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LET CRE BE YOUR HERO

If you find yourself watching CNBC or reading the Wall Street Journal in the morning, you would have noticed the erratic movements of the stock and bond markets. You have undoubtedly noticed the precipitous losses that slammed the DOW, NASDAQ, and S&P 500 this week as the world grapples with the deleterious effects of Corona Virus on economic engines. We have managed to stay calm and focused knowing that we are in a business that not only can withstand erratic shifts in world markets but sometimes even benefit from them. The commercial real estate industry and more specifically Multifamily investments have been and will continue to be an amazing safety haven for investors. But they are not merely safety havens, they are also a substantial profit and cashflow vehicle and possibly one of the best tax remediation strategies investors can have as part of their balanced portfolio.

Today, our investments in the Southeast region and our portfolio as a whole have continued to reward us and our investors with steady returns and tax advantaged distributions, despite the volatility of the stock market; nor do we have a drop in our assets value. Our initial problem with the stock market was that we have no direct control in how our investment performs. Multifamily investment is different. Having the ability to hop on a call with our management team or drive to our properties allow us to keep constant contact with our properties and their performance. Now, let’s talk about a few reasons why real estate investing, and more specifically Multifamily investments are better and in the longer term more profitable than traditional stock investing

Physical Investment:

The first obvious benefit of real estate vs. stocks is that you’re investing in a physical piece of land or building. This is great because there is only so much land on this planet! The supply of tangible land on earth is not going to increase and because of this having a physical investment allows the investor to keep a close eye on the investment which allows for the owner to make necessary improvements if needed. This is something you cannot do with stocks.

Taxes:

The second reason real estate investing is superior to stocks is due to the tax benefits associated with RE. Real estate allows investors to save large amounts of money from Uncle Sam. Investing in stocks will allow you to save a small amount in taxes if you hold your stocks for over a year, which would allow your investment to be taxed at the slightly lower capital gains tax rate instead of your ordinary tax rate. This can amount to slight increase in tax savings but not nearly anything tangible in comparison to the savings you will attain through real estate; which presents numerous ways to decrease taxes that far outperform stocks. The first way is by the use of depreciation to offset income for an income-producing real estate asset. The longer something exists the more it deteriorates. An additional way to save a considerable amount of taxes from your investment income (as well as your ordinary income if you’re still working a day job) is by engaging with a tax professional that will help by conducting a cost segregation study. This study essentially details every part of an investment property and gives a depreciation timetable for each integral part. This will allow you to speed up the depreciation process and save more. It is important to remember that when it comes to your return on a real estate asset or a stock, it’s not the amount of money that’s produced but rather how much money you take home after paying taxes.

Due Diligence:

As always, an investor should engage in an intensive due diligence period for real estate investments as well as stocks; however, most investors tend to do more due diligence for real estate investments than stock investments. This tends to happen for a number of reasons. To start with, real estate is more illiquid, which people tend to look at as a bad thing, but it is quite the opposite. The ready liquidity of certain investments like stocks or bonds can sometimes make investors act too impulsively as a reaction to a market anomaly that may or may not have any effect on their investments in the long term. This ends up costing investors losses because it is very hard to time markets correctly. With real estate, the investment is illiquid by nature and cannot be sold as quickly as stocks, so the impulsiveness of stock investing is not there. Plus, the time value of appreciation in real estate tend to always work to ones favor with more passing of time (see the paragraph about physical investment). In multifamily, time is needed to season the asset and implement both cost saving measures as well as tax savings. Hence illiquidity is a friend in real estate. Also related to due diligence is the fact that investors tend to dive into the financials, rental contracts, and overall condition of a property for good reasons. A real estate investment is an investment in a physical asset. Investors tend to have more of a connection with something physical which in turn means they will do more homework on said investment. However, we recommend that the homework doesn’t cease there. We always encourage our investors to do their homework on us as well as other principle sponsors or operators who would be, in essence, managing their investments. A seasoned operator with the right staff, market knowledge, performance history and a proper team in place is just as important as the investment itself. Lastly, all of the paperwork and time necessary to acquire a real estate investment. All of the paperwork and time that is put into the property means the prospective investor will ultimately know more about their potential investment. When it comes to stocks, all you need is an account set up with a brokerage firm and you can buy and sell shares almost instantly.

Atlanta Leads the US in Job Growth

Atlanta skyline at dusk

_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners  

As you can see in our recent blogs, Southeastern United States Metros offer high returns to investors. Colliers International and Marcus & Millichap recently released Q2 multifamily updates on many of the large US metros. Analyzing four of the Southeast metro reports emphasizes the importance of our Carolinas and Georgia expansion. Below is a chart we created to summarize four metropolitan reports including Charlotte-Concord-Gastonia, NC, Columbia, SC, Greenville-Anderson-Mauldin, SC, and Atlanta, GA. Q2 multifamily update chart fixed According to Axiometrics, the last column on the right named “Average Effective Rent” means concessions or discounts are already factored out. The Colliers International reports also highlighted the average asking rent for properties delivered in the last 12 months achieved higher asking rents than of existing properties. Asking rents for newly delivered units in the Charlotte-Concord-Gastonia metro, Greenville-Anderson-Mauldin metro, and Columbia were $1,430, $1,289 and $1,305 respectively. These prices do not factor in concessions. Each of the four metros had positive job growth, with Atlanta at the highest of 93,700 jobs. Atlanta is one of the nation’s 12 largest metropolitan statistical areas, according to the U.S.  Bureau of Labor Statistics. In April 2017, the U.S. BLS reported “Atlanta had the fastest rate of job growth, 3.3 percent, followed by Dallas-Fort Worth-Arlington at 3.0 percent. Chicago-Naperville-Elgin had the slowest rate of job growth, up 0.3 percent.” It is interesting to notice Atlanta's hyper job growth has not raised average effective rents over the other three metros, which are smaller and have seen less growth. The cost of living could be a contributing factor to Atlanta's success. Are you looking to invest in one of these high performing metros? Contact John Azar, our EVP/Managing Member at john@maccvp.com for more information. The photo of the Atlanta skyline is from Rick Holliday Photography. Tthe data is from Colliers International and Marcus & Millichap    

