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Family Finances: Fundamentals of Generational Wealth

July 11, 2024

By: Danielle Jackson, Investor Relations, Senior Manager

Family Finances: Generational Wealth

Family Finances Matter 

It takes money to make money! We’ve all heard this saying, and while true, it’s not 100 percent accurate.  

Making money takes time, effort, knowledge, and capital that is converted into income. But the wealthy don’t just expect their wealth to grow; they plan for the next generation to maintain and build it.   

Generational wealth is a method of securing financial wellness to help safeguard the financial wellness of our children, perhaps our grandchildren, and so on. The goal is to grow assets and income over time, putting each generation in a better financial position than the previous one.  

However, 70 percent of affluent families lose their wealth by the next generation and 90 percent lose it the following generation, making investors unable to create a lasting legacy.[1]   

Don’t let that data scare you – there are ways others have created generational wealth that lasts well beyond their children and grandchildren.   

  

Consider Investing and Diversify  

Generational wealth is ideally cultivated in a way that creates generous upside potential but with capital preservation. There are many ways investors may approach that challenge.  

When investing in the financial markets, one of the most common strategies investors use to achieve this goal is building a diversified investment portfolio. Overexposure to any single stock, investment type, or sector can significantly increase risks.  

While the concept of diversification is well known, some investors may fail to apply this principle to the overall mix of assets within their portfolio. Due to 2022’s inflation, geopolitical tensions, supply chain issues, etc., Wall Street saw the largest annual percentage drop for the three main stock indexes since 2008.[2]  

Investors seeking strategies to diversify their portfolios, hedge against inflation and offset risk may want to consider real estate.[3] Real estate can offer a reliable, tangible asset with potential for consistent cash flow and is not directly subject to short-term market volatility. Additionally, historical trends show that real estate values have often outpaced inflation, making real estate an attractive option for those looking to build long-term generational wealth.[4]   

By investing in different types of assets, you aim to mitigate your overall exposure to any one type of risk. The goal is to create a balanced portfolio with both growth and income-producing assets, maximizing returns while reducing risk.   

  

Financial Literacy Sustains Generational Wealth 

Financial literacy is the skills, knowledge, and tools that allow people to make sound financial decisions. It extends beyond just knowing your finances and includes being an active participant in financial planning, while maintaining the ability to manage emotional and psychological factors that could influence your decision-making.  

Many people who inherit wealth may not be educated on the importance of financial knowledge. As a result, they may delay acting in their investment portfolio out of fear of the unknown. 

Why is it important? When it comes to building generational wealth, financial literacy is key. Only 22 percent of U.S. high school students have access to personal finance courses.[5]  

Additionally, a recent annual survey found that only 52 percent of U.S. adults are “financially literate,” and less than 37 percent understood “comprehending risk” (i.e., understanding uncertain financial outcomes).[6]  

We all have unique values, goals, and dreams that motivate us. Accessing and understanding the financial information needed to make those dreams happen can be extremely empowering.  

The good news is that you can start investing in your children’s and grandchildren’s financial education now. Ensure they know the basics of budgeting, savings, retirement, and investing, and give them the tools they need to protect their long-term wealth.   

Having open conversations about money and investing, including both your methodical decisions and not-so-logical decisions, can help your family learn and make better choices in the future. As an investor, it is inevitable that you will experience a loss.  

Rather than dismissing those losses, view them as an opportunity to educate your family to help them avoid making those same mistakes down the road. Teaching your family how to save, spend, and give will help develop financial responsibility.  

Involving your children in the financial planning process is critical to helping them understand the importance of small actions and their potential major impacts on future financial outcomes.  

  

Secure Your Family Finances: Ashcroft Capital’s Multifamily Investments 

Ashcroft Capital is headquartered in New York and has a team of real estate professionals that focus on capital preservation and wealth generation. Due to our focus and expertise, over 4,000 investors have trusted us with their capital.   

