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
Building more Middle-Income and Workforce Housing
At Atlas, we focus primarily on acquiring value-add workforce housing. A big part of our investment thesis is that you can’t build new middle-income housing, so supply is capped while the demand for high-quality middle-income housing keeps growing. This is just a fact accepted by most real estate operators and as a result, capital has poured into workforce housing, cap rates have compressed, and returns are squeezed. Few understand the dynamics at play which make it nearly impossible to build much-needed middle-income housing today. To better understand why we aren’t building...
This is the moment we’ve all been waiting for
I started my career in real estate in 2009. For the first 11 years, I enjoyed one of the longest expansions in history. I remember thinking in 2015 that assets were expensive and good opportunities were hard to come by. I’m not sure where that came from. Perhaps it was purely the fact that assets in 2015 were much more expensive than they were in 2011? Regardless, I never pretended to know where we were in the cycle. Here’s what I wrote in 2015: I have no idea “what inning” we’re in. Market pundits spend a lot of time talking about what inning we’re in and whether or not we’re in a...
What’s going on with Multifamily Collections?
If I were to tell you that ~40% of your residents were unemployed, what do you think that would do to rent collections? Would you believe me if I told you multifamily collections were more or less unaffected through May? Probably not. So what’s going on? One of the sad realities of the coronavirus is the disproportionate impact it has on those at the lowest income and education levels. Most wealthy individuals can work from home and escape areas most hard hit by the virus. The individuals putting themselves at risk by working are doing so because they must. A majority of those who have...
COVID-19 Impact on CRE: Accelerating Trends and Secular Shifts
There’s a lot of chatter and speculation in the commercial real estate community about what a post-Corona world will look like. Is business travel dead? Will consumers ever shop in malls again? Are we all going to be working remotely? Are people going to move out of cities and into the suburbs? Will we have to practice social distancing in restaurants and bars? What happens to gyms and fitness classes? Who knows. I think the world is going to look very different over the next few months, but we’ll eventually begin to act more and more like we did pre-Corona. It’s important to remember...
Reflections on Working from Home
Over the past few years, I’ve spent most of my time working remotely either on the road traveling to properties or out of my apartment. I’ve created an environment and workflow that’s conducive to remote work and I utilize technology to communicate seamlessly with the rest of my team. I’ve enjoyed the benefits of working from home; no commute, an asynchronous schedule, and the ability to hang with my daughter throughout the day. For me, remote work was a strategic choice and a luxury afforded to me. The COVID-19 pandemic has forced all teams to adopt a remote working environment and...
Should I pay my rent?
Over the past 3 weeks, nearly 17 million people filed for unemployment. True unemployment at this moment is about 18%, compared with just 3.5% as of the first week of March. Many of these individuals rent apartments, have little in the way of savings, and find themselves in a difficult position. Thankfully, the government has taken swift action. The recently enacted CARES Act puts money in the hands of individuals so they can keep paying their bills, but the timing of the stimulus remains uncertain. The CARES Act also put a moratorium on evictions for any property financed with...
Thoughts on COVID-19 and the Impact on Workforce Housing: March 22nd, 2020
I started my career in the real estate business in 2009, the bottom of the Global Financial Crisis. It’s been a historic 10+-year run for the multifamily sector. The combination of economic growth, organic rent growth, compressing cap rates, and sustained low interest rates lead to great returns. That’s easy to say looking backward. There were many moments over the past 10 years where it felt like pricing was frothy and the music was ready to stop. My career has always been underscored by the risk of a recession driven by an unknown catalyst. I graduated from college in 2008 and saw...
3rd Party Property Management: Far from a Set it and Forget it Solution
Many multifamily operators (Atlas included) utilize 3rd party property management to oversee the day-to-day management of their properties. It’s great in many ways. You can maintain a lean team, utilize the resources of a large institutional management firm, and make a change if they’re not performing up to your standards. That said, implementing a 3rd party to oversee your deals is hardly a ‘set it and forget it’ solution. Multifamily properties require aggressive hands-on asset management and certain tasks must be handled at the ownership level. In my experience, here’s what 3rd party...
Lifestyle Brands Physical Real Estate Strategy Extends Beyond Retail
The way lifestyle brands approach their physical real estate strategy is changing. As sales have shifted online, brands have begun to utilize their physical presence to deepen their relationship with the consumer, share their story, showcase their products, and ultimately fuel (online) sales. This strategy is not just being deployed across conventional retail space, we’re beginning to see consumer brands in multifamily, hospitality (hotels/restaurants), and the condo business as well. Multifamily, until recently, was a relatively commoditized product that competed on price and location....
The Game has Changed: The Importance of Connecting with Residents
Direct to consumer brands (think Harry’s, Warby Parker, and Casper) have stolen market share from the incumbents. Their success isn’t because they have a slightly better product, it’s because they are obsessed with connecting with the customer. Real estate owners/operators can learn a lot from the success of digitally native DTC brands. In the apartment industry, there is little brand awareness and almost no brand loyalty, so residents are up for grabs. Owners who resonate with prospects, offer a great value, and cater to their lifestyle will ultimately win. I spend a disproportionate...
Two Multifamily Myths Debunked
The demand for multifamily remains strong, but the drivers of demand are often different than what most people think. Tell me if you’ve heard these two narratives: Millennials are moving more often so they prefer the flexibility of renting.Millennials have a shifting preference toward renting over buying. I’ve heard these from many smart real estate professionals who typically use anecdotal evidence to support their claim. While Millennials are staying in the renter pool longer, it’s generally not because of the reasons noted above. Let’s start with the first myth that increased mobility...
10 Multifamily Predictions for 2020
I hope everyone had a great holiday and enjoyed some quality time with friends and family. I was able to disconnect and spend a week in FL with my family. The time off is great, but I’m eager to get back to work and tackle the big initiatives and goals I have for the year ahead. In my first post of 2020, I want to make some predictions and point out the trends I see continuing within the multifamily space over the next 12 months. Here are my 10 multifamily predictions for 2020. The End of the ‘All White’ Kitchen: How many value-add projects do you see with the same ‘all-white’ look?...
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...