Why We Build and Buy to Own

I've been buying real estate since 2010 and building for the last five years. In that time we've built new apartments from dirt, turned an office building and a student housing property into regular apartments, and bought and sold a lot of value add deals. We've acquired and operated roughly 1,500 apartment units over that time.

For most of those years the plan was the same as everyone else's. Buy it, fix it and sell it in a few years. Some of our deals were held for less than two years before we sold them. It worked when rates were low and buyers were paying more every year. When that changed, I learned the hard way how much of the plan depended on things nobody controls.

What the last cycle taught me

Rates went up faster than almost anyone expected. A wave of new apartments opened at the same time. Deals that needed a sale or a refinance to work were suddenly at the mercy of the market, and some of ours were among them.

The lesson wasn't to stop investing in apartments. It was that the deals that hold up are the ones that pay their bills from the income they make today, on debt that can't blow up, in locations people will still want to live in twenty years from now. Everything else is speculation.

So we changed the plan

We've pivoted to boring real estate. We build and buy apartment communities in Phoenix and Oklahoma City to own for ten years or more. Every deal has to show cash flow from day one. We use long term fixed rate debt or no debt at all, and we stay in Class A and B locations. Whether we build it or buy it, the plan is to keep it.

Building is still part of it. Row 31 in Phoenix is the first community we built to keep, and Inca Peak in Rio Rancho is planned the same way. A new building in a good location, held for a long time, is one of the best things you can own.

Why I'm telling you this

I'll be straight with you. Owning for the long term is new for us. Our track record is in building, buying and selling, not in holding a building for ten years. I'd rather say that plainly than pretend otherwise. What sixteen years of buying and five of building gave us is the experience to know what lasts and what doesn't, and that's what this plan is built on.

Real estate investing is supposed to be low and slow, and that's the model we're sticking to. If you're a broker or owner with a property in Phoenix or Oklahoma City, or an investor or operator who wants to partner in the same markets, reach out.

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