Local Multifamily Operators Provide Higher Returns Than Benchmark Indices


 

holding house representing home ownership and the Real Estate business

_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners

 

Why High-Net-Worth Investors Seek increased Real Estate Allocations

The commercial real estate landscape is continuing to become more easily accessible to investors due to the fusion of technology in the industry. Today, an accredited investor can directly invest in a sponsor's multifamily asset, purely online, without needing a licensed investment broker or even speaking to the sponsor. Investor Management Services (IMS) is a software firm that allows sponsors to offer investors access to an investor dashboard where they can go through a quick self-accrediting process, invest in properties, and stay up to date with their returns and tax documents. IMS also provides efficiency for the sponsor to track complex financial transactions that occur throughout the period of operating a property and providing distributions to investors. IMS increases investment transparency, improving the investment experience for individual investors because of easily accessible data on each of their investments.

Easier access to real estate investing has also increased competition. According to Robert Brunswick in a recent National Real Estate Investor article, there is potential for a pricing bubble in real estate investing. These concerns have been raised from a flood of capital into high-end commercial real estate from sovereign wealth funds, domestic pension funds, and life insurance companies. This flood has resulted in a “return-starved” market, leaving Ultra-high-net-worth (HNW) and family office portfolios to seek less saturated investment options.

Brunswick noted, “real estate still functions predominately within a private marketplace, and with certain inefficiencies that, when properly priced and sourced, can provide returns in excess of comparable benchmark indexes.” Its hard to beat higher returns than benchmark indices and there are several other benefits of investing in real estate, specifically apartments. Among those reasons to invest in apartments is steady cash flow and a diversified tenant base. Brunswick also mentioned “Larger investment firms typically put capital to work in gateway cities and in larger investment amounts, providing opportunity within the middle market for transactions in the $20 million to $75 million range, and in non-gateway cities.”

Flip That... Apartment!

When high-net-worth investors are able to find successful middle market sponsors, they can receive passive income without the hassle of a mortgage and other time consuming responsibilities real estate entrepreneurship requires. The passive income is distributed to investors after the local sponsor uses their expertise to conduct thorough market research, underwriting, and deal sourcing to acquire the right value-add opportunity. It is a much larger scale version of the popular HGTV show, Flip or Flop, that has motivated an abundance of entrepreneurs to enter the real estate game.

Finding the right deal is an extensive process, especially when it comes to apartments; they also are not a quick money maker like a successful single-family flip has a reputation to be. Furthermore, there is income from multiple renters. Unlike a flipper who must pour cash into a house to sell it, there is also opportunity for cash flow as a multifamily operator collects rent income from occupied units. In addition to cash flow during an apartment "flip," investors can also take advantage of a local sponsor's established operations; which lowers costs and ultimately leaves more capital to distribute to investors.

Secondary Markets are Gateways for Domestic Migration

Migration chooses secondary EDITEDThis graph from the Yardi Systems US Multifamily Strategy & 2017 update, shows a significant increase of migration in non-gateway markets from 2012 to 2016. Negative migration in gateway markets can be linked to Americans seeking affordable living, resulting in high demand for middle market apartment communities. Though gateway cities, such as New York, Chicago and Boston, are constantly making headlines for promising real estate investment locations, non-gateway cities offer significant returns and less competition from high-end commercial investors. Brunswick said, “Interestingly, these non-gateway cities display many positive demographic trends, including continued job growth that enhances property rent rolls and income performance.” Cities such as Greenville, SC, Columbia, SC, Greensboro/Winston-Salem, NC and countless more, offer lower acquisition prices for the middle market sponsors to afford; enabling high-net-worth investors to tap into the real estate investing market.

Are you an accredited investor looking for high returns and a local operator to trust with your investment? Make a free investor account by clicking the image below:

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Photo from SA Homes, article references from NREI, and graph from Yardi Matrix

The New Southern Renaissance


4 Southern Cities

 John Azar 0031 - CopyBy: John Azar, EVP/Managing Member, MACC Venture Partners

Southern Charm is the Darling of CRE

As we all contemplate the short and long-term future of multifamily real estate during the present squeeze we must look at the shifting fundamentals in populations, job growth and desirability of geographic areas.  The South (or rather the Southeast) has emerged as the darling of the Eastern Seaboard in all the growth it has presented in the past 5 years.  We believe there are a lot of runway left ahead for the Southeast.

The diversified economies of the Carolinas and Georgia as well as the robust development of Florida has presented a growth opportunity in many tier 1, tier 2 and even tier 3 locations that were previously overlooked by institutional buyers and investors.  The growth potential has spread beyond the major metros into these 1st, 2nd and even 3rd tier areas.  The gravitational pull for younger working adults and families have been strong due to both a balance with quality of life as well as cost of living.  Areas such as Charlotte NC, Raleigh NC, Durham NC, Greenville SC, Charleston SC, Savannah GA and Asheville, NC have attracted a panoply of upstart restaurants, breweries, and top grocers like Wegman’s, Wholefoods and Publix.  The municipal government in all these areas have also done a great job in attracting more businesses, big and small, through either community building grants, tax aid/discounts and business friendly ordinances.

All of this has translated well into commercial and residential real estate and boosted pricing as well as the growing desirability of the region.

“Collectively, the six states comprising the region—Alabama, Florida, Georgia, North Carolina, South Carolina and Tennessee—would form the sixth largest country in the world from a GDP standpoint, according to the Urban Land Institute (ULI).”  notes Dan Wagner, Atlanta-based regional research manager with commercial real estate services firm CBRE.

In cities like Charlotte, NC and Atlanta GA the local government and business community have done a tremendous job in growing their commercial business districts (CBD) and have been attracting a bevy of technology, human resources, and advertising companies; steadily for the past 4 years.  Charlotte and Atlanta both have a growing legion of startup entrepreneurs who have launched small and medium enterprises in Fintech, technology, and consumer goods.   Areas like Greenville SC, Charleston SC, and Savanah GA have been attracting more industrial operators as they focus their effort on growing their port capacities and linking with global markets.

