Winter 2019 marks our company’s 10-year anniversary. It’s hard to believe that 10 years ago, life threw me a curveball and I didn’t know what to do.<\/p>\n
In June 2009, I was laid off from my job as an analyst at Capmark and couldn’t get another job in real estate, so I decided to try my luck investing in real estate, even though I didn’t have a formal education in this space.<\/p>\n
At exactly that time, I had a fortunate meeting with a role model who had purchased 7,000 units between 2004 and 2007. I was thinking about investing in distressed houses or small apartment complexes of 4-10 units. We discussed the difficulties in generating wealth in those property types, and the lack of cash flow in both. He was losing a large portion of his portfolio and suggested that I consider large apartment complexes.<\/p>\n
asked about the toilets, and how I could possibly fix hundreds of toilets before I learned how to fix one. He told me that I’d never have to fix toilets if I focused on large properties, because there would be staff to manage the day to day operations. In addition, this was where the opportunity was because the loans were non-recourse. Borrows weren’t dipping too far into their pockets to save the properties.<\/p>\n
This meeting marked a transition point in my thinking. I didn’t realize that the opportunity existed, and this advisor opened my eyes to see what I was too young and inexperienced to notice. I’ll be forever grateful to him.<\/p>\n
Over the past 10 years, we have accomplished a lot. Here's a brief overview, or our 10 in 10:<\/p>\n
- \n
- Grown from one employee (me) to over 50<\/li>\n
- Acquired nearly 5,000 units<\/li>\n
- Invested over $126 million<\/li>\n
- Sold 791 units and returned approximately $73 million via distributions and sales<\/li>\n
- Completed over $50 million in construction projects<\/li>\n
- Started a construction company and a property management company<\/li>\n
- Expanded into Dallas, San Antonio, and Atlanta<\/li>\n
- Started on our first ground-up development<\/li>\n
- Made many new friends and partners who’ve joined our journey<\/li>\n
- Been tested by difficult situations and built a reputation as a best-in-class operator in our market<\/li>\n<\/ol>\n
Looking Ahead<\/h3>\n
Going into our next decade, we are preparing for further growth and improvement. We are in the process of setting up an advisory board to help us scale into a great investor, operator, and developer of multifamily properties.<\/p>\n
As many of you know, a big part of my role is to meet with investors. We raised over $50 million in the second half of 2019 from high net worth investors. Trust me, that didn’t happen from my couch. I traveled a ton this year and had face-to-face meetings with hundreds of people. In the process, I learned a few things that differentiate our organization from other groups. Here are a few:<\/p>\n
- \n
- Patient and principled investment strategy.<\/strong> We run a lean operation that’s not reliant on deals to survive. Obviously, we want to grow and find opportunities to place capital, but the fees are not driving our decision making.<\/li>\n
- No pressure to invest.<\/strong> We share deals that we have under contract and will close regardless of a single investor’s participation.<\/li>\n
- Pick the deals you like.<\/strong> Unlike a fund, this isn’t a blind pool. You can invest in deal A and pass on deal B. We’ll keep you on our distribution list until you tell us to take you off.<\/li>\n
- Large sponsor co-invest.<\/strong> I’m the largest (or one of the largest) investors in every deal. My typical check size ranges from $1-2 million and our average investor contributes $150,000.<\/li>\n
- Fair return structure for investors.<\/strong> We can offer similar returns with a fair structure that benefits both the sponsor and the investor, because we’re cutting out the middleman (i.e. private equity firms) and raising funds directly from investors.<\/li>\n<\/ol>\n
In 2020, we expect to sell four properties:<\/p>\n
- \n
- Oak Lawn Heights in February 2020<\/li>\n
- Alora, Ellis, and Redwood Gardens in Q3 2020<\/li>\n<\/ul>\n
This will free up capital for our organization and our partners.<\/p>\n
We will also break ground on our first development project in Q2 2020: an opportunity zone development in the Texas Medical Center. There’s still some room left if you’re interested.<\/p>\n
By Q4 2020, we will finalize the development plans for a large mixed-use development in Houston. The timing of future acquisitions is uncertain, but we’ll be looking for opportunities.<\/p>\n
In 2019, we underwrote over 100 apartment communities, offered on 47 deals, made best and finals on 19 and were awarded two. That’s a 2% hit rate. We are evaluating ways to improve our percentages moving forward, without sacrificing our return expectations.<\/p>\n
All of this is made possible by our partners. Our team and I are the guides who can make partners' investments work, and we take that responsibility very seriously. I’m excited for the future and preparing for both opportunities and challenges ahead.<\/p>\n","protected":false},"excerpt":{"rendered":"
Winter 2019 marks our company’s 10-year anniversary. It’s hard to believe that 10 years ago, life threw me a curveball and I didn’t know what to do. In June 2009, I was laid off from my job as an analyst at Capmark and couldn’t get another job in real estate, so I decided to try… <\/p>\n
- No pressure to invest.<\/strong> We share deals that we have under contract and will close regardless of a single investor’s participation.<\/li>\n
- Patient and principled investment strategy.<\/strong> We run a lean operation that’s not reliant on deals to survive. Obviously, we want to grow and find opportunities to place capital, but the fees are not driving our decision making.<\/li>\n