The typical size of the properties, he says, will range from about 150 units to as many as 1,000 units. As for the value-add component, the investment will vary according to the asset. "It could be $1,000 per unit or higher," he says. "We're doing one project now where the renovations are $22,000 per unit." Laramar's in-house construction team handles the upgrades, which can range from cosmetic enhancements to reconstruction of the kitchens and bathrooms to construction of new clubhouses and amenities.

In terms of geographic markets, Elowe adds, "We like supply-constrained submarkets within major metropolitan markets. We like areas that offer opportunities with little to no land available for new development. We think that will benefit our strategy in the long run." Focused primarily on the East Coast, Laramar invests in markets like Washington, DC, Philadelphia, New York City, and Orlando and Tampa, FL, as well as Chicago and Minneapolis in the Midwest. The company is also considering entering West Coast markets, Elowe explains, and considering opportunities to acquire reverted condominium properties in markets including Florida.

The vehicle will likely acquire between 30 and 40 communities during the next 10 years. While he would not identify its target yield or returns, Elowe says the investments are typical of value-add plays.

At the same time it closed the fund, Laramar purchased four properties, including Manchester Oaks, a 198-unit community in Palatine, IL and the 302-unit Parkway Towers in Harwood Heights, IL, both suburbs of Chicago; the 492-unit Promenade at Berkeley in Duluth, GA; and the Park Baldwin Palms, a 436-unit property in Orlando.

Although the acquisition prices were not disclosed, Elowe says, "As a whole, we felt we were able to acquire all of them at significantly less than replacement cost, and all offer substantial upside because of the lack of professional management by prior ownership. They were undercapitalized and underperforming situations in major markets with very strong submarkets."

With Manchester Oaks, for instance, the property's occupancy rate of 60% is far below the submarket's 95% average occupancy and its rental rates lag market-rate rents by 20%. Laramar intends to renovate and reposition the community, adding a clubhouse and leasing facilities, theater, fitness center and an Internet café, as well as a new exterior building finishes and landscaping.

Once this fund is fully invested, Laramar plans to launch similar funds. "We're very optimistic about the apartment market. There's been a very broad-based recovery during the past 18 months or so, and we expect it to continue during the next two to five years or more," he says. It's very difficult to develop in our target markets and submarkets. Construction costs and home prices are elevated and, as a result, there's been a shift back to renting."