Tonnesen Inc. operates as an acquisition, renovation, marketing and management services company for distressed multi-family properties.
YOU BUY IT
If you do the finding and buying, we can help you get the place stabilized (100% rented) or if you're just looking, we can evaluate the income and operating expenses as well as the upside under various cap rates. We will visit the site, offer verbal improvement and marketing suggestions and give you a written report with a:
Information we need from you:
WE BUY IT
If we buy the property, there are two ways you might consider participating: equity investing and debt investing.EQUITY INVESTING
An equity investment offers a preferred, fixed, annual rate of return, secured by a first deed of trust plus a 70% share of the cash flow and disposition at close of escrow up to an annualized return of 15%, then proceeds are split 50–50.
A "debt" investor receives a fixed annual interest rate paid monthly. The debt only investor receives a relatively high interest rate (say 8-12%) on his money but has no part of profits that might be realized from a sale or positive cash flow. Your investment is fully secured by a note and first deed of trust. Like a mortgage, this means that if you do not receive your payments you will get the entire property. You will get not only a property at the price we paid in this depressed market but also with all the improvements. In short, the property you are loaning us the money to buy will be yours if we don't make our payments to you as promised.
We believe that our proforma numbers are realistic if not conservative, however to earn returns of 5% to 75% per year there is more risk than putting money in a bank protected by the FDIC that would yield 1.5%. Some properties are bought at a trustee sale auction and a careful inspection is often impossible. Bad mechanical and electrical systems, structural problems and zoning challenges are all possibilities. The Casa Carmel pro forma (for example) allows a 10% vacancy rate. We try to keep them all rented, and we have a good track record, but if vacancies increased dramatically the financial success of the project could be threatened. As an equity or debt investor your worst case scenario exit strategy is that you end up with the property. In 20 plus years of investing, individually and collectively, this has never happened to us.CAUTION
Tonnesen Inc. is not a REIT (Real Estate Investment Trust). This document is not a private offering memorandum or a solicitation to the general public. It is a brochure highlighting current and completed real estate investment projects to introduce you to our experience and capabilities with an eye toward future collaborations. Specific real estate opportunities and investment scenarios are only offered to qualified investors. Although we firmly believe that real estate in Arizona is at an all time low and that the Tempe market is especially durable due to the presence of ASU and its central location, we advise you to consider your ability to comfortably put funds at risk. Renting apartments, even in Tempe where we're the most active is difficult. There are "For Rent" sings everywhere. Too many units were built chasing ASU students in '04 through '08 and they're all competing for the same tenants. We, however, (fingers crossed) are usually 100% full. Partly because our rents are competitive and our properties are interesting but also because we're always worried about vacancies and we work hard to keep 'em full.
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