Optimizing Capital and Profit in Residential Housing
Optimizing Capital and Profit in Residential Housing
Situation
- A company specializing in the purchase, rental and sale of REO properties has grown their single family rental operations to the limits of available capital.
- It wanted to continue growth by attracting additional capital from institutional investors.
- BPA was engaged to provide management advice, identify key profitability factors, define strategies, and develop management tools and controls to implement those strategies.
Our Role
- BPA reviewed the firm’s current business practices and collected information on its strategies, operations, key challenges and issues.
- Interviewed existing and potential investors to understand their requirements and preferences for transparency and risk evaluation.
- Developed immediate areas of enhanced profitability and provided guidelines for remediation as needed.
- Engineered financial models and presentations to depict the fully loaded profitability for each property and sale .
- Used predictive analytics to isolate a combination of factors most influential to profitability, and built the associated predictive models.
- Formulated a pricing dashboard with the embedded predictive model results as a guide for better bids and efficient usage of capital on more desirable and profitable property acquisitions.
- Fomulated a pipeline management tool based on profitability targets, for more optimal property rentals and sales.
- Designed a reporting package to monitor key performance and risk factors
Outcome
- BPA provided important business strategy improvements which were implemented successfully.
- Client integrated the pricing dashboard with BPA’s analytical results to provide optimal price bids and optimal property acquisitions.
- Client managed their inventory using tools and reports to greatly improve profit with successful rentals and timely sales for optimal capital redeployment.
- With the same capital base, the Client was able to deploy capital efficiently for higher profitability while successfully managing risks and sales of lower margin properties.
- BPA is assisting the firm in attracting additional capital from institutional investors.