The Kiddar Way: Diligence
We do our homework.
Principle 3 of 9.
The effects of the Great Recession of ‘07–08 are well known: the stock market took a nosedive, house prices plummeted, and an entire generation was stonewalled from the job market for years. National recovery has been uneven and coastal. Even in areas where house values have exceeded their pre-recession highs, symptoms still linger. It’s more difficult than ever for homebuilders to obtain capital from banks, contributing to an ongoing housing shortage in desirable urban infill markets.
At Kiddar Capital, we fulfill the capital requirements of select homebuilders in markets like the Washington, DC metro area. With our funding, quality builders forced to work under-capacity due to lack of capital can now mobilize multiple projects concurrently.
Our process for funding homebuilders is one of precision. We do our homework to determine ideal markets, product dynamics, and builders before we go anywhere near committing capital.
We use millions of housing/demographics data points and machine learning algorithms to identify great investment areas.
Here’s our process.
- We collect historical home values for U.S. zip codes as well as current housing and demographic data.
- We use zip codes where we have highly successful investment track records as “training data” for our neural net and Naive Bayes models to allow us to identify zip codes of similar quality across the U.S.
- To de-risk our investments, we give priority to zip codes which did not devalue more than 15% during the Great Recession. Other high-priority information includes infrastructure availability, education levels, and a diverse jurisdictional tax base.
- We assess individual transactions within these zip codes to verify each area’s investment viability.
Once we identify our target markets, we partner with experienced producers and use our knowledge and relationships to guide both product and process. We tailor the builder’s product to fit local demand, de-risking the investment even further.
“Research has been crucial to our success… if we don’t do our homework, we can’t execute.”
We take doing our homework very seriously. In real estate we scrape zip codes, scour regulations, and crunch numbers to model every possible scenario. In venture capital, our deep diligence process includes testing each technology through our affiliates and partners. In philanthropy, we make sure our money is doing exactly what we intended it to do.
We do our homework: that’s The Kiddar Way.
We are Todd Hitt’s global alternative asset management firm Kiddar Capital, and we put our capital to work to make good…medium.com