Drawing upon the experiences of our over 300 employees, our team knows how to maximize the returns on our properties, create superior living spaces for our tenants, and allow our investors to realize their financial goals.  

Our investment model is tailored for investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. Moreover, we are committed to supporting your investment journey by providing resources for navigating the real estate investment industry and syndication throughout 2024 and beyond.   

If you would like to learn more about investing in multifamily assets, or our current investment opportunities, schedule a call with Investor Relations today. 

danielle@ashcroftcapital.com

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Investing in Commercial Real Estate vs Single-Family

July 5, 2024

By: Travis Watts, Director of Investor Development

Passive Income Lifestyle Explores Investing in Commercial Real Estate Investments vs Single-Family

The Passive Income Lifestyle series is all about you, the passive income investor,  discussing mindset, strategies, philosophies, stories, and more.  

In this episode, Travis explores the fundamental differences between investing in commercial real estate and single-family. Investing in real estate offers numerous opportunities, each with its own set of benefits and challenges.  

Whether you’re a seasoned investor or just starting, understanding these differences is important for choosing the right investment strategy that aligns with your financial goals. 

 

The Basics: Commercial Real Estate vs Single-Family

Let’s define single-family and commercial real estate: 

  • Single-Family Real Estate typically refers to standalone residential homes intended for one family. These can be primary residences or investment properties rented out to tenants. 
  • Commercial Real Estate (CRE) encompasses a broader range of properties including multifamily apartments, offices, retail spaces, warehouses, and more. These properties are primarily used for business purposes and are intended to generate income. 

 

Shared Advantages of Single-Family and Commercial Properties  

Despite their differences, single-family and commercial properties share several common benefits for investors. Both can provide passive income, appreciate, offer tax advantages, and typically involve some level of leverage or debt, which can amplify returns but also introduce risk. 

 

Challenges in Single-Family Real Estate 

While single-family properties provide investors with more control over their investments, they require active management and involvement. From selecting tenants to maintaining the property, these tasks can turn a passive investment into an active job, especially without the help of a property management company.  

 

Advantages of Investing in Commercial Real Estate

Investing in commercial real estate can provide significant economies of scale. For example, renovating multiple units at once can lead to significant cost savings.  

These investments often involve syndications, where investors pool resources to purchase larger properties, reducing individual risk and management responsibility. Moreover, commercial properties usually have professional management teams, which can mean a more passive investment experience for individual investors.  

1. Specialization  

Commercial real estate is a broad category that includes not just residential units like apartments but also industrial, office, and retail spaces, among others. This diversity allows investors to specialize in niches that align with their investment strategy and market conditions. 

2. Financing  

Commercial properties typically involve shorter loan durations (five to seven years) compared to the 15 to 30-year mortgages common in single-family real estate. This difference can affect cash flow and refinancing options. 

3. Value 

The value of commercial properties is largely determined by the income they generate, which can provide a more stable and predictable basis for valuation. In contrast, single-family homes are usually valued based on comparable sales, which can be more volatile and influenced by external market factors. 

 

Making the Choice: Commercial Real Estate vs Single-Family

Choosing between single-family and commercial real estate investment depends largely on an investor’s financial goals, risk tolerance, and level of involvement desired. Each type offers distinct advantages and comes with its own set of challenges. 

The key to successful real estate investing lies in aligning your investment choices with your personal goals and market conditions. Whether you’re drawn to the hands-on approach of single-family homes or the larger-scale, diversified opportunities in commercial real estate, both paths offer valuable experiences and the potential for substantial financial returns. 

For those looking to expand their knowledge, additional episodes of the Passive Income Lifestyle series can be found on the Ashcroft Capital YouTube channel 

travis@ashcroftcapital.com

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Syndication in Multifamily Real Estate: Key Questions for Investors

July 2, 2024

By: Travis Watts, Director of Investor Development

Syndication in Multifamily Real Estate Key Questions

Evaluating Syndication in Multifamily Real Estate 

Before diving into the top questions to ask a syndication partner, it’s essential to address some critical questions about your own investment goals and preferences. Understanding your personal investment objectives is vital not only for selecting a syndication partner whose goals align with yours but also for determining if syndication in multifamily real estate is suitable for you.

