My transition from SFR rentals to Multifamily Investing

[Arn Cenedella]

One of my core values is that my words match my actions.

In street vernacular, one could phrase this as “practice what you preach” or “put your money where your mouth is” or “if you talk the talk, you need to walk the walk”.

I have invested in single family homes and smaller 2 to 4 unit properties since 1980 - forty years - a lifetime - and have done well with these investments.

This year as COVID hit America, I had a conversation with a young investor buddy of mine about Covid’s impact on rent, the conversation led to a podcast recommendation about Covid impact on multifamily investing.

The light bulb went off - in TV talk show language, one could say I had an epiphany.

And my journey and transition to multifamily investing started. I know I am a little slow to catch on, but hey better late than never. 😀

From that point on, I sold a couple of my single family rentals and have now invested in 6 multifamily syndications as an LP and am in the process of completing my first multifamily syndication as a GP.

See for me.......before I could ask people to invest with me as a GP, I had to first invest as an LP. I had to walk the walk before I could talk the talk. I couldn’t in good conscience ask people to do something I had not done.

In a short time, I have created a diversified portfolio of MF investments in some of the nation’s best markets - Charlotte, Greenville SC , Columbia SC, Boise, Colorado Springs, and Augusta GA. These investments are spread across A B and C asset classes. So I have geographic diversity as well as Apartment Class diversity.

I now have invested in over 1000 units.

So I would encourage smaller mom and pop investors like I was or busy W2 professionals who know investing in real estate is a good thing but don’t have the time or knowledge to invest - educate yourself about passive MF syndication investments, see if they are a good fit for you and if so, create a plan and execute it.

[Arn Cenedella]

@Jordan Malara

Good question.

After 35 years living and working in Palo Alto and Menlo Park CA and selling property all over Silicon Valley, I have come to understand expensive and less expensive or cheaper is all relative. I might add cheaper does not mean value.

I have now live in Greenville, SC where the price delta is large.

Investing is a fine line proposition. There is a continual tension between capital growth and cash flow. I like to invest in markets where prices and rents are going up - it indicates the local economy is doing well and the market is a desirable place to live. Of course, the $64M question is how does each investor weight the scales between cash flow and equity growth?  No one right answer. 

To answer your question more specifically.......

I really like diversification - to me, diversification leads to a certain security - not having all my eggs in one basket or market.

Colorado Springs is a booming market and I believe this will continue. The factors that have made Colorado Springs boom will exist five years from now, in my opinion. As folks leave CA, they are moving to Colorado and Utah and they bring money and equity with them. Add in robust job growth and it is the right recipe for investment. So I am bullish on Colorado Springs.

I recently invested in Boise, Idaho. Boise is not considered a cash flow market. It is considered expensive. Some say the time to invest in Boise was 5 years ago. They may be right. But Boise is booming and the factors that make Boise attractive now and likely to remain unchanged five years from now.

My current MF investments are Charlotte NC, Greenville SC, Columbia SC, Boise, ID and Colorado Springs, and most recently Augusta GA.

My investors have paid over $200,000 a unit for some of these MF properties and in Augusta GA, my investors and I are paying $42,000 a unit.

I have Class A B and C assets. I have assets in high cost markets and low cost markets. I love the diversification.

So when I chose to make an investment, I am looking at the specific property and location but I also consider how this investment fits with the rest of my portfolio.

I am well represented in the SE and want more of the Mtn West.

Hope this makes sense. Happy to discuss more.