We predict that the demographic shift that has led to the growth of the Southeast will only continue to grow as employees and employers continue to seek more affordable and better quality of life havens, and business friendly markets.  Baby boomers will also continue to prefer these warmer climate areas that offers low cost of living and a growing desirable urban core.

If you would like to capitalize on the CRE Renaissance in the Southeast,  invest with us on our next multifamily acquisition. To partner with us click the image below:

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This post was written by our EVP/Managing Member, John Azar. He can be reached at john@maccvp.com.

The photos at the beginning are from The Real Deal and Jarrett Jones

 

Multifamily Investment Update: Foxcroft Apartments One Year Post Acquisition

Fix FC Cover for Blog

_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners

 

Identify: Foxcroft Apartments Investment Highlights

Our firm acquired Foxcroft Apartments in August of 2016. The 226 unit complex is located in the Statesville, North Carolina submarket and it was built in two phases (1974 & 1985). Foxcroft Apartments has an attractive floorplan mix ranging from 1 BR to 3 BR garden and townhome units. The property is in a prime location near the I-77/40 junction and is just outside of Charlotte and Winston-Salem, and entices residents with access to major shopping, employers, recreation and transportation options. Thorough submarket research indicated Foxcroft Apartments was a strong investment opportunity with an attractive value-add scenario.

Invest: One-Year Acquisition Update 

Less than a year later, the property has already resulted in a high return on investment from execution of moderate property rehabilitation of interior units and exterior upgrades. Upon the acquisition, our in-house property management firm, Capstone Multifamily Group, took over management of the property. Our Capstone transition team has increased the value of the Statesville property by renovating and updating the interior units as well as exterior renovations on roofs and resealing the parking lot. In addition to renovations, our Capstone team has added banners and flags to make the community more inviting.

Capitalize: Value-Add Strategies 

  • Offer a model for potential residents
  • Utilize unused clubhouse structure
  • Moderate Interior & Exterior Updates

At property takeover, the leasing office was operating out of a 2-bedroom unit (pictured below as the "Before: 2-Bedroom Leasing Office"). The 2-bedroom unit was also not centrally located in the community, making it inconvenient for a portion of the residents to access the leasing office. Fortunately there was a clubhouse structure that was already built (pictured below as "Now leasing Office & Clubhouse"), but was only being used for storage and maintenance. The clubhouse structure also included a lounge area with couches and a full-size kitchen.  Our team decided to move the leasing office to this unused structure, which has allowed our community staff to operate more efficiently. The property manager, leasing agents, and maintenance staff can now operate out of one centrally located building, making it is easier to access all units to address work orders, resident issues, and unit turns. The new leasing office is connected to the pool area, so the staff can ensure safety for residents and consistent upkeep on the pool. Along with safety, the new leasing office offers an open floor plan where our staff can interact with residents and host community events. Residents can rent movies for free from the movie library and grab some free popcorn to snack on. The Capstone team also added fresh new floors and constructed a closet to make room for storage.
Leasing Office Now Model FC

Moving the leasing office out of the 2-bedroom unit left an opportunity to capitalize on a vacant unit. Upon purchase of the Statesville Apartments, there was not a model unit to show potential residents. When touring a property, seeing a model unit can help a resident visualize their potential home, making them more comfortable to commit to a lease. Now our leasing agents can improve leasing efforts by offering a welcoming clubhouse and beautifully furnished model.

Interested in more of our acquisitions? Take a look at our case studies to see the high returns we deliver to our investors! If you would like to partner with us on our next deal, visit out our investor portal to learn how.

MACC Venture Partners Acquires 168-Unit Multifamily Community in North Myrtle Beach, South Carolina


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_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners

 

FOR IMMEDIATE RELEASE

Contact:  Tony Azar – tony@maccvp.com     John Azar - John@maccvp.com   (704) 861-1056

Gastonia, N.C. (August 1st, 2017) -  MACC Venture Partners, through a partnership with Legacy Capital Partners close on its newest multifamily acquisition of a 168-unit Garden apartment community called Summer Chase Apartments. The property is located in Horry County, part of the North Myrtle Beach area at 3952 Horseshoe Rd N, Little River, SC 29566.

Tony Azar, CEO  of  MACC Venture Partners.  “We are very excited about the addition of Summer Chase Apartments into the MACC VP’s portfolio and our entry into the coastal and the Grand Strand market of South Carolina. The asset meets all the elements of our value-add strategy. These enhancements will elevate the quality of the asset and we will manage it through MACC VP’s sister company, Capstone Multifamily Group. We are also excited about our partnership with Legacy Capital Partners; and together we are looking forward to delivering great returns to our investors and a high-quality community for our residents.”

Built in 2000-2001, Summer Chase Apartments has maintained exceptional service, location, features and value. The complex is located off Hwy 17 Business, which is the main Hwy for the Myrtle Beach Grand Strand area. The property has a gated community with video surveillance, a clubhouse with wi-fi, a large swimming pool, 24– hour fitness center, laundry facilities, playground, and grilling area. Shopping, restaurants, country clubs, marinas and a variety of entertainment facilities are within a few hundred yards of Summer Chase. Myrtle Beach is the second fastest growing metro in the United States with a diversifying economy due to an increase in the retiree population & rapidly growing healthcare industry.

 

About MACC Venture Partners:

MACC Venture Partners is a private equity owner operator of commercial real estate set to pursue capital preservation and appreciation, as well as high returns and yields through a strategic acquisition process. The firm acquires and operates stabilized assets in high growth markets and continuously manages for capital appreciation. As a vertically integrated and value-add firm, MACC VP manages all aspects of operation relating to its investments and is continuously seeking to expand its portfolio. 

For more information on MACC Venture Partners and the firm’s current offerings please visit us at www.MACCVP.com or contact Tony Azar at tony@maccproperties.com or John Azar at john@maccvp.com .