1. What Are Your Investment Objectives?

  • Cash Flow 
  • Growth 
  • Tax Benefits 
  • Wealth Preservation 

Clearly defining your investment objectives is the first step. This helps ensure that your goals align with those of the syndication partner and makes it easier to identify the right investment opportunities.

2. What is Your Investment Timeframe?

Consider whether you value liquidity or if you’re comfortable locking up your capital for extended periods. Some syndication operators only plan to hold a property for a couple of years. Others may not project a timeframe to sell; therefore, you may be invested for a decade or longer. Knowing your ideal investment timeframe in advance can help you select the right syndication opportunities.

3. What is Your Risk Tolerance?

Evaluate whether you are risk-averse or open to higher-risk opportunities with potentially higher returns. Your risk tolerance will significantly influence the types of deals you should consider.  

For example, an opportunistic investment may entail a higher risk profile compared to investing in a value-add property with high occupancy that offers immediate cash flow. You can learn more about these investment types on our YouTube Channel 

 

Questions to Ask a Potential Syndication Partner 

Understanding your own objectives is just one part of the equation. It’s equally important to ask the right questions when it comes to vetting a syndication partner. Below are three questions to consider. 

1. What is Your Exit Strategy?

This question provides insight into your syndication partner’s experience, investment objectives, and business plan. At Ashcroft Capital, our focus is on creating value through well-defined exit strategies. Our track record shows a consistent pattern of identifying the right time to exit investments, ensuring optimal returns for our investors.  

Our target hold period is five years for single assets and seven years for our funds. Historically, it takes about three years for us to complete a value-add business plan, so a projected 5–7-year timeframe allows for added flexibility to sell at the most opportune time.  

2. What is Your Investment Strategy?

Ask why the syndication partner is pursuing a core, core-plus, value-add, or opportunistic strategy. Their rationale should reflect their experience, infrastructure, and available resources. A detailed explanation indicates confidence and preparedness. 

At Ashcroft Capital, we specialize in value-add investment strategies. The business plan is to acquire stabilized, cash flowing properties, enhance them through strategic renovations and operational improvements, and ultimately increase their value over time.  

This approach has allowed us to deliver double-digit net returns to our investors while improving the living conditions for our residents in the process. You can view a video example of one of our projects on our YouTube Channel 

3. Does the Partner’s Compensation Structure Align with Your Interests?

Be wary of partners who have no personal investment at stake but expect to get paid regardless of the investment’s performance. Ask if they get paid even if you lose money. Seek out partners who prioritize investor compensation and align their success with yours. 

At Ashcroft Capital, we believe in aligning our interests with our investors. That’s why our General Partners co-invest as LPs in every deal. At a minimum, our GPs invest $100,000 in each deal, but in many cases, the amount is much higher. We also offer our investors a “coupon” on preferred return to ensure LPs are paid before the GPs.  

Additionally, our asset management fees are not collected until our investors have been paid their full coupon. Our compensation structure is designed to reward performance, ensuring that we succeed only when our investors do. 

 

Is Syndication in Multifamily Real Estate Right for You? 

Though every investment entails a level of risk, much of this can be mitigated by investing with the right partners or managers. For syndication in multifamily real estate, the experience, defined exit strategy, clear investment approach, and precise business plan of your partner are crucial for success. 

Our mission is to create exceptional investment opportunities through strategic acquisitions, diligent in-house property management, and a commitment to transparency and integrity. By asking the right questions—both of yourself and your potential partners—you can significantly enhance your ability to vet your next syndication investment effectively. 

