Campbell is a native Austinite and Managing Partner at Wildhorn. He is a real estate entrepreneur who first broke into the business in 2008 as a passive investor. In 2010 he transitioned into active investing and management of a personal portfolio that grew to 76 units across Austin and San Antonio. He earned his stripes building and managing his personal portfolio before founding Wildhorn Capital and focusing on larger multifamily buildings. At Wildhorn, he is focused on Acquisitions and maintaining Investor Relations, utilizing his marketing and communications background to build long-term relationships.
