Our approach

Meaning

Warren Buffett once said, “If you aren't willing to own a stock for ten years, don't even think about owning it for ten minutes.”

At Gibson Capital, we don’t buy stocks, but nonetheless, the first and most important principle in our investment strategy is to fully understand the opportunity at hand. There are numerous profitable real estate strategies out there, however, we choose to focus only on what is within our circle of competence; our wheelhouse of expertise.

For us, this means opportunities within the multifamily, self-storage, mobile home park/RV campground, and short-term rental space. With our focused strategy, we feel we give ourselves and investors the greatest chance of success to prevent permanent loss of capital and obtain a satisfactory risk-adjusted rate of return.

 

Moat

Investing in properties that are able to generate predictable, high levels of cash flow over a long period of time is absolutely essential to our strategy. And such opportunities typically exist where other positive demographic trends are also present in the given area: population growth, job growth, income growth, and businesses moving to the area, to name a few.

These are all key indicators that a property is within a location that has a durable competitive advantage, because once these established trends are in motion, it is very difficult to reverse their course.

Management

We require an operating team that has a long-term track record of honesty, integrity, conservative underwriting, and overachieving for investors in both the asset class and ideally the geographic region we are investing in.

Since the majority of our investment opportunities involve implementing value-add business strategies, our investment thesis heavily relies on the operating team we are partnered with successfully executing their business plan to increase the cash flow of the property and force appreciation.

Margin of Safety

Assuming all other criteria have been met, there is not an infinite price we are willing to pay for any investment opportunity no matter how great it is.

Lastly, we evaluate whether the purchase price of the property supports a large enough margin of safety such that if the business plan carried out by the operating team does not go according to plan, then we are still earning a satisfactory return in the form of cash distributions while we wait for a profitable exit. Insisting on a margin of safety in our purchase price provides us the greatest opportunity to own a truly low-risk/high-reward asset over the long term.

Our Investors Build Wealth 4 ways

Cash Distributions

Positive cash flows generated by the rental property are typically distributed to investors on a monthly or quarterly basis, and lump sum payouts are typically paid out either at disposition and/or refinancing.

Amortization

Rental income collected will not only pay down the debt owed on the property, but any amount applied toward the principal would grow your overall equity stake (ownership percentage) as well.

Appreciation

By implementing operational and/or physical improvements to a multi-unit property, the Net Operating Income may be increased which can lead to a higher market value. This is called forced appreciation.

Depreciation

Our investors enjoy several tax benefits, including cost segregation, accelerated depreciation, as well as possible 1031 exchanges into new projects to further defer taxes.

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