About Sakkara Holdings

Our Investment Thesis

Market Trends

01. Urbanization

The US has been transforming from a primary rural/agrarian society to an urbanized one since the colonial period. In 1790, fewer than 10% of Americans lived in cities. By the 1950s, the number had grown to 60%. By 2020, greater than 80% of Americans lived in cities. Between 2010 and 2015, cities captured 21% of household growth, double its usual rate. This trend promises to continue as economic opportunities and desirable amenities continue to flourish in cities.

02. Regional Shifts in the US Population

The warm, affordable, pro-growth south will claim >60% of household growth between 2016 and 2025. As employers shift HQ and/or open offices in tax friendly, low-regulation, business-friendly southern states the population will shift there in droves for opportunities, warm weather and a lower cost of living especially compared to the northeast (i.e. Megalopolis) and far west (i.e. CA).

03. The COVID-19 Pandemic Has Accelerated Population Shifts and Distributed Opportunities

The post pandemic world is accelerating population shifts that are already in motion. As companies make work locations flexible, workers are moving away from expensive markets on the coasts and northeast and into more affordable, tax-friendly areas in the south and southeast for a better quality of life. Unlike pre-COVID times, this can be done without a significant trade off in opportunities in some industries as tech companies in particular increasingly allow remote work to attract and retain top talent.

04. Millennials and Seniors will Rent vs Buy

Millennials are flocking to cities optimizing for lifestyle (incl. travel) and opting to rent vs buy. At the same time, massive numbers of baby boomers are downsizing their empty nests as they age and are choosing to rent as well. Young people who come to cities for work opportunities and a more interesting lifestyle are often priced out of urban home ownership, even when they desire it.

Our Strategy

North Star: Cash Returns

Our top priority is to generate cash returns on the investments that we make

Approach: Debt Snowball

We will follow a debt snowball strategy to accelerate cash flow growth and equity/net asset value. This approach will also create more liquidity for future investments such that we may make faster and/or much larger acquisitions

Alignment with Growth Trends

While cash returns are important, it is important to capitalize on growth opportunities to position Sakkara to generate optimal cash in the future from increased rent and equity that can be turned into cash

Market Blend

We will need to approach the market with a blended strategy to achieve our short and long term goals. There are five (5) market characteristics that we look for across two (2) dichotomies: – growth vs stability and major vs secondary/tertiary as well as markets that best align with our north star of cash returns

Growth Markets

Fast population growth, an attractive cost of living and heavy real estate activity (ex: Austin, Phoenix, Orlando)

Stable Markets

Stable economies bolstered by industry; low unemployment and high economic activity (ex: Huntsville, Boise)

Major Markets

Large, blue-chip markets with high residential demand (ex: Atlanta, Houston)

Markets with Cash Returns

Relative low property costs relative to rent prices (ex: Detroit, Cleveland, Indianapolis)

Secondary/Tertiary Markets

Smaller, lesser-known markets with strong data (ex: Boise, Chattanooga, Ft. Wayne, Harrisburg)

Target Markets

We currently shop and invest in seven (7) US markets. We also look to invest in opportunity zone areas within these markets when and where possible

Cleveland, OH

Top priority market in the short term. Strong cash returns, affordable & low market entry costs. Gentrification and opportunity zones

Detroit, MI

Second priority market in the short term. Strong cash returns & an exciting revitalization under way; opportunity zones

Atlanta, GA

Top priority growth market for the longer term. Family roots and a great city to visit tax-free

Huntsville, AL

Secondary city with a tremendous growth, a strong, stable economy underpinned by NASA and two major universities; should benefit from the growth happening in the southeast

Houston, TX

The biggest market in the state (Texas) best poised for household growth. The high tide will raise all boats here

Birmingham, AL

Secondary city that should benefit from southeastern growth. Stable market with secondary but strong industries

Tulsa, OK

Secondary market that is affordable for renters, has a low market entry cost and low investor competition

Lakeland, FL

Tertiary market that features a low market entry cost.

Deal Guidelines

Cap Rate

At or above market average AFTER any necessary improvements (preferably none)

Locale

In a target zip for the market (opportunity zone a +)

Property Management

Must meet any inspection/condition/locale requirements of our property management company in that locale

Call Today: (408) 766-0880