Street Smart Success

The value of national currencies has always plummeted to zero in the course of history, usually because of money printing and inflation. There has also never been an international fiat currency. This is what the role of cryptocurrency plays and why it is ultimately indestructible. Crypto has no issuer, so therefore cannot be destroyed. It also has finite supply, so will likely continue to appreciate, perhaps significantly. Chris Snook, Managing Partner of Atomiq, helps RIA’s, High Net Worth investors, and family offices makes sense of the new world order. Chris helps people build, protect, and maintain their wealth as markets, AI, geopolitics, and blockchain are changing the investment landscape. 

Appreciation is great, but predictable cash flow is what enables a steady retirement. Real Estate funds are a great way to achieve steady cash flow because they’re less risky than syndications because of a diversified base of assets. Jay Patel, Founder and Fund Manager of Proptex, helps investors and pre-retirees earn 11% annually backed by collateralized real estate. Proptex has stabilized assets, distressed properties, and debt in the fund to provide liquidity and the option to redeem out of your investment after a one-year hold period. Proptex invests in Assisted Living facilities, multifamily, Mobile Home Parks, and other cash flowing asset classes.

Alternative investments produce more cash flow with less volatility than public markets. This is why money invested in alternative assets have more than doubled over the last decade, from $7.2 trillion to $18 trillion, and expected to grow to $29 trillion by 2030.  Investments like Private Credit, niche commercial real estate, oil & gas, and specialized finance are exploding. Bob Fraser, Co-founder and CFO of Aspen funds, and USA Today bestselling author of Invest Like a Billionaire, has several specialized high performing funds with over 1000 retail investors in search of high-yielding, consistent cash flow with conservative risk profiles. 

Many operators launch funds to achieve scale and create diversification for themselves and their investors. Funds also attract lower cost of capital and achieve operational efficiencies that result in improved yield. From an investor standpoint, funds mitigate additional risk because of compliance requirements and third-party auditing. Bridger Pennington, co-founder and CEO of Fund Launch, has helped incubate over 400 funds including Real Estate, VC and Private Equity funds. Bridger recently started his own successful GP Stakes micro fund which has generated above market returns.

Many think Private Credit has elevated risks, but the economy is strong and borrowers have healthy balance sheets. One of the least hyped but most interesting areas of credit are special situations and distressed debt. The potential for alpha, mid-teen returns is significant, but it requires precision. Distressed debt requires understanding legal frameworks, financial health, and industry landscapes. Dan Bird, founder of Thornwood Hill LLP, specializes in credit and alternative asset management. Dan has a proven track record in direct lending, special opportunities, and distressed debt, generating strong returns for his clients. Dan identifies strategic investment opportunities with optimal risk management. 

Most of the problems in multifamily over the past few years have been related to debt. Many operators are now in their second extension phase and not making payments or keeping up with their properties. Several of these have been taken back by the lenders. Lenders are identifying experienced, local operators to take over these properties.  James Eng, “The Professor” of multifamily financing, is the National Director at Old Capital in Dallas. James has helped hundreds of multifamily investors strategize the right debt to obtain and acquire over $1 Billion dollars of properties. James has also been a Limited Partner in 45 multifamily deals in Texas. 

An asset class that thrives in different economic cycles is student housing, especially at the best colleges. The demand to attend these schools always far exceeds supply. On the operations side, revenue per square foot often exceeds multifamily apartments because leases are done by the bed. Mark Weinstein, President of MJW Investments, has acquired over $1.5 Billion of student housing, over $1.5 Billion of apartments, plus several commercial buildings, industrial, and self-storage facilities over the last several decades.  Mark is currently raising a fund to acquire student housing in the best locations at the top U.S. college campuses in the country.

Multifamily investing can be profitable, but it is not without risks. One of the ways to generate mid-teen returns while mitigating risk is to invest in pref equity. As an investor in pref equity, you’ll be paid after the first mortgage and before the common equity holders. It’s therefore safer than common equity and you’ll still get the same attractive tax treatment. Steeve Breton, President of Velocity Capital, is a multifamily operator, developer and loan broker. Steeve also has a pref equity fund for people who are intent on generating cash flow and don’t want to take on the higher risk of common equity.

80% of new apartments built in the last ten years are luxury class A. As a result, the supply of B class workforce housing has not nearly kept up with demand. Unless someone can afford to own a home or pay close to $4,000 per month for an A class two bedroom or $1,500 for an A class one bedroom unit, they are relegated to renting a B class apartment. Class B apartments cost 30%-50% less. As $800 Billion of floating rate loan maturities are coming due, great opportunities are emerging to acquire workforce housing for 75 cents on the dollar. Mitch Siegler, Co-founder and Senior Managing Director at Pathfinder Partners, finds smaller deals in the Western U.S underneath the radar of larger institutions that have significant value-add opportunities. 

Supply-demand imbalance drives value in Real Estate. In this country, we have a severe shortage of affordable housing in many markets and therefore high occupancy levels. In the case of Mobile Home Parks, supply is not only not growing, it is actually shrinking because municipalities are repurposing the land Mobile Home Parks occupy for better perceived uses. This is what’s creating an undersupply. Nathan Jameson, Founder and Managing Director of ARX Capital, has an incredible track record of buying, improving, and operating Mobile Home Parks in Pennsylvania and surrounding states. He’s now raising his third fund and taking his successful formula to markets in the Midwest.