Street Smart Success

Although the multifamily market is on fire, there’s still a chronic housing shortage that will persist for several years. In many markets, job and population growth is far outpacing existing inventory and new construction. As a result, opportunities still abound in many submarkets in the country. Today’s guest, Matt Picheny, has successfully found opportunities in great markets with B and C value-add properties.

In this exuberant environment for Multifamily, the returns for ground up construction can be more compelling than usual. Although the risk profile is steeper, the rewards can more than justify the risk with an experienced operator. Today’s guest, Sam Bates, Founder of Bates Capital Group, has recently done both ground up construction and acquisitions of existing properties, the deals just have to make sense.

Traditional financial investments versus alternative investments…. which is better? The answer may be more nuanced when looking at both over a long period of time. Today’s guest, Denis Shapiro, Managing Partner of SIH Capital Group and author of The Alternative Almanac, believes there are pros and cons to both although he’s leaned more towards Multifamily investing over the past few years.

Is there a downturn coming? Either way, you have to plan on it, according to today’s guest, Whitney Sewell. Whitney is the founder of Lifebridge Capital. Lifebridge is acquiring properties in the Mountain West states of Idaho and Colorado. Everyone is talking about the South and Southeast, but the Mountain West is also growing rapidly with great job growth and strong demographic trends.

Cap rates on most real estate asset classes have dropped 40% over the past five years. This has made cash flow very hard to achieve. Ground up construction, on the other hand, has much higher cap rates. The key is mitigating risk by being in the right markets with the right assets. Today’s guest, Neal Bawa, the Mad Scientist of Multifamily, has been doing ground up construction in smaller markets in several different asset classes in order to generate attractive returns for investors.

Great Multifamily deals are a needle in a haystack these days, but great deals are still to be had if you’re willing to be patient and methodical. Today’s guest, Sam Wilson, founder of Bricken Investment Group, has found great Value-Add deals in the Southeast with rental upsides over $300 per unit. Sam also has a Self-Storage fund and has invested in parking garages.

In today’s multifamily market, you need to buy deals with as much rental and operational upside as possible to make sense for investors. Today’s guest, Nathan Cloud, Founder and CEO of Cloud Capital, has built out systems with stringent buying criteria to meet these goals. Nathan’s bought C class deals in Houston below market and has had great success. He’s in the right submarkets with the right properties to maximize returns.

Even though Austin is the hottest multifamily market in the country, lifelong relationships and a great reputation yields great deals, even when they’re fewer and further between. Today’s guest, Andrew Campbell, Managing Partner of Wildhorn Capital, has built an impressive 3000 unit portfolio in Austin and San Antonio that’s produced consistently strong returns for investors through cash flow and appreciation.

Even in historically low appreciation markets, single family homes are appreciating at unprecedented rates. New household formation and historically low interest rates has spurred renters to leave apartments and buy their first homes. Today’s guest, Eric Martel, Founder of MartelTurnkey, has been buying, rehabbing, and selling homes to investors who are getting 10% returns on their money.

Market cycles ultimately determine the potential of an investment. Markets and asset classes are always in different phases of development. Today’s guest, Serge Shukhat, Principal of Zonal Capital, started out buying houses for $50,000 in a suburb in Phoenix during the Great Recession and has leveraged these early successes into a multi-asset class empire including multi-family, hotels, and other assets.