Why did you choose the Phoenix market?

In 2017 we did a national market study on the macroeconomics of cities throughout the country. Phoenix was on our short list due to its growth in population, labor force, and job diversity. Our research was validated as Phoenix was the fastest growing city in 2018. Furthermore, the cost of living is low here compared to the median income meaning there’s room for rent growth in the coming years.

Why acquire an apartment over smaller investments?

Larger complexes operate more like business and they benefit from economies of scale (2 full-time staff members, access to quality contractors, discount on large purchases of materials for renovations, reduced effect of vacancy). There’s also increased security in size. Having 5 vacant units within a 100-unit complex is still profitable compared to having a single vacancy in a triplex.

The opportunity for force appreciation is also unique to multifamily compared to a single family homes. We can drive the valuation of the business (apartment) up by renovating units and increasing its revenue because businesses are sold and purchased based on their ability to produce income.

 

Does First Chair Capital own and operate all the complexes?

No, this commercial real estate space is a team sport and we’re a key player on a larger team with White Haven Capital. How did our two firms start working together? We visited Phoenix in 2017 and connected with Ben Leybovich, a White Haven partner and BiggerPockets celebrity, since he lives and invest there. We hired him to mentor us through the acquisition of a 40-unit property and got a chance to work one-on-one with him.

He saw our work ethic and offered us a spot on his team when he and our fourth partner, Sam, had a 98-unit complex under contract. Collectively the four of us have worked together to close 4 deals totaling 473 units and involving 100+ investors. We have a close working relationship with them and normally spend time with Ben’s wife and two kids whenever we visit Phoenix.

Who's your typical investor?

We work with a lot of small business owners who excel at their craft, are interested in real estate, but don’t have the time or interest to be active investors. Government and non-profit professionals are another segment of our investor base. You can see the common trend is that our investors generally enjoy their day jobs and like real estate as an investment vehicle – but they don’t see land lording as a sustainable part of of their lives so they prefer a more passive investment strategy.

I'm interested to learn more, what are next steps? What's the investment process like?

Reach out to us and we’ll set up an initial chat. It’ll be a great opportunity for us to get to know you and more importantly, for you to pick our brains on everything real estate. We’ll send you details of our next investment opportunity if we both feel that this is the right strategy for you.

From there, you’ll review and sign all the legal SEC documents – that’s right, these investments are overseen by the Security and Exchange Commission – and ask more questions. Again, we want to make sure you feel confident going into the investment.

Lastly, you’ll wire your investment ($50K is our minimum) to the new business entity that we’ll form and become an official limited partner for the new business. You’ll receive monthly updates, quarterly distributions (if any), and get an annual K1 tax form that will report your earnings or losses in proportion to your ownership percentage.