About Legacy Capital Partners: 

Legacy Capital Partners is a Cleveland based real estate private equity firm founded in 2004.  Since its inception, Legacy has invested in 48 properties with a total cost basis of $1.35 billion.  Since October 2009 Legacy has invested exclusively in for-rent multifamily properties investing over $140 million in the acquisition and renovation of 11,106 apartment units in 35 properties.  For more information, please visit www.LCP1.com.

 

Interested in investing in future assets with MACC Venture Partners? View our latest offerings by clicking the image below:

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6 Reasons Class B & C Apartments Are a Home Run Investment


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_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners

 

Roughly 80% of the new supply of the 363,000 apartment units to come online in 2017 are in the Lifestyle segment. In April, Yardi Matrix reported “Demand in many metros is driven by middle-class renters,” who can’t afford the high price of luxury apartments. A recent Multifamily Executive article said these properties tend to offer residents the most bang for their buck, attracting renters in a down economy and they are  typically 15 to 25 years old. They are also located in desirable buildings in well-established middle-income neighborhoods, without the extravagant amenities that the newer properties offers.

1.   High consumer demand offers opportunity to capitalize

The recent MFE article said “Class A apartment construction is at the peak of a seven-year high… This has led to a sudden oversupply of luxury apartments, which in turn has made Class A properties less profitable across the board.” A+ and A- properties cater to the “renter-by-choice” resident type that are aimed at high-income Millennials or downsizing Babyboomers because they offer luxury or resort quality apartments. These residents are either capable of owning a home and choose to rent or they have substantial incomes, without wealth.

2.   Demand in many metros is driven by middle class renters

There is obviously a disconnect between the supply of Class A properties and the demand for this type of property. The April Yardi report also noted more rent growth for renter-by-necessity properties than the upscale Lifestyle properties. The report stated, “Nationally, rents of working-class Renter-by-Necessity (RBN) properties have increased by a solid 3.3% year-over-year, while upscale Lifestyle properties have risen by only 0.7%.” Renters in large cities are pushing the demand for RBN properties because they need more affordable housing due to an excess of luxury apartments.

3. Class B and C Properties attract a wide demographic

Class B and C apartments cater to three different “rental household market positions,” classified by Yardi. These three market positions include High Mid-range, Low Mid-range, and Workforce and have property ratings ranging from A- to C-. These properties are often associated with the renter-by-necessity (RBN) segment and include young-professionals, students, low-middle-income, blue-collar, subsidized households, and military households.  Though the “renter-by-choice” property type can attract downsizing Babyboomers, there is a portion of this demographic that needs more affordable rent.

4. The largest living generation’s lifestyle demands renter-ship

According to the MFE article, millennials value experiences over buying a home. “The number of millennials who will reach the prime renting ages of 20 to 34 will increase by 2 million in 2017 and surpass 70 million within the next seven years… making this the target demographic for multifamily real estate properties.” More than 78% of this generation is reported to choose spending money on travel or events over other purchases such as buying a home or consumer goods. In addition to millennials’ choice to spend on desirable experiences, the generation is made up of a large amount of young people who have high student debt and work entry-level jobs with low salaries. These well-known economic factors cause this part of the millennial generation to fall into the renter-by-necessity property category, which adds to the significant demand for affordable apartments.

5.   Affordability can offer safety during an economic downturn

In our last blog post we mentioned the recent questions about a potential financial crisis in the near future. The United States is currently in its third longest economic expansion and fortunately for the real estate market there are healthier fundamentals than before. Nonetheless, economic growth is cyclical, which makes the Class B and C apartments edge over Class A apartments during economic uncertainty quite relevant. The MFE article noted “Older properties have proven themselves to be more or less recession-proof, whereas newer properties can easily become a liability under the same economic conditions.”

6.  Value add significantly increases NOI

Investing in cash flowing assets offers low risk compared to building an apartment complex from the ground up. Before acquiring the property, Investors have the benefit of making financial projections based on a property’s historical performance. The MFE article mentions “Class A properties also are costly to build and often come with a high property-tax price tag, making the up-front investment for these properties quite significant.” Upgrades to Class B and C properties are relatively inexpensive such as adding a playground or minor interior and exterior renovations. They also increase the value of the property, increasing cash flow and property price upon disposition.

 

View one of our case studies to see how we improved NOI by clicking the image below!

Oliver court numbers

By: Molly Holbert

Real Estate is the Top Investing Choice Among Americans


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_DSC0963 - CopyBy: Molly Holbert, Marketing & Investment Coordinator, MACC Venture Partners

 

One-Third of Americans Say Real Estate is Best Long-Term Investment

When asked “which of the following do you think is the best long-term investment,” Americans have chosen real estate as the favorite investing type for the fourth year in a row. A Gallup Poll indicates real estate is the top long-term investment at 34% with Stocks/mutual funds falling behind at 26%. Real Estate hasn’t always been the top choice, just six years ago during the sharp downturns in the housing market, only 19% of Americans chose real estate as their favorite investment.graph-americans best investment

The value of the real estate investing industry has not only been recognized by Americans. In August of 2016, The global S&P  Dow Jones Indices expanded its ten industry classifications of to eleven. The original ten included information technology, consumer discretionary, healthcare, financials. Real estate was bundled inside of the financials classification. According to Bloomberg, “Real Estate was barely present on the S&P 500 as recently as 15 years go.” The sector now represents close to 3 percent of the market indices. High activity and significant growth to three percent, prompted the Dow Jones indices to give Real Estate its own home. In addition to high activity, a Bloomberg article said another reason for the new category was “Real estate stocks and financial stocks have behaved differently, historically, so they've made for awkward bedfellows.”

 

Will an Economic Downturn Decrease Real Estate Investing Popularity?

The Gallop Poll mentions a “leveling off of preferences” for real estate from a one percent drop in the percentage of popularity from 2016 to 2017. The famous phrase, “history repeats itself” is strongly implied, referring to the third longest economic expansion in US history that followed the 2007-2009 recession. The article says; “Still, despite meaningful increases in housing prices and stock values over the past year, Americans' preferences for real estate and stocks have held fairly steady, possibly a sign of residual caution on consumers' part. americans choosing REAs long as the economic shocks of the Great Recession remain a vivid memory, preferences for these may not swell much further.” Though consumers are cautious and concerns have been raised about an economic downturn in the near future, a recent interview with the CEO of Marcus & Millichap expresses a more positive light, especially for the commercial real estate industry.

