Street Smart Success Roger Becker

In the world of multifamily, 80% of total units are in buildings with fewer than 50 units. This represents a big opportunity for buyers, because these buildings are mostly too large for most smaller operators to acquire, and too small for institutional buyers. Ray Heimann, Managing Director of Terra Capital, specializes in acquiring properties in this smaller range. These buildings are mostly older properties in gentrifying neighborhoods in midwestern cities with strong job and population growth. Terra Capital has in-house property management that leverages technology, which brings management costs down and the tenant experience up. 

Although the multifamily market has seen huge headwinds, the competition for buying these assets remains fierce. Even in this market, there is still lots of competition, but Lee has managed to find great value-add properties that perform well and generate great returns for his investors. There are still markets experiencing rent growth, and the long-term prognosis for multifamily remains strong as a result of a persistent national housing shortage. Lee Yoder, Founder and CEO of Threefold Real Estate, has done a great job acquiring and managing Class C properties in Southwest Ohio. Lee recently brought property management in-house to achieve greater operational efficiency and profitability.

You don’t need to be a direct operator of Real Estate to get a great return on your money. You can invest in the secondary mortgage market and get a 12% return with conservative leverage against single family homes. Nic DeAngelo, President of Saint Investment Group, invests in pools of mostly non-performing single-family notes at a discount and a conservative loan-to-value. Nic works with borrowers to get the loans back into performing status by modifying the terms in their favor. Over 95% of his current borrowers are current on their payments.

Getting high returns is very difficult in Real Estate investing, largely because there are too many people chasing the same deals and sellers want a lot for their properties. If you’re willing to invest in projects that are off most people’s radar, however, there are great deals that can generate double digit cash flow. Mike Holdwick, Co-Founder of Pro Team Commercial, identifies non-residential value-add properties, mostly in the Detroit metro, where he resides. Mike has acquired six commercial buildings with 30 tenants, mostly in the $500,000-$1,000,000 range, all while working a W2 job. Mike has generated enough monthly cash flow to stop working his W2 job.

Single family homes in U.S are the largest asset class in the world at $43 Trillion. Many investors have made a fortune investing in single family homes over the decades, and large institutions have been aggregating single family portfolios over the past dozen years. One sector of the market that has unique appeal is homes in the best school districts in the best zip codes. There are very few homes for rent in these neighborhoods and families pay a premium for their kids to attend the best schools. Sean O’Dowd, Managing Partner of Scholastic Capital, is building a portfolio of single family homes in the best school districts in top markets in the Upper Midwest. Sean is targeting the acquisition of 250 homes for his fund that projects an 8% distribution to his investors. 

Investing passively is a great way to generate cash flow and appreciation, without having to deal with day-to-day operations. You just need to develop the skills at vetting operators and specific deals. David Shirkey, a fellow passive investor, has done a great job finding quality operators and profitable deals over the past eight years. David has made numerous successful multifamily investments plus several profitable investments in Mobile Home Parks. He is also focusing on Industrial properties. Additionally, David founded the Michigan Investor Group to help other investors like himself learn about Real Estate and other alternative investments that produce strong cash flow.