I’m Joe Stampone. I work at Atlas Real Estate Partners (‘AREP’), a private real estate investment firm focused on value-add multifamily investments. ASotREG is a place where I share my thoughts on real estate as a career, technology, entrepreneurship, passive investing, and anything else that piques my interest.
Recent Posts
Why Syndicators Should Always Over Raise Equity
Moses Kagan is the founder of Adaptive Realty which focuses on heavy value-add multifamily projects throughout the LA area. I really enjoy his views on the real estate business which he shares often over on his blog. In his most recent post, he discusses a concerning trend he’s seeing utilized by syndicators who raise capital via crowdfunding sites. In order to attract investors to their deal, syndicators must market deals with both current cash flow and high IRR’s. However, in today’s market, it’s nearly impossible to have both, so syndicators are over-raising capital to be used to make...
When Knowing Too Much Makes you a Bad Investor
Over the past 10 years, we’ve executed nearly $75M worth of renovation work across 20+ value-add multifamily projects. Over that period, we’ve experienced many of the unexpected things that can go wrong when executing these deals; hidden physical issues, larger than expected tax reassessments, tenant lawsuits, crime, resident delinquency issues, and submarket challenges like unanticipated new supply or poor policy decisions, to name a few. It’s like Farmers Insurance, “we know a thing or two because we’ve seen a thing or two”. While being educated on all the potential risks of a deal...
Routine Replacement Expenses: “Multifamily’ s Dirty Little Secret”
I was talking with a multifamily fund operator who’s been in the business for 30+ years. His firm started out buying class C multi deals and scaled up over time to raise a fund with institutional capital to acquire higher-quality, light value-add multifamily assets. The primary driver of the movement upstream was the capital-intensive nature of older vintage apartment properties. The ongoing capital needs make it difficult to hold these assets long-term and require holding significant reserves. In real estate, ‘cap rate’ is used as a crude metric for valuation and is simply a measure of...
The Challenge of Holding Multifamily Assets Long-Term
In my previous post, I talked about the value of compounding which results over holding multifamily real estate assets long-term. While that’s great in theory, it’s difficult to hold older vintage multifamily assets long-term (longer than 10 years). At Atlas, our business plan typically entails renovating and repositioning assets to bring them in line with other recently upgraded communities in the area. We rebrand the property, correct operational deficiencies, clean up deferred maintenance, improve curb appeal, and upgrade amenities and unit interiors; all of which typically result in...
Hold Real Estate Forever, Reinvest, Compound, Don’t Pay Taxes, And Get Rich Slow
Real estate is a long-term, get rich slow business. That’s something you hear a lot, but the math and reasoning behind it is rarely illustrated. At Atlas REP, our investment strategy centers around buying cash-flowing value-added multifamily properties and holding long-term (10+ years). I believe multifamily real estate investing is most attractive over a long time horizon given the strong and consistent cash flow combined with significant tax benefits. To illustrate these benefits, I wanted to show the equity growth and cash flow of a $100k real estate investment over 30 years. This was...
Apartments, Hotels, What’s the Difference!?
The way people are living, and traveling has fundamentally changed and the lines between apartments and hotels have blurred. Guests and renters are no longer constrained by a market flooded with watered-down options and brands dictating the experience. Today, renters and travelers have nearly endless options, catering to any experience they seek. I recently traveled to Nashville and I decided to test out Niido, an apartment community ‘powered by Airbnb’. It’s a traditional midrise apartment community that allows (encourages, actually) its residents to rent out their apartments...
Bringing a Hospitality Mindset to Multifamily Development
We’re in the midst of a multifamily development boom. If you’ve been to any major city over the past few years, you see ‘stumpy’ midrise developments everywhere. The forgettable stick-frame buildings all look similar. They are relatively cheap to construct, go up quickly, and cater to a wave of demand from Millennials and Gen Z’ers delaying marriage, having kids, and buying or renting a home in the suburb. With the cost of construction and land at elevated levels, development yields are compressed, developers have little flexibility to physically differentiate their property from the...
The Key to Multifamily Asset Management: Controlling Costs and Creatively Adding Value
Every so often I scan through the real estate forum on Wall Street Oasis and I recently came across an interesting thread titled ‘Contrarian Thesis: Acquisitions is the Least Interesting Job in Real Estate’. The post argued that acquisitions is a repetitive job wrought with frustration and best-suited for young analysts who are hungry and proficient with the latest technology. Asset and portfolio management, on the other hand, tend to be the most valuable and interesting roles. The asset managers recognize the value-add upside, know what it cost to renovate, have intimate knowledge of...
The Bearish Case for Multifamily
Multifamily has been the darling of the recovery and remains one of the most sought-after asset classes. And why wouldn’t it be? We’re constantly bombarded with the case for multifamily; there’s a secular shift toward renting, millennials are getting married and having kids later, baby boomers are downsizing and seeking an urban lifestyle, multifamily construction was well below historic norms coming out of the recession, many 18-34-year-old’s live at home and will eventually enter the renter pool etc. etc. It’s a compelling case. Some of these are real, while others are overblown. In...
The Multifamily ‘Amenities Arms Race’ Shows no Signs of Slowing
Multifamily development has picked up considerably over the past few years, as the demand for high-quality apartment communities near major employment centers and entertainment has increased. Driven by demographics, couples getting married and having kids later, lifestyle choices, and pent-up demand, millennials, Gen Z, and some Baby Boomers are flocking to newly-developed class A communities. These individuals seek a lifestyle and expect way more than a nice place to live; they desire conveniences, technology, a robust resident event program and sense of community, and amenities. Lots of...