When CEO Hessam Nadji was asked, “Is a very worrisome sign post on the road to a financial crisis when it comes to commercial real estate?” The Marcus and Millichap CEO explained that there are much healthier economic fundamentals now than there were ten years ago due to a very tepid recovery. Nadji said, “This recovery did not include a lot of overbuilding of commercial real estate, hardly any. Most importantly, it did not include any over leveraging of commercial real estate as we saw to the run up of 2006-2007, which were the last peaks and lead to, of course, the great financial crisis.”

 

Bottom Line

The real estate industry has seen significant attention over the past decade. Receiving its own home in the S&P Dow Jones shows that there is confidence in the industry across the globe. The immense growth has created job opportunities for Americans from construction to property management and everything in between, which has contributed to the economic growth during this expansion. The real estate industry in turn offers investors and money managers an investment class that is sure to enhance performance and lowers the beta of their overall portfolio.

View our case studies to see why real estate is the top investment choice for Americans.

How can you invest in real estate? Click the image below to visit our investor portal. You can view our offering and create a free account!

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By: Molly Holbert

Will Employment Shifts Increase Apartment Demand?


Adult children moving out

Financial strength may allow a record number of adult children to move out of their parents house. Will this increase apartment absorption or home-ownership? A June 2017 Marcus & Millichap research brief says that the adult children who will move out are likely to rent. The research brief noted, "The catalyst for the releasing of these pent-up households is the increasing number of part-time workers making the jump to full-time employment as the underemployment rate declines." Job openings are at an all-time-high, resulting in a 16 year low for unemployment. The financial strength young adults are gaining from entering full-time employment is enough to begin relying less on parents for financial support. Renting gives young adults their independence without the hefty costs of buying a home, while still paying off student loans.

[caption id="attachment_677" align="alignleft" width="422"] CNBC Money: The smallest difference is still a third more to own[/caption]

"Owning is More Expensive Everywhere"

A recent CNBC Money article reinforced the prediction of the continued increase in renter-ship trends. The article referred to a NerdWallet analysis that concluded, "homeowners in all 50 states and Washington, D.C., pay from 33% to 93% more for housing each month than do renters living in the same state." The Southeast United States region was on the lower end of the scale with the states ranging from 33% to 50% high home-ownership costs than renter-ship. In North Carolina and Tennessee, it costs 49% more to own a home, with South Carolina and Georgia falling slightly behind at 43%. To determine the monthly home-ownership premium, The NerdWallet analysis compared median gross renting costs to median home owning costs across the US in 2015. Owning a home was significantly higher due to the costs of monthly mortgage payments, real estate taxes, insurance, and utilities versus monthly rent costs and utilities. The analysis did not include the cost of a down payment lenders require to buy a home, which is typically 20% of the home price. Data from the US Census showed the median sales price of houses in the South were $284,000 in 2016 and $274,600 in 2015.

The Strength Lies in Multifamily Investing

In addition to high home owning costs, Marcus & Millichap reported a 4.1 rise in overall average US rents and boosted multifamily absorption in 2017; indicating the continued demand for multifamily apartments. The M&M report highlighted "Renter demand sustained by steady job & household creation," which leaves an abundance of opportunity for investors to earn consistent and desirable returns from apartments investing. High returns are possible because local multifamily operators can offer lower prices to residents by only charging rent and utilities compared to the home-ownership premium.

How can you earn passive income from multifamily apartments? Click the image below to find out!

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Cover image courtesy of Utah Travel Guide

Alpha Strategies for Value-Add RE Investors


 

positive change

In March of 2016, our Executive Vice President, John Azar, published the following article on Linkedin. Over a year later, the shortage of strategically located Class B and Class C properties is still prevalent in the multifamily market. In a recent Blau Journal Interview, our CEO, Tony Azar, spoke of the intense competition in our local market place that was sparked from several factors John mentions below.

Alpha Strategies for Value-Add RE Investors

[caption id="attachment_619" align="alignleft" width="165"]john-color John Azar, EVP/Managing Director, MACC Venture Partners[/caption]

Since we have come out of the latest recession and the recovery of 2010/2011 we have seen an increased appetite from both renters and investors in Class B and Class C value-add assets.  These properties have gained in popularity in both the mentioned groups due to their affordability to a rising cadre of median income renters as well as to the rising returns they provide as an investment class.

Two great recent articles from Seeking Alpha (The 4 Main Strategies of Commercial Real Estate Investing) and NREI (Investors See Opportunity in Value-Add Strategies for Class-B Multifamily Assets). Provide insights into this sector out-performance.  They essentially underscore the ever so growing popularity of Class B and Class C properties that offer great value add to investors, developers and owners.

“Multifamily developers can capitalize on a huge unmet need in the market by buying and renovating older Class-B and Class-C apartment buildings.” -@seekingalpha

This approach of course is not limited to developers, but can be implemented by owners/operators and investors who are seeking to improve their IRR without the being a part of a Class A premium acquisition.  These acquisitions are part of the core strategy at MACC Venture Partners where we typically seek acquisitions of B and C properties that present a certain value add opportunity to investors.

These opportunities often exist in markets or sub-markets that engender economic growth and a rising employment base of middle income earners.  These renters are typically seeking similar amenities to a Class A property without paying the high rental price associated with these properties.  This is causing a shortage of strategically located Class B and Class C properties across the spectrum.  Developers are not typically building these types of developments and instead opt to build Class A properties.

Investors are also gravitating to these types of assets in much bigger numbers than they did back in 2011 during the early recovery.  They accept holding the assets (or their investment) for an average of 5 years or more in order to boost their IRR returns to 15% or higher upon a liquidity event.

“This approach is expected to be the most popular in 2016, with 55% of private equity real estate investors looking to pursue value-added investments.”-@seekingalpha

Such a growing appetite does not come without its follies.  This growth in consumption by both investors and renters is also leading to a shortage of these opportunities and assets. As more owners/operators and private equity buyers clamor to load up their portfolios with these Alpha boosting strategic properties.  This trend is expected to continue as we see a slow rise in the prevailing interest rates.