Discover the power of hands-off real estate investing. To learn more, we invite you to book a call with an Investor Relations representative. This complimentary, no-pressure call will equip you with the knowledge and information needed to make an informed decision.  

travis@ashcroftcapital.com

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Major Players Bet Billions: Reinforcing Multifamily Real Estate

June 28, 2024

By: Travis Watts, Director of Investor Development

There is a significant trend unfolding this year, particularly in the residential real estate sector. Investors are channeling billions into this market, sparking discussions, and raising significant questions about the future of real estate.[1] 

This surge in interest is not random but a calculated move by some of the biggest names in the industry, signaling potentially lucrative opportunities for those ready to dive in. 

 

A Massive Signal for Multifamily Real Estate? 

One overarching question captivating the real estate community is whether the recent increase in investment volume is a cue for jumping back into the commercial multifamily space.  This speculation gained momentum following a landmark announcement in April 2024 by Blackstone, the World’s largest owner of commercial real estate.   

The firm announced it will acquire Apartment Income REIT, ticker symbol AIRC, for nearly $10 billion. Furthermore, Blackstone plans to invest more than $400 million to improve the existing communities in the portfolio and may invest additional capital to fund further growth, underscoring a strong belief in the future of multifamily residential real estate.[2]

 

Blackstone’s Strategic Real Estate Moves 

In May 2024, Blackstone made another significant move to expand its residential footprint by 38,000 homes as it privatized Tricon Residential, ticker symbol TCN in a deal valued at $3.5 billion. Blackstone’s position near the top of the real estate food chain is evident through its aggressive acquisition strategy in both the multifamily and residential single-family sectors.[3] 

These moves place Blackstone at the forefront of a robust acquisition strategy, straddling both multifamily and single-family sectors. However, this aggressive approach is only one example of the broader trend of capital flowing into residential real estate this year. 

 

Other Major Players in the Real Estate Game 

This is not an isolated trend; a wide array of institutional players are also making substantial moves in residential real estate. For a broader perspective, let’s look back at the fourth quarter of 2023. According to Redfin, investors purchased 26% of the country’s most affordable homes in Q4 2023 – the highest share on record.  

High-profile investors like Jeff Bezos, founder of Amazon, have also entered the fray. Bezos recently backed a real estate startup that’s buying single-family homes across the nation and allowing retail investors to partner alongside.[4] Additionally, financial titan JP Morgan has formed a joint venture to invest $1 billion into rental homes nationwide.[5]  

These recent acquisitions have many questioning whether this signals a market bottom and if we can expect upward momentum from here. This large influx of institutional capital into residential real estate is certainly a vote of confidence. 

 

A Prime Time for Multifamily Real Estate 

It is evident that some of the biggest names in the industry are jumping into residential real estate nationwide, both in the multifamily and single-family sectors. The billions of dollars invested are helping stabilize the market, and are opening doors for retail investors who are ready to jump in.  

As these market dynamics continue to evolve, the recent actions of institutional investors serve as a leading indicator for the sector’s direction. Staying informed and agile will be key to capitalizing on emerging opportunities.  

For accredited investors in a position to deploy capital, this could be an opportune moment to consider multifamily real estate. If you are interested in learning more about our current investment opportunities, please schedule a call with us or visit www.ashcroftcapital.com 

travis@ashcroftcapital.com

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Stop Chasing High Yield Investments: This Is a Better Strategy

June 24, 2024

By: Travis Watts, Director of Investor Development

The Surprising Truth About High Yield Investments 

Isn’t investing all about yield? Don’t you want the highest return on your money? 

You might be surprised to learn that chasing high yield investments is not always the best strategy for long-term success. It took me many years to learn this, but now I want to share why a different approach can be more beneficial for long-term success. 

 

A Unique Investment Approach 

In my early years of investing, achieving 30%+ annualized returns on my investments was not uncommon. But today, I earn more money (in terms of dollars) despite having lower returns. This shift in strategy came after a mentor explained his unique approach to me. 

