Changing the Way
Money Creates Impact
Our Selection Guidelines
At Impact Investing Community Capital, we focus on uncovering opportunities that align with our mission and vision. From evaluating dozens of potential investments, only one truly exceptional prospect is chosen. Promising ventures undergo thorough initial screening before advancing into our detailed Analysis and Assessment phase, which ensures every aspect is scrutinized. Final decisions are made by our committee with a foundation of comprehensive research and evaluation.
INITIAL SCREENING PROCESS
Our Key Focus Areas
At Impact Investing Community Capital, our initial screening process is guided by three core pillars—The Project, The Market, and The Sponsor. Each opportunity is carefully evaluated to ensure alignment with our strategic objectives and potential for delivering exceptional returns.
The Opportunity
Property Type
Multifamily, Affordable Housing, Community Revitalization, Senior Living Facilities, Mixed-use Developments,
Property Classification
Primarily focusing on Class A and Class B assets built after the 1980s
Target Returns
15% or higher IRR, 8% or greater average cash-on-cash returns, and a 2x equity multiple
Financing Approach
Favoring low-leverage loans (55% to 75% LTC) with fixed rates or protective long-term interest rate caps
The Location
Geographical Focus
While our investments are primarily within the Midwest, Southeast, and Texas, we remain open to opportunities across North America.
Demographic Trends
Is the population growth in the past five years exceeding the national average?
Employment Conditions
The region should display robust job creation with unemployment rates below the national benchmark.
Rental Momentum
Does the average rental growth outpace the national standard?
Household Affordability
Are local median household incomes capable of sustaining current and anticipated rental prices?
Economic Diversification
The area should host a range of major employers and avoid overreliance on a single industry.
The Sponsor
Industry Experience
The firm has been established for a minimum of a decade and demonstrates extensive operational expertise.
Proven Performance History
Achieved successful full-cycle completions on over 10 projects, consistently meeting or exceeding investor return projections in at least 90% of cases.
Portfolio Depth & Focus
Owns and manages a robust portfolio with geographic concentration; for multifamily investments, this includes a track record of managing 2,000+ units all-time and maintaining at least 1,000 units in the current portfolio.
Integrated Operations
The sponsor employs a vertically integrated approach, overseeing asset management, property management, and construction operations to ensure hands-on oversight.
Meaningful Stake
Demonstrates significant commitment by investing at least 5% of the required total capital.
DUE DILIGENCE & UNDERWRITING
Guaranteeing Exceptional Opportunities
Our approach to Analysis and Assessment serves as the backbone of our commitment to high standards. We meticulously evaluate all potential investments against these key benchmarks:
Proven Sponsor Expertise and Achievements
Clear and Reliable Communication Practices
Thoughtful Capital Allocation and Risk Management
Robust Acquisition Plans and Scalable Strategies
Well-Defined Long-Term Goals and Exit Strategies
Comprehensive Background Verification and Reputation Checks
In-Depth Examination of Asset and Operational Management
Sponsor's Experience & Track Record
Decade of Proven Expertise: Ensure at least one principal on the sponsor’s team possesses 10+ years of specialized experience in the relevant asset class.
Economic Cycle Resilience: Ideally, the sponsor should have successfully navigated through at least one economic downturn without incurring investor losses.
Detailed Performance Review: Request and examine a comprehensive history of past projects, including unit counts, projected vs. achieved returns, and completed full-cycle deals (preferably 10+ deals and 2,000+ units).
Lessons from Challenges: Inquire about recent challenges faced by the sponsor and actions taken to address them. Assess their openness in discussing these experiences.
Transparency & Communication
Timely Reporting Practices: Clarify how often the sponsor provides investor K-1s and identify the CPA firm managing their tax documentation.
Transparent Underwriting Insights: Ensure the sponsor openly shares their underwriting methodology and adequately addresses all your concerns.
Reputation Through Reviews: Investigate platforms like GlassDoor for feedback on employee satisfaction and organizational culture. Be on the lookout for indications of hesitation or internal discord.
Investor Testimonials: Obtain references from previous investors and gather insights on their experiences with reporting, returns, and communication quality.
Capital Allocation & Risk Strategy
Long-Term Goals & Exit Strategies: Verify that the Sponsor’s vision aligns with sustainable investment objectives. Explore flexibility in options such as 1031 exchanges, refinancing, or other adaptable plans.
Reputation & Background Integrity: Conduct extensive screening through tools like ClearChecks, ensuring credibility in criminal databases and watch lists. Dive into online reputation analysis for any potential red flags.
Investor Tax Reporting: Confirm timely and accurate distribution of K-1 forms and verify the engagement of reputable CPA firms for transparent tax management.
Acquisition Process & Deal Sourcing
Pipeline Assessment: Evaluate the breadth and quality of existing and anticipated opportunities within the sponsor’s deal pipeline for the next year.
