Street Smart Success

The hardest part of Real Estate investing is finding the right deals, but there are great deals in any market. Someone always has to sell; you just have to be able to identify the opportunity when you see it. In order to do this, you need to stay in the market at all times. Jeff Greenberg, Principal of Heritage Capital Management, has been investing across several asset classes for over three decades and has enjoyed great success by utilizing 1031 exchanges in order to scale his portfolio. Jeff is currently acquiring flex industrial properties in secondary and tertiary markets in the $10 million to $30 million range, a segment too small for larger institutions and too large for smaller investors. 

Currently, there are great deals being sold by developers on newly constructed properties at below construction cost. As institutions have been on the sidelines, this is a once in a decade to fifteen-year opportunity. In the right submarkets with job and population growth, rents will continue to escalate and Multifamily will continue to see a supply/demand imbalance for the foreseeable future. New construction has simply not kept pace, especially in the last couple years with high interest rates and soaring construction costs. Michael Zaransky, Founding and Managing Principal of MZ Capital Partners, has been acquiring newer properties in Texas, Tennessee, and his home state of Illinois and capitalizing on this rare opportunity for friends and family investors. 

Nothing pays off like geographic focus and vertical integration, especially with multifamily. Multifamily is a block-to-block business where things can change quickly within a short distance. When managing or owning apartment complexes, a tight geographic focus contributes immensely to profitability, especially with smaller buildings. AJ Shepard, Owner of Uptown Properties in Portland, Oregon, has his own property management company where he manages 1000 units plus his own portfolio of 10 buildings. AJ buys Value-Add C and D class buildings in B neighborhoods. 

Knowing how to buy right is the key to not losing money. When you paid the right price in the first place, you can better weather mistakes and sustain unaccounted for market conditions. One of the ways to achieve this is to buy off-market, direct-to-seller deals from ma and pa sellers. Whether you’re buying single family homes or commercial properties, direct-to-seller deals are the way to avoid overpaying in a competitive marketplace. Gabe Petersen, Founder of Kaizen properties, owns Mobile Home Parks, Self-Storage facilities and single families. Most recently, Gabe is focusing on wholesaling single family homes in Indianapolis and Gainesville. 

If you’ve been looking to make passive investments in hard assets but are finding it difficult to get the returns you’d expect, there are other great vehicles that can generate 10 % or higher with conservative risk. Business loans made to well-run, established and profitable businesses that are not served by traditional banks or other sources can provide an attractive risk adjusted yield. Jamie Shulman founded Meriwether Capital with the purpose of providing short-term financing up to $5 million to businesses with $2 million to $50 million in total revenues. Jamie raises capital from investors and provides a steady 10% return.

The best ideas are simple. For example, creating a national coffee chain like Starbucks, or an alternative to taxis, like Uber, or Airbnb, etc. Joseph Woodbury, CEO of Neighbor.com, connects homeowners and businesses that have unused space to people who need to store cars or other storage items. Now people can find homeowners in their town where they can park their car, boat or RV. Neighbor.com has also created partnerships with office buildings, parking garages, and apartment complexes where renters can store their goods. There are currently more storage facilities in the country than all fast-food locations combined. 

Starting a Multifamily brokerage from scratch can be a steep undertaking. It takes time to build awareness, and to get known in a market in order to hire the right agents and obtain property listings and clients. As the current environment is seeing agents leave the market, however, there’s opportunity to gain traction in starting a brokerage business. By adhering to basic sales and marketing disciplines, and providing superior customer service, there’s room for a hungry, newer player. Rob Rixer, Founder of Citypoint and author of Forced Appreciation, has opened an office in suburban Chicago and Scottsdale, AZ, and will be opening in South Florida later this year.

Despite the desire for short-term gains, the predicable wealth in Real Estate is built over the long term with quality assets and strong operators. In multifamily markets where employment and population trends are favorable, rents will continue to grow and the value of properties will increase substantially, especially in supply-constrained markets. Keith Wasserman, co-founder of Gelt Inc., buys properties with mostly 7-10 year fixed debt in western markets. Keith has amassed a portfolio of 5,000 units and has provided exemplary annual returns for his investors of over 20%. Kieth has also conducted many 1031 exchanges so investors can reinvest their money without immediate tax consequences.

Single family homes in the U.S. are the largest asset class in the world at $37 trillion dollars. This is why the largest financial institutions on Wall Street have been increasing their investments in this lucrative asset class. There are many ways to make money in single families from flipping, to buying and holding, to lending against them. Jim Manning, CEO of Doorway Properties, started out fix and flipping in his hometown of St Louis and is now specializing in lease purchases where tenants make payments toward the purchase of the properties. Jim has funds of these properties that have generated safe, consistent, passive returns for investors with conservative leverage.

In an environment where it’s difficult to achieve significant cash flow with direct equity investments in Real Estate, investing in the debt can be an attractive option with much more liquidity.  Investing in debt can have less risk and generate yields as high as 9%-11%, and sometimes even higher, with the assets as collateral. Carrie Cook, President of Ignite Funding, makes investing in Real Estate available to people who always wanted to invest, but didn’t think they could afford it, in addition to seasoned investors seeking a high yield on their money.. Through Ignite Funding, individuals can invest in loans against specific Real Estate properties in different asset classes for as little as $10,000.