My mentor, who sold a company and became a full-time investor in the 1990’s, allocates 40% of his portfolio today to assets producing 3-4% annual returns. Initially, his strategy to sideline high yield investments seemed like a poor choice to me. However, his rationale was based on his substantial net worth and risk tolerance. 

 

Understanding the Math 

At the time of our discussion, my mentor’s net worth was around $80 million. By investing 40% in low-risk, tax-free municipal bonds yielding 3-4%, he secures nearly $1,000,000 a year in passive income. He discovered how much is “enough” and doesn’t need to take high risks with this portion of his portfolio. Even if the remaining 60% of his portfolio went into failed deals, he could still live comfortably. This perspective on risk management was enlightening and led me to reassess my own investment strategy. 

 

Moving Away from High Yield Investments 

In my earlier years, I enjoyed the results that were achievable from high yield investments due to a rising market and an active real estate strategy. However, these strategies exposed me to significant risk in the event of downturns. As I matured, I began reducing risk, targeting lower yields of 6-10% annualized. While these yields are significantly lower than the early years of investing, my income has increased due to having a larger investment base. 

Consider these scenarios: 

  • With $100,000 invested at 30%, you earn $30,000 annually. 
  • With $1,000,000 invested at 10%, you earn $100,000 annually. 

The latter scenario illustrates how lower yields on a larger investment can generate more substantial income while taking on less risk. 

 

Evaluating Your Risk Profile for Smarter Investment Decisions 

  1. Risk Profile: Understand how much risk you are willing to take. 
  2. Down Market Performance: Evaluate how your investments might perform during downturns. 
  3. Defining “Enough”: Determine how much income is sufficient for your lifestyle needs. 

For me, prioritizing consistent and stable income with a low-risk profile is more beneficial and sustainable over the long-term. This approach reduces the anxiety of market shifts, knowing these are inevitable. I encourage you to consider this philosophy and evaluate your current investing approach.  

If you would like to learn more about investing in multifamily assets, or our current investment opportunitiesschedule a call with Investor Relations today.

Find additional Passive Income Lifestyle episodes on the Ashcroft Capital YouTube channel. 

As always, reach out with any questions. I’m happy to be a resource.  

travis@ashcroftcapital.com

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Unveiling Braxton Waterleigh: A Luxury Class A Property in Orlando

June 13, 2024

By: Travis Watts, Director of Investor Development

Braxton Waterleigh: Where Luxury Living Meets Opportunity 

Ashcroft Capital presents a unique investment opportunity that combines luxury living with strategic market positioning. Located in one of the top three fastest growing master-planned communities in the country, Braxton Waterleigh is a premier 354-unit luxury asset located in Winter Garden, Florida, a submarket of Orlando.

Built in 2021 by Fortune 500 homebuilder D.R. Horton, this property offers a unique blend of elegance, community appeal, and investment potential. Braxton Waterleigh stands as a prime example of a Class A property, featuring high-end amenities, open floor plans, and spacious 9ft ceilings.

The property’s vicinity boasts a 72% white-collar workforce, with average incomes around $90,000 within a one-mile radius, and $115,000 among property residents. This affluent demographic, along with access to A-rated schools and a rapidly expanding job sector, makes Braxton Waterleigh highly attractive to investors. 

 

Market Analysis: Orlando’s Diverse Economy Fuels Apartment Demand  

Orlando is known globally for its tourism industry. It is home to Walt Disney World and Universal Orlando, which support over 100,000 jobs and attract more than 75 million tourists every year. Beyond tourism, Orlando’s robust economy includes thriving sectors such as healthcare, aviation and defense, aerospace, financial services, and advanced manufacturing. These diverse industries drive strong job growth and high salaries, fueling apartment demand.  

 

Submarket Analysis:  Horizon West’s Master-Planned Oasis 

Braxton Waterleigh is nestled in Horizon West, a master-planned community that has seen population growth of 130% since 2010. Horizon West is not just another suburban development; it is a dynamic community spanning over 22,000 acres (about the area of Manhattan) designed for family, entertainment, luxury, employment, and convenience.  