 

 

Are you an Accredited Investor, but not sure if you're interested in multifamily investing? Read 8 Reasons to Invest in Multifamily Apartments

To view our latest private offering,  visit our investor portal to create a FREE account and get pre-qualified through our simple self accreditation process. To visit our investor portal click or tap the image below!Investor Portal with Timbercreek

 

Why does the North Myrtle Beach Multifamily Market Provide Consistent Returns?

 

Myrtle beach at night

Myrtle Beach, South Carolina is not only a world-recognized travel destination, but also a premier location for business growth and development that is becoming increasingly recognized. The rapid growth of this metro is due to an increase in the retiree population & a rapidly growing business community including manufacturing and healthcare. According to the MBREDC, "From its humble roots as a small weekend getaway town for regional workers, Myrtle Beach has blossomed into a robust metropolitan area and become the business center of the Grand Strand. With its own baseball team, world renowned golf courses, and a thriving cultural scene, Myrtle Beach has everything you would expect from a big city, but with a small town price tag." The city is expanding its reputation of being a vacation destination by pushing initiatives to focus non-seasonal industries such as aerospace, more manufacturing, and technology.

 

Myrtle Beach is the second fastest growing metro in the U.S. for the second year in a row

As the baby boomer generation continues to age, they are moving to the North Myrtle Beach area for a relaxing retirement. The number of retirees is driving job gains in the healthcare industry, making the Myrtle Beach area an ideal place for healthcare professionals to seek job opportunities to care for the aging population. In 2016 USA Today recognized Myrtle Beach in the top 5 fastest growing US cities, behind three Texas cities and The Villages, FL. While 14.5% of the nation’s adults are senior citizens, 22.3% of Myrtle Beach’s population is 65 and older. Comprised of four separate communities, Cherry Grove, Ocean Drive, Crescent Beach, and Windy Hill, North Myrtle Beach is a progressive community. The area has been named one of Google’s 50 eCities, which recognized the growth of small businesses using the internet, and named it the strongest business community in 17 fastest growing cities in USthe state.

Myrtle Beach MSA Forbes Economic Overview

  • Total Population: 433,700
  • Job Growth: 2.7%
  • Gross Metro Product: $17.7 Billion
  • Cost of Living: 0.7% Above National Average

The area has a diverse array of industries offering job opportunities for Non-retirees

Horry County offers a modern infrastructure and is home to 25 international companies. The anchor industry, Leisure and Hospitality, comprises 25% of total employment with Healthcare burgeoning. It offers a diverse mix of sites and buildings, from Class A-certified industrial parks to business and commerce centers, for  prime business locations.

The Myrtle Beach Regional Economic Development (MBREDC) has worked to bring a number of new industries to the area including the corporate headquarters’ for the manufacturing firm BauschLinnemann and international customer service call center STARTEK. Through MBREDC's "Building North Myrtle Beach" campaign and the strategic efforts of business leaders, North Myrtle Beach is on the front lines of stimulating new and existing business growth in Horry County. Myrtle Beach is currently ranked #15 on Forbes lost cost of doing business list.  The city is also home to U.S. headquarters from companies such as Accent Manufacturing USA, Integra Fabrics, Canfor Southern Pine, as well as the manufacturing and distribution operations for Landusi Enterprises, the largest distributor of smoking pipes and tobacco in the United States. With an increase of healthcare activity, three outstanding hospital systems serve the Myrtle Beach region: Grand Strand Regional Medical Center, Tidelands Georgetown Memorial Hospital, and McLeod Loris Health. The Myrtle Beach area already offers a diverse mix of highly-skilled, reliable and experienced workers in a wide variety of fields. Myrtle Beach-Conway-North Myrtle Beach ranks in the Top 20 "Prime Workforce" Cities in 2016 by Area Development Magazine.

Convenient Location near beaches, entertainment, and transportation

The Grand Strand area offers unlimited options for recreational activities. Even with the push to broaden the Myrtle Beach area's revenue sources, the popular vacation destination continues to offer career opportunities to those in the tourism industry.  It Consists of over 60 miles of white sandy beaches of North Carolina and South Carolina, along with the intra-coastal waterway, nature preserves, and bike trails for any season of the year. There are great restaurants, shopping, over 100 golf courses, and entertainment in an easy reach. The Carolina Country Music Festival is new to Myrtle Beach, bringing in tourists for a weekend in June with top Country artists including Keith Urban, Tim Mcgraw, Rascal Flatts and many more. In addition to a music festival, the city is home to the Grand Strand’s largest concert venue, The House of Blues, which regularly host nationally known performers. The recent expansion of Myrtle Beach International Airport will connect customers, family, and friends to the world via air, and US 501 provides easy access to I-95 and beyond in under an hour.

Lack of multifamily supply in the coastal area leaves room for opportunity

Since Myrtle Beach is historically a tourist area, commercial real estate developers have answered the demand for hotels and resorts, leaving multifamily in the dust to accommodate visitors for weekend getaways. This has mostly left multifamily construction out of the equation for years, with few even in the pipelines today according to Yardi Matrix.  The city of North Myrtle Beach's expansion plan has resulted in successful economic growth from non-tourist attractions by bringing different industries to the area. Forbes also recognized Myrtle Beach's growth by ranking the city #16 for The Best Places for Business And Careers in 2015. Company migration to North Myrtle beach offers non seasonal/tourist opportunities for workers, which strengthens the demand for more long term housing options.  Now the continuous stream of recent graduates entering the workforce from Coastal Carolina University and Horry Georgetown Technical College, won't be as likely to leave in search for career opportunities. The already strong labor force continues to grow with young, knowledgeable employees who are ready to work and are in need affordable places to live.

How can you make passive income from a multifamily asset in Myrtle Beach? Contacts us at info@maccvp.com or click the image below to visit our investor portal and make a free account!