Exclusive Market Partnerships: Validate the authenticity of off-market deals and establish confidence in broker relationships to ensure exclusivity.
Adaptable Investment Planning
Market-Driven Exit Adjustments: Discuss the sponsor’s ability to pivot exit strategies in response to evolving market conditions.
Refinancing Implementation: Understand plans for refinancing and strategies aimed at efficiently returning capital to investors.
Background Checks & Reputation Analysis
Comprehensive Background Screening: Utilize resources like ClearChecks to perform detailed screenings on the Sponsor and core team members. Investigate potential concerns within criminal records, watch lists, and compliance databases.
Reputation Assessment Online: Conduct in-depth research on the Sponsor, associated entities, and key individuals. Pay close attention to any indications of misconduct, SEC violations, or negative feedback.
Evaluation of Management
Assessment of Oversight: Gain a complete understanding of the asset and property management framework. Identify those accountable for property performance and evaluate their level of on-site involvement.
Integration in Operations: Determine whether the Sponsor operates their own construction, management, and asset teams, showcasing a proactive, integrated approach.
Deal Evaluation Framework: A Roadmap
for Impactful Investments
The Deal Evaluation Framework consists of over 40 tailored questions, addressing all key aspects of a potential investment. Points are assigned to each criterion, and a score of at least 90% is required for consideration as part of our portfolio.
Key Metrics We Assess
Scores are allocated to the following questions
What is the class of the property (A, B, C)?
How many units are included in the project?
What is the vintage of the property?
What is the renovation cost per unit for this development?
What is the expected average rent growth post-renovation or from year one?
What is the existing occupancy rate for the property?
What is the projected 5-year average breakeven occupancy rate?
What percentage of total units are slated for upgrades after the business plan is executed?
How many units are planned for renovation within the first year as a percentage of the total?
Is there a preferred return structure?
What is the preferred rate of return?
Does the GP participation occur only after capital return post-preferred return?
What is the LP equity split?
When do the distributions start during the investment timeline?
Is the average cash-on-cash return projected to exceed 8% over the hold period?
What is the projected 5-year IRR to investors?
What is the estimated 5-year equity multiple?
What is the loan-to-value (LTV) for the project?
Is there an interest rate cap in case of floating rates?
Is there mezzanine or preferred equity integrated into the plan?
Does the financing include an interest-only period?
What is the Debt Service Coverage Ratio (DSCR) in the first year?
How was this opportunity sourced (off-market, through brokers, etc.)?
Will a cost segregation study be conducted as part of the investment strategy?
Scores are allocated to the following questions
How long have the principals been in the industry, and how many years has the company been operating?
How many projects has the sponsor completed from start to finish?
Has the sponsor consistently met or exceeded projections for the majority of their deals?
What is the total number of units the sponsor has handled to date?
How many units does the sponsor actively manage now?
Does the sponsor use their own property management company?
What prior experience does the sponsor have with the specific asset class involved?
What experience does the sponsor have with the property’s location or market?
What level of financial investment does the sponsor have in the deal?
Scores are allocated to the following questions
Is the population growth over the past five years higher or lower than the national average?
What is the range of median household incomes in the area?
What is the property crime rate in the area based on city-data.com or similar resources?
How does the 12-month job growth in the area compare to national averages?
What is the level of employment diversity within the property’s market?
Is the unemployment rate in the area below or above the national average?
Does the average rental growth in the area exceed or fall short of the national average?
Scores are allocated to the following questions
What are the details of fees, returns, and key processes for handling the asset?
How will this offering be registered with the SEC to ensure compliance and transparency?
Will updates and distributions be monitored through an investment portal for efficiency?
Are forward-looking proformas built with reasonable assumptions?
How clear are the PPM, Operating Agreement, and Subscription Agreement?
Has the sponsor ever issued a capital call? If so, under what circumstances?
Annual Sponsor Questionnaire
We perform annual assessments of our sponsors to ensure they continue to align with our established criteria.
Upload your most recent performance report, detailing returns and outcomes for prior projects.
Have you recently completed any full-cycle deals not reflected in your latest report? If so, share the number of projects, performance metrics, and whether investor expectations were met.
Outline your deal pipeline for the upcoming 12 months, including the estimated number of projects in progress.
What are your company’s primary areas of focus and strategic goals for the next one to three years?
Identify key risks or challenges expected in the next year and provide insight into your strategies for addressing them.
Copyright 2025 | IIC-Capital
Disclaimer
This website is intended solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy any securities. Investments are available only to qualified investors who meet certain eligibility requirements. All investments involve risk, including the potential loss of principal, and there is no guarantee of any return. Past performance is not indicative of future results. Any projected returns are estimates and should not be considered assurances. Please consult your financial, tax, or legal advisor prior to making any investment decisions.
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