The community is designed to support the growing population, as residents enjoy easy access to major roads, a variety of retail and entertainment options, and access to newly constructed A-rated schools located in the #2 ranked school district in Orange County. The area is also home to significant developments like the Hamlin Town Center and Flamingo Crossings Town Center, which enhance the community’s convenience and appeal.  

 

Mark-to-Market Opportunity 

Over the past few years, three new apartment communities have been delivered in the immediate area surrounding Braxton Waterleigh. During the lease-up phase of these communities, rents remained flat as concessions were offered to new residents in order to help stabilize the properties. These properties are now achieving high occupancy levels, and rents are beginning to increase in the market accordingly. 

Given the current owners’ need to sell due to their maturing debt, coupled with below-market rents, Ashcroft is acquiring Braxton Waterleigh at a nearly 23% discount. Furthermore, completions in Orlando are expected to fall by 57% in 2026 which is projected to increase the demand for Class-A apartments, including Braxton Waterleigh. 

 

Braxton Waterleigh Property Features and Amenities 

Braxton Waterleigh offers a variety of best-in-class amenities that boost its appeal to potential residents. These include a heated saltwater pool, first-class fitness center, car wash station, BBQ grilling areas, a dog park, parcel lockers, sand volleyball court, business center, premium lounge areas, and units that offer oversized floor plans. This combination of high-end amenities and well-designed living spaces positions Braxton Waterleigh as a premier residential option in the area. 

 

Strategic Acquisition and Market Positioning 

The acquisition of Braxton Waterleigh is strategically timed to take advantage of current market conditions. The property is being purchased at a ~10% discount to replacement cost and at a cap rate of 5.5%, which is more competitive compared to recent transactions and comps in the area. Current market dynamics and a pre-existing relationship with the seller have created an off-market opportunity for Ashcroft Capital to acquire this asset with favorable terms. 

 

The Business Plan at Braxton Waterleigh 

Though the property currently offers luxury finishes and a best-in-class amenity package, we will continue to further enhance the common areas and amenities to elevate the overall appeal of the property. Along with rebranding to Ashcroft Capital’s “Halston” brand, the business plan for Braxton Waterleigh includes several strategic initiatives to enhance the property: 

  • Enhanced Unit Interiors: Implementing tech packages that provide smart locks, smart thermostats, smart lights, and leak detection systems, and replacing carpet in living areas on the 2nd and 3rd floors with upgraded faux wood flooring. 
  • Exterior and Common Area Improvements: Elevating amenities and the common areas, addressing minor deferred maintenance, and improving curb appeal and signage. 
  • Operational Improvements: Tightening operations and improving resident retention. Adjusting rents to market level and reducing concessions and bad debt on the property. 

These projects will be overseen by Birchstone Residential and Birchstone Construction, Ashcroft Capital’s in-house property management and construction team, to ensure a seamless and effective implementation. 

 

Financial Structuring for Investors 

To mitigate risk, Ashcroft Capital will secure a 5-year fixed-rate agency loan with an LTV of approximately 65-70%. This loan is anticipated to include 5 years of interest-only payments at an all-in interest rate of approximately 5.55%. This strategic debt structuring aligns with the property’s anticipated hold period and reduces the risk of interest rate fluctuations throughout the hold period. 

 

Looking Ahead: The Exit Strategy  

Ashcroft Capital plans to seek a disposition of Braxton Waterleigh in approximately five years.  The goal is to capitalize on the property’s enhanced value resulting from the successful implementation of the business plan, market appreciation, and stabilized rental income.  

 

Join the Journey: Braxton Waterleigh Offers Strategic Advantage  

As Orlando continues to grow and diversify, Braxton Waterleigh is poised to capitalize on current and upcoming trends, as a strategic acquisition by Ashcroft Capital. 