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Cover image courtesy of Myrtle Beach South Carolina Real Estate Experts

By: Molly Holbert

8 Reasons to Invest in Multifamily Apartments

 

nice apartments smaller

U.S. multi‐family real estate has generated strong investor returns over the last 20 years driven by diverse income streams, low operating costs, manageable capital expenditure requirements, and favorable debt financing terms. The movement of wealth to secondary markets was highlighted in a recent US Multifamily Strategy and & 2017 Update conducted by Yardi Matrix. Southeastern US markets stand out in the data from the Internal Revenue Services, showing Florida with the most wealth gain, followed closely by the Carolinas, Georgia, Texas, and Tennessee. Retiring Boomers and mobile Millennials have been the main contributors to population and income shifts. These demographic shifts are in the multifamily industry’s favor over the long-term, especially in the younger aged cohorts.

 

(1) Superior Rate of Return

Multifamily provides superior rates of return to stocks and other assets when you have reliable managers.

 

(2) Income/Steady Cash flows

Apartments produce rental income, which delivers steady cash flows to offset the costs of ownership, maintenance and financing costs.

 

(3) Diversified tenant base

Each property has several tenants, one or few delinquent tenants has less impact on your income.

 

(4)  Amortization

On a monthly basis as tenants make their rental payments, mortgage is paid down and investors´ equity increases.

 

(5) Appreciation

From: a) the ability to buy undervalued properties, b) ability to increase free cash flow and c) from general uptrend in  real estate prices.

 

(6) Increase the Value of the Property

By turning the property around or improving the operations, an increase in rents and occupancy adds value to the property. Added value can result in a capital gain if the property is sold, adding to the steady income that pays down the mortgage from rental payments.

 

(7) Hedge

Hedge against inflation as rents increase yearly at or above inflation. Prices of properties go up directly proportionate with inflation.

 

(8) Less Volatile than Stocks

At certain degree, multifamily is immune to the volatility of the stock market.

 

How can you invest in Multifamily Apartments? Visit our investor portal to find out how. Click the image below!

investor portal with SC open

By: Molly Holbert

The Fusion of Technoloy, Data, and Regulations in Commercial Real Estate


Wireless connection or networking concept as means of communication and social interaction

MACC Venture Partners, a North Carolina based owner/operator and active sponsor of multifamily assets throughout the Southeast, is pleased to host the third event in its 2017 panel series lineup on Wednesday May 24th 2017.  The event will be based on the topic of technological innovation and data intelligence in the commercial real estate industry, and their transformational role.  As the industry continuously adapts to new regulatory and legal changes, the intersection of regulation, data and technology will be on the forefront of industry growth. The event will be hosted at the brand new AvidXchange building in the Charlotte AvidXChange Music Factory.  MACC Venture Partners’ EVP and Managing Member, John Azar,  will be moderating the four person panel.

 REGISTER HERE

We facilitate our networking events through our Meetup.com Group, Multifamily & Apartments Investing Network (MAIN). This group was formed over a year ago and has grown to over 355 members. The group's main focus is to educate investors who are interested in multifamily and apartment investing; as well as exchange ideas, encourage networking, provide tips and facilitate discussions on real estate LP investing. We welcome people who would like to learn about investing in commercial real estate and exchange dynamic ideas effecting our industry and community.

Meet our Panelists

Our four panelists bring a wide range of technology and real estate experience.

Jack Kern is the director of research for Yardi Systems, Inc., the leading global real estate services firm with over 5,000 employees and 40 offices globally. He previously served as head of research at Archstone-Smith, one of the largest apartment real estate investment trusts prior to its acquisition by EQR and AVB. In his previous consulting Kern

[caption id="attachment_546" align="alignright" width="120"]Yardi Chief Economist, Jack Kern Yardi Chief Economist, Jack Kern[/caption]

worked with portfolio investment and management clients to identify key strategies for expansion and performance improvement. As a long term research professional Kern also worked on political polling and issues consulting at the local and national level and has been active in politics ever since. Recently Kern was appointed the Kettler Scholar at George Mason University’s Center for Regional Analysis and now is a research fellow at the Center working on commercial real estate issues. He brings over 30 years of professional experience and also serves as the publisher for Commercial Property Executive and Multihousing News, two of the industry’s most powerful media

[caption id="attachment_547" align="alignleft" width="141"]Chris Atkinson CEO of IMS, Chris Atkinson[/caption]

Chris Atkinson brings 20 years of software operational experience to his role as CEO of Investor Management Services (IMS).  Chris is responsible for the strategic vision of IMS and driving operational excellence during a stage of hyper-growth.  Prior to joining IMS, Chris was CEO of KnowledgeTree where he guided the company to explosive revenue growth and award-winning product expansion. Prior to KnowledgeTree, Chris served as Executive Vice President and General Manager of StrikeIron, where he was responsible for the day-to-day management of the organization. In his tenure, StrikeIron averaged 68% CAGR and significant product innovation.  The 440% revenue growth from 2011 to mid-2014 led to StrikeIron’s successful acquisition by Informatica. Chris’ software leadership experience includes executive management, general management, sales, marketing, and corporate development roles at Fortune 100 and venture-backed startups.

[caption id="attachment_548" align="alignright" width="100"]Senior Manager at Elliot Davis Decosimo, Bobbi Jo Lazarus Senior Manager at Elliot Davis Decosimo, Bobbi Jo Lazarus[/caption]

Bobbi Jo Lazarus has more than 11 years of public accounting experience, specializing in tax services. She focuses on providing tax planning and compliance services specifically in the partnership, and individual income tax return reporting areas with a specialization in the real estate industry. Additionally, Bobbi Jo has been involved with several partnership allocations, cancellation of debt and basis issues, as well as Section 179D energy efficiency and cost segregation studies. Bobbi Jo is also part of the Commercial Real Estate Women (CREW)–Charlotte Chapter-Past National Delegate. She was named Charlotte Business Journal 40 under 40 award recipient in 2016 and Mecklenburg Times 50 Most Influential Women Award Recipient in 2015.

