Targeted Opportunities

The Fund is designed to capitalize on the current housing market dislocation that has been caused by 15 years of cheap easy money as well as systematic underbuilding, culminating in high inflation and the fastest and most aggressive interest rate hike cycle in the U.S. in over 40 years. Following the Fed’s actions, home prices turned negative in the second half of 2022, to the tune of a 14% peak-to-trough decline in greater Phoenix, which bottomed in the first quarter of 2023.

Delphi aims to take advantage of the current environment by acquiring high quality single-family assets in attractive micro-locations at temporarily restrained pricing due to high interest rates. Post-acquisition, Delphi can then quickly reposition such assets for rental and maximum growth potential, while benefitting from a long-term supply-demand imbalance and the Fed’s continued monetary easing.

The Fund provides a powerful investment vehicle to capitalize on the current market dislocation, as it combines substantial “dry powder,” i.e. available funds, with the strong local leadership of Delphi to seize on targeted opportunities as they arise. Further, the ability to purchase properties without debt financing combined with Delphi’s ability to perform substantive due diligence quickly and efficiently, provides the Fund with superior negotiating leverage and bargaining power.

Acquisition Criteria

• Property type: Single-family residential
• Modern Homes: typical age of 0-25 years old
• Sizable Homes:
• 3 bedroom / 2 bathroom floor plans or larger
• 1,500 - 2,500 square feet
• Affordable Workforce Housing: $300,000 - $450,000, or 65% - 95% of the median sales price of existing homes in the greater Phoenix metropolitan area
• Motivated sellers: Homes that can be acquired at a favorable cost basis relative to the broader market
• Minimal re-positioning exposure: Ability to quickly position homes for use as rentals with only minor to moderate improvements
• Well-kept subdivisions with low homeowners association dues
• Attractive locations with strong potential for rent and price appreciation:
• Neighborhoods with positive attributes and long-term trends
• Convenient access to schools, amenities, transit, and job centers
• In the path of new development

Phased Execution

Initial Property Acquisition Phase (12-24 months): The Manager anticipates that it will acquire the vast majority of Fund assets over an initial 12-24-month period.

To mitigate risk, the Fund intends to focus on modern homes less than 25 years old, to forgo debt financing in the initial acquisition of Fund investments, and to make only modest improvements totaling approximately $15,000 - $20,000 per property designed to strategically position each home for use as a single-family residential rental unit and for maximum growth potential.

The median cost to acquire, renovate and lease assets in the Fund portfolio is anticipated to be approximately $400,000 per property. If $20 million in capital is raised and no debt is utilized, this would amount to approximately 45-50 single-family homes initially purchased by the Fund.

Stabilized Phase (2 to 5 years): Following the initial acquisition phase, the Manager intends to add moderate leverage as financial conditions ease, up to 75% loan to value pending the state of capital markets. Upon such financing, the Manager intends to return a substantial portion of investor capital. The Manager will then hold and manage the properties for a period of approximately two to five years, while routinely evaluating opportunistic circumstances to sell the assets on an individual retail basis, or potentially as a portfolio to an institutional investor.

Short-Term Projects

Notwithstanding the acquisition criteria and phased execution outlined above, the Manager will also evaluate opportunities to invest a portion the Members’ Capital Contributions in Short-Term Projects, defined as a Project that is acquired with the intention of being sold in less than eighteen (18) months after its acquisition. Short-Term Projects would be expected to be obtained at lower price levels, require more re-positioning or rehabilitation, and offer greater potential returns on investment than other Projects. The Fund is subject to the limitation that no more than thirty percent (30%) of the Members’ Capital Contributions may be invested in Short-Term Projects.