The property offers investors a strong resident appeal, mark-to-market upside potential, and strategic positioning within one of the nation’s fastest-growing communities in the United States. Investing in Braxton Waterleigh is not just about owning a piece of luxury real estate; it is about joining a dynamic community of investors alongside a best-in-class operator to enhance the lives of residents and support the ever-growing demand for rental housing in Central Florida.   

To learn more, please visit www.investbraxton.com or schedule a call with our Investor Relations Team today.   

 

travis@ashcroftcapital.com

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WSU Basketball Coach Embodies the Ashcroft Team Spirit

June 12, 2024

Investor Feature - Jim Shaw

“I feel like I’m on a team, but I’m a silent partner––and that is important to me.” 

 

As the associate head coach for men’s basketball at Washington State University, Jim Shaw knows what it means to invest in the future. For more than thirty years, he has guided and mentored young men on and off the court. His demanding job, constant travel, and reflection on his ideal retirement have all inspired Jim to invest in his own future.  

 

Putting Landlord Duties on the Bench  

“My dad was a landowner and so I’ve been around investment,” says Jim of his early exposure to earning multiple streams of income. “As I progressed in my career, I looked for ways to set up passive income. I started out with rental homes, which worked really well because we bought them at a time when the housing market had almost collapsed in 2008. But with my full-time career, I discovered that it’s hard to be a long-distance landlord.” 

Luckily, Jim’s son-in-law introduced him to the concept of real estate syndication, opening a new potential for passive income that is truly hands-off. “I’ve slowly weaned my way out of the landlord game and into this one,” he explains.

After bonding with Joe Fairless over their ties to The Big 12, and conducting some independent research, Jim decided to give Ashcroft a shot. He’s now been with Ashcroft for over five years.   

Jim Shaw Washington State University

 

Jim’s Investment Playbook  

In addition to looking for five percent or greater returns, Jim employs a ‘worst-case-scenario’ rule of thumb for investing. “I want to make sure that I can afford the worst-case scenario. In this case, people are always going to need a place to live. Interest rates going up affects everybody and everything; but at the same time, the rental market should stay strong because less people can buy homes. Evaluating the worst case is great because everybody feels good when the best-case scenario happens instead.” 

Jim is hoping to stack up some of those best-case scenarios to pad his future retirement. “What I’d like in the long-term is plenty of discretionary income so that when I retire, I’m not just relying on social security; I should have two or three other income streams.” And he’s worked out a clever strategy to maximize the benefits of his role until he gets there. “Once you hit age 50 and you’re a state employee, there are a lot of ways you can pre-tax your dollars,” says Jim.

“I max everything––then I use the cushion from Ashcroft to make sure I have enough monthly income.”  

Jim Shaw President

 

Finding Balance Amidst COVID and the Current Market 

A stellar coach and strategist, Jim is quickly adapts to change and thinking one step ahead. “I made the decision to sell my rental properties based on the circumstances surrounding the pandemic. I like balance in most areas, and it became really unbalanced to be a landlord because you just didn’t have a lot of levers to continue your income stream during the crisis. And I don’t have time right now to really focus on my investments, so that made the decision to sell simpler.”  

“With Ashcroft, I like the fact that I don’t have to put a tremendous amount of time into it. I still have a very demanding career. I like being the silent partner and letting the experts be the experts.”  

In a tumultuous post-COVID world, Jim trusts Ashcroft to navigate the changing tides and still deliver. “There are challenges in the investment world right now with interest rates, but the reality (in my opinion) is interest rates probably won’t come back down. I think they’re getting close to leveling out. We got unbalanced for a while: zero is unbalanced as it essentially gives money away. I think ultimately, they’ve come back to a balance point. From a strategy standpoint, I’ll let the experts figure out what the new normal is going to be and how we can still achieve our goals financially.”   

