A hot apartment market, Denver's also a competitive one when it comes to finding good investment properties. Competitive, but still quite doable, Oak Coast Properties co-founder and managing partner Phillip Nahas tells us.

"As with all other investments, knowing the market is the fundamental ingredient in being a competitive investor," Phillip says. Market dynamics, such as changing demographics and future developments in the area, are critical factors in determining which asset types and strategies to employ. Trends in the debt market and interest rate fluctuations also affect the asset’s cash flows and returns, he says.

"Even in booming markets, it's safer to make conservative assumptions in underwriting and consider above risk factors before going in," Phillip says. "Also, identifying and working with operating partners with expertise in the local market will greatly enhance the effectiveness of a renovation program and an operational focus on an asset’s advantages and weaknesses."

Recently, LA-based Oak Coast acquired the 959-unit Pembrooke on the Green Apartments at 10700 East Dartmouth Ave in Southeast Denver for $129M. Originally built during the 1970s, the property is 95% occupied and includes 37 three-story buildings with a mix of studios, one- and two-bedroom units. HFF facilitated a $103M loan to Oak Coast for the acquisition.

The acquisition offers potential as a value-add investment, Phillip says, and Oak Coast has earmarked $1.9M for capital improvements, which are starting now. “Our capital improvements to the community, along with improved property management and oversight, will allow us to bring rents in line with similar market-rate properties in the region,” he says.