[caption id="attachment_549" align="alignleft" width="185"]Chris Elmore Director of Product Strategy at AvidXChange, Chris Elmore[/caption]

Chris Elmore is author of 8 books and over 600 articles, and has learned that experience is one of the best teachers. Chris started his career in finance and human resources and has helped build several startup technology companies like early dotcoms MTS (1996) and carrershop.com (1998). His current venture with AvidXchange has given him the corporate ride of his life. As AvidXchange’s first employee, in 2000, Chris has played roles in support, training, testing, development, project management, consulting, sales, marketing, and management. Chris is a teacher leading efforts at AvidXchange’s internal university training new employees, acquisitions and partners as well as being an Adjunct Professor in the Department of Computer Science at UNC Charlotte. Chris also serves as an adviser to four Charlotte NC based startups, Radin Technologies, 2ULaundry, Advocations and Griffin Tattoos. Chris lives in Clover, SC where a wife, four kids and business keeps him very busy.

 

Attend our Panel Discussion: The Fusion of Techonology, Data, and Regulations in Commercial Real Estate

Date: May 24th | Time: 6pm to 9pm | Location: AvidXChange | Address: TBD

REGISTER HERE

Also check out our MAIN Fireside Chat with Tony Azar to see photos from our sell out event in February!

Perspectives from industry leaders on the new landscape of CRE in the Carolinas & Beyond


We are hosting an all-star panel at our upcoming Multifamily & Apartments Investing Network (MAIN) event on April 6th. Leaders of NAIOP & ULI  Charlotte chapters will be discussing the state of the local and regional commercial real estate market. The ticket includes admission, beer, and custom pizzas. Our sponsors, Granite Falls Brewing and Fuel Pizza on South Blvd in Carlotte with be provide the craft beer and custom pizzas.

BUY TICKETS HERE

National Association for Industrial and Office Parks (NAIOP)  

NAIOP CLT

Since 1967, NAIOP, the Commercial Real Estate Development Association, has become the leading organization for developers, owners and investors of office, industrial, retail and mixed-use real estate. NAIOP comprises 18,000+ members and provides strong advocacy, education and business opportunities through a powerful North American network.

NAIOP advocates for effective legislation on behalf of its members. As the recognized leader for commercial real estate, NAIOP furthers the industry’s public policy agenda by actively working with elected officials on legislative issues affecting its welfare.

Urban Land Institute (ULI)Naiop Rob Cochran

Urban Land Institute is a 501(c) (3) nonprofit research and education organization supported by its members.

Founded in 1936, we now have almost 40,000 members worldwide, representing the entire spectrum of land use and real estate development disciplines working in private enterprise and public service.

A multidisciplinary real estate forum, ULI facilitates an open exchange of ideas, information, and experience among industry leaders and policy makers dedicated to creating better places.

How can you network with leaders of these national and global organizations?

Our three panelists who will be speaking at our upcoming MAIN panel discussion are heavily involved in NAIOP & ULI.

Brendan Pierce serves on the board of directors of NAIOP Charlotte as  President. He is Director of Office Development, Acquisitions and Leasing at the Keith Corporation(TKC) and has over fifteen years of experience in the commercial real estate industry. He is responsible for sourcing development and acquisition ventures throughout the United States.  In his career, Brendan has developed and acquired over 1.2 million square feet of commercial real estate valued at $550 million.

Rob Cochran is the current Chair of the Charlotte District Council of ULI. He is also a senior managing director of Cushman Just speakers for event blog& Wakefield where he is the leader of the Charlotte Capital Markets team and has more than 35 years of experience in the Carolinas real estate market. For the past ten years, he has focused on investment sales in the Carolinas.  He is a past president of the Charlotte Region Commercial Board of Realtors and the boards of Communities in Schools, Ronald McDonald House, and Children & Family Services Center.

Theresa Salmen is heavily involved in the commercial real estate network in Charlotte. She serves as Executive Director of NAIOP Charlotte and Executive Director of ULI Charlotte. Theresa Started TH Mgmt., Inc. in 1991, an association management company (AMC).  She has earned her Certified Meeting Professional (CMP) designation and was recognized by the Charlotte Business Journal as one of the top Women in Business for 2005. She is a past president of the Association Executives of North Carolina Charlotte Chapter and previously served as a board member for the AMC Institute (trade organization for the Association Management Company industry).

 

Attend our Panel Discussion: Perspectives on the New Landscape of CRE in the Carolinas & Beyond

Date: April 6th | Time: 6pm to 9pm | Location: C3 Labs | Address: 2525 Distribution St, Charlotte, NC 28203

BUY TICKETS HERE

 

Also check out our MAIN Fireside Chat with Tony Azar to see photos from our sell out event last month!

Upcoming Charlotte events:

NAIOP is hosting its NC statewide conference on March 30-31 in Pinehurst, NC. Find registration information on the NAIOP Charlotte website under the upcoming events tab. The conference is open to members and industry guests.

ULI  is hosting its 4th annual Carolinas' Meeting on March 23 and 24 at the Westin Charlotte. It is expected to draw more than 600 attendees from across the region. Find more information about the event at the ULI Charlotte website under the events tab. The event is open to members and nonmembers.

Whit background Shout OUT

 

 

First event of 2017 was a huge success!

Fireside Chat with Tony Azar Draws Diverse Multifamily Audience in a Sold Out Event.

By: Molly Holbert

Our firm manages a Meetup.com group focused on education and collaboration as well as community for investors and stakeholders who are interested in multifamily and apartment investing. The group is continuously growing and has reached over 330 people. Our goal is to allow people to cross pollinate their interests and expertise, as well as facilitate discussions on MultiFamily Limited Partnership investing and commercial real estate in general.

The first event of the year was on February 23rd, 2017 at Advent Coworking space in Plaza Midwood, Charlotte. The room was filled with over 50 people who were able to network among a diverse group of like minded peers. Our CEO, Tony Azar, was the speaker at our first event. He discussed his journey from single family flipping to owning and operating over 5,000 commercial units in the US. We were joined that evening by other local business executives outside of the CRE industry such as Jeff Brokaw (StartupGrindCharlotte) and Chris Elmore (AvidXchange)

Click here to find out about our next event

Collage of Fireside Chat for Blog