Street Smart Success

If you ever think of cell phone towers and rooftop antennas that transmit wireless usage, you might think the owners of these properties would have all the leverage in lease agreements with major carriers like TMobile, Verizon, and ATT because the insatiable need for increasing and better signal coverage. However, this isn’t entirely true. The carriers have more options than you would think on where to transit their signals from and can be brutal in their lease negotiations with landlords. Meir Waldman, Chairman and CEO of Nexus Towers, represents landlords in these complicated lease negotiations with the major carriers and helps owners maximize their leasing revenues via better negotiations or sales of the entities to larger acquirers.

With cap rates having gone as low as they arguably can go, multifamily operators are going to have to add deep value to properties moving forward to meaningfully increase their asset value. They can no longer rely on cap rate compression to generate high IRRs and returns for their investors. At this point, only the strongest operators will generate the kind of profits we’ve seen over the past few years. Steven Gesis, COO at Smartland, started in Northeast Ohio rehabbing, modernizing, and standardizing old D – C+ apartments that blew their competition out of the water. Smartland innovated the approach to renovations in this class of properties including the installation of wireless packages, putting in EV charging stations, renovating pools & gyms, planting gardens, even opening on-property convenience stores, Subway sandwich shops, and more. They’ve recently expanded to Miami with the same formula but with higher upside because of the exploding rents in South Florida. As a result of Smartland’s approach, they’ve generated consistently outsized returns for their investors.

There’s been so much growth in Multi Family investing over the past few years it can make you wonder if it’s too late in the cycle to get into good deals. Yes, a lot of people are overpaying for properties, especially newer, inexperienced syndicators. There’s also risk that rents contract in an upcoming recession coupled with higher borrowing costs when floating rates adjust upwards. The fact remains, however, that 50% of the country are renters, and there’s still a big undersupply of B Class workforce housing, especially in the suburbs. There’s just not enough of this inventory and you can’t build it. Mitch Siegler, Co-founder and Senior Managing Director at Pathfinder Partners, finds deals underneath the radar of larger institutions with an average of 100 units in growing markets with value-add opportunities. This is how he’s mitigating risk and continuing to provide great returns for investors in this increasingly competitive market.

Sometimes great entrepreneurship is just applying common sense and having your eyes open to great opportunities. Brandon Schwab, Founder and CEO of Shepherd Premier Senior Living, owned 23 single family rental houses that were making $200-$300 per month per house when he stumbled upon the idea of lucrative Senior Living Facilities. Instead of making $200-$300 per home in monthly profit, he realized he could make over $10,000 per month with one single Senior Living facility. At the same time, he knew the level of care was way better in smaller facilities after he saw the horrendous experience his grandfather endured as a resident at a large, corporate senior living facility. After opening and operating his first successful Assisted Living home, Brandon acquired four more homes and is now raising a $50,000,000 fund to acquire 10-20 bed facilities all over the Midwest.

If you’re willing to do what other aren’t, you may stand to benefit immensely. Jorge Newbery, Founder, Chairman and CEO of AHP servicing, has made a career out of inventing himself out of thin air. Jorge’s first big deal was a 298 unit apartment building in downtown Los Angeles in Skid Row for less than $3000/door in the late nineties. The prior three owners had been thrown in jail for violations, but Jorge saw immense value and had the confidence and bravado to take the project on. He ended up evicting those he needed to evict and fixing up the building and eventually make a $1,000,000 profit. Jorge went on to do an even bigger project with similar demographics and challenges in Kansas City and then a monstrous 1100 unit complex in Columbus, Ohio that was called Uzi Alley for all the gang warfare. Jorge ended up in an unwinnable situation to no fault of his own, where he became saddled with $26,000,000 in debt and hitting rock bottom before reinventing himself and creating American Homeowner Preservation, a company that has bought 1000’s of single family non-performing notes from banks.

Private Equity and Alternative investments have outperformed the public markets 35 out of the last 35 years. However, few people are aware of investing in alternative investments such as Real Estate syndications in apartment buildings, Self-Storage facilities, and Mobile Home Parks, not to mention a plethora of other alternative opportunities like life insurance settlements, litigation finance, cannabis, and so many other ways to invest. As it stands, alternative investments only command 13% of U.S. invested capital. Chris Odegard – the Prolific Investor, Author, Alternative Investment Blogger and Educator, got away from “the 401K highway to mediocrity” and has deployed his money into alternative investments and has prospered incredibly well as a result.

One of the great advantages of investing in Real Estate is the ability to shelter or defer paying taxes so you generate a higher return in the short-term and your money works harder for you and generates great wealth over time. Thomas Castelli, Partner at Hall CPA firm, has been a direct investor and also a limited partner in syndication deals so he believes in the value of Real Estate not only from a cash flow and appreciation perspective but also from a tax perspective. There are few other ways to compound money as well as Real Estate and Thomas discusses the nuts and bolts of how it works.

If you’re not careful, you can lose a lot of money investing with the wrong people and the wrong deals. As human beings, we’re inclined to trust others and it’s difficult to discern dishonesty because we don’t expect it. Jack Gibson, a successful businessman, Real Estate investor, and Wealth building Strategist, lost a lot of money in tech stocks at a young age following the advice of a financial planner. Later, he was a victim of a Real Estate ponzi scheme. These costly mistakes taught Jack valuable lessons in business that he’s leveraged to enable him to build and manage his own residential Real Estate portfolio that most recently includes managing and owning Short-term-Rentals.

Austin is one of the hottest Real Estate markets in the country. In order to be competitive and get the edge in this market, being there in person and having longstanding relationships has tremendous benefits. Andrew Campbell, Managing Partner of Wildhorn Capital, has built an impressive 4000 unit portfolio mostly in Austin that’s produced consistent strong returns for investors through cash flow and robust appreciation. He plans on making Austin his primary focus as long high-paying employment grows and the population continues to grow with it.

The prices on multifamily apartment buildings have risen meteorically over the past 3 -5 years. In some cases, however, between the cost-per-unit to acquire the properties plus the amount per-unit to renovate them, the all-in price has exceeded the cost to build new complexes from the ground up. That’s why Michael Episcope, co-CEO of Origin Investments, has been only doing ground up deals for the past three years. Origin has a number of funds that are invested across eight fast-growing markets throughout the U.S. and they’ve been ranked in the top 10% decile of performance, outperforming 90% of other funds of the same vintage, strategy and size.