September 2021

How has the Covid resurgence affected your thinking? If you think it hasn’t, you’re not being honest with yourself. Regardless of your stance on vaccinations, masks, the reality is that our lives have changed, and our real estate business has to adapt to these changes.

For one, and this has been agonizing for me, we can’t – or shouldn’t – be out in big gatherings. It’s 10 times harder meeting prospective partners in virtual conferences. I do miss the real ones.

Eviction moratoriums on a national level look like they are behind us unless congress takes it up, but many states including my own have their own restrictions. I’ve chosen not to invest my hard earned dollars where the vital role that owners and landlords play in providing affordable homes for families is not valued.

We’ve seen the dramatic upside opportunities of multifamily investing through work-from-home and work anywhere trends across the U.S., the spike in building costs reducing new product on the market, and the Fed’s ongoing focus on keeping interest rates low. Asset pricing may be through the roof but this is unquestionably a good time to be a buyer. The Covid resurgence is causing companies to give up any further plans to get employees back to the office. Certainly there is considerable downside to this trend but the impact to multifamily real estate is hugely positive.

Inflation? Count on it. But own hard assets like real estate. So when your property appreciates by 5% but inflation is 5%, did I make any money? Yes, because we’re leveraged. Your $1M property grew to $1.05M but you only put in $200K, and now your equity is $250K. You beat inflation. Downside is interest rates rise with inflation too. Nominal interest rates don’t even have to rise much for real interest rates to rise. It will kill your stock portfolio but not your real estate.

Lakeland, FL – not on most investors’ roadmaps because it’s not Orlando, Miami, or Tampa, but it’s really in the perfect location, right between Orlando and Tampa, and in a state that appreciates investors. We all read about the southbound migration and this is going to continue, but Lakeland represents a way to get in early, cheaper, and without the risks that a lot of smaller one-company towns have with losing that employer. Lakeland, population 108,000, has grown steadily over the last 20 years and has maintained one of Florida’s highest Areavibes livability scores, 81, of cities larger than 100,000.

But what is most compelling is job growth rate. In the seven years prior to 2020 it averaged 3%. 2021? Still positive at 0.7%! And the first seven months this has averaged over 4%. That’s pretty phenomenal. It’s not just one big company suddenly expanding, it’s a strong, diverse demand for housing. It is reflected in a YoY rent growth rate of 11%. Also phenomenal.

In-between cities like Lakeland will continue to expand because of their proximity to nearby MSAs, which we see in many areas across the country. A great long-term opportunity.

Use a syndicator to find a syndicator
Is your preference to passively invest in real estate? You like being involved in the whole commercial multifamily real estate world because there’s so much going on, there are some very creative, smart, thoughtful, and outgoing people who make this their passion – but it is more than what you want to take on. You do know all the benefits multifamily real estate investing has, though, and you still want to participate.

That’s a reasonable and well thought out choice.

So where do you go from there? Have you started networking? Getting out, joining meetups, attending weekend conferences? How about joining coaching programs?

As a syndicator myself, I can say that this is absolutely my passion and I do all of these things and can’t wait to jump back into face to face meetups. I can also say that through my networking I meet a lot of people who also syndicate multifamily real estate. Some are just getting started, some own a
lot more real estate than I do. Some buy highly distressed properties, some buy Class A properties, some buy only in the south, some like the rust belt. I keep track of what I know about people I meet. It is not only required by SEC rules for deal presenters to know their investors, but it is good business to help me serve my investors needs and grow my relationships.

The syndicators I meet, especially the successful ones, are well informed and they like to share their knowledge. I never feel like they’re competitors as syndicators know that they learned from those who went before them. They learn and they share.

As a result, I know syndicators. I know a lot of their specialties, the kinds of deals they look for, their risk tolerance, their geographic preference, how experienced they are, and in a lot of cases, other people who have been involved in their deals.

If you are looking for a syndicator so you can passively invest in their deals, you should not feel uncomfortable about asking a syndicator for their recommendation. Some might not be willing to tell you about others but many will. If you know a syndicator, you can describe what you’re looking for and if they are not generally going to acquire that property type, they might know somebody who does.

For example, my last syndication property was low occupancy. It was clearly a renovation and lease-up opportunity, and that’s not for everybody. My next property will be different but many attributes will still be the same – for example, I like the southern mid-west regions of the U.S. but I stay out of Texas because those deals are too competitive. That’s my model and if you like red hot DFW I can refer you to some great syndicators.

Feel free to ask syndicators those questions. It’s not like asking a Ford dealer what they think of Chevys. You’ll be pleasantly surprised and you’ll get good advice.

Who We Are

Cardinal Oak Investments acquires, improves, and manages under-valued commercial apartments. We buy B and C class properties of around 100 units in the Southeast and Midwest. We look for properties whose amenities, aesthetics, and appeal have fallen into obsolescence, whose care reflects tired management, and whose location is where a stable workforce wants to live.

And we partner with like-minded investors looking for stable assets that produce good cash flow and strong appreciation.

Founded and managed by John Todderud, Cardinal Oak Investments has acquired properties on both coasts and in between creating annual double-digit returns.

For more information, schedule time with me or contact us.

Please note: Past performance is no indication of future performance.