Jim Shaw Washington

 

Taking Lessons from the Court into Investing  

Having the Ashcroft team on hand to offer regular communication, a solid action plan, and a high level of return gives Jim the space to focus on the court. In fact, his role as a coach reminds Jim of what he likes most about Ashcroft. “In coaching you try to eliminate mistakes and maximize what you control. You’re dealing with 18 to 22-year olds. If you can get them to have a consistent attitude and a consistent work ethic, then you can form a unified personality and common goals,” Jim explains.

“With Ashcroft, I feel like I’m on a team, but I’m a silent partner––and that is important to me. Let the experts be the experts and try to have a good attitude.”  

Jim Shaw Coach

Jim is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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The Federal Reserve’s Moves and Commercial Real Estate

By: Travis Watts, Director of Investor Development

What the Federal Reserve’s Moves Mean for Commercial Real Estate 

The Federal Reserve (“the Fed”) plays a critical role in shaping the economic landscape of the United States, primarily through its control over interest rates. These rates can influence borrowing costs, consumer spending, and investment decisions across various sectors, including commercial real estate. Understanding how the Federal Reserve’s interest rates impact commercial real estate is crucial for investors and owners. In this article, we’ll examine what the Federal Reserve’s moves mean for commercial real estate.  

The Expectation  

Looking back to late 2021 (before the recent rate hike cycle), commercial real estate investors and owners were seeking insight into what interest rates might do in the coming years. This data is critical to consider as it leads to decisions such as what type of debt to place on a property and where valuations might be headed soon.  

The chart below, published in December of 2021, shows the expectation that the federal funds rate was likely going to increase in the coming years at a slow and steady pace to an approximate range of 2.5% – 3% by 2025. The federal funds rate is the interest rate that banks charge each other to borrow or lend excess reserves overnight. The federal funds rate directly influences the cost of borrowing.  

When the Fed raises the federal funds rate, it becomes more expensive for banks to borrow money. This increase is typically passed on to consumers and businesses in the form of higher interest rates on loans and mortgages. For commercial real estate, higher interest rates mean increased costs for financing property purchases and development projects. [1] 

Federal Reserve New Dot Plot

The Reality 

Fast forward to 2023, and we had experienced the most aggressive tightening cycle in decades. The federal funds rate was raised to 5.25% -5.5%, nearly double the projected rate from late 2021. This was to reduce inflation that began to rapidly rise in 2022; however, as a side effect, this aggressive tightening cycle placed commercial real estate into a downturn. Let’s examine the impact in more detail.[2]  

Federal Reserve's Interest Rate Tightening Cycle

 

Borrowing Costs 

Developers and investors often rely on loans to fund commercial real estate projects. Compared to retail mortgages with a 30-15-year maturity term, the maturity length of commercial loans is often much shorter. Generally, commercial bridge loans are intended to provide 6-12 months’ worth of financing before a complete repayment of the loan is due.

These types of loans are common in commercial real estate as well as other commercial mortgages which often fall within a 5-10 year-term until maturity. This is important because when these loans mature, the debt needs to “reset” to the current interest rate environment, or the property needs to be sold to another buyer.  

The problem commercial real estate has faced over the past two years is that higher rates reduce the distributable cash flow or income from properties with adjustable loans, as these rates move in tandem with the current rate environment. If a fixed-rate loan is nearing maturity, it will likely need refinancing, which is now challenging as mortgage rates have nearly doubled since 2021. Additionally, commercial real estate valuations have declined due to higher rates, leading to decreased investment activity, more distressed properties, and a slowdown in new developments. 

 

Influence on Property Values and Cap Rates 

Commercial real estate values are influenced by a combination of income generated from the property and the capitalization (cap) rate, which is used to estimate the investor’s potential return on investment.  

Cap Rate Formula

The cap rate is influenced by interest rates. As interest rates rise, cap rates tend to increase to compensate for the higher cost of borrowing. Higher cap rates typically lead to lower property values because the same level of income from a property results in a lower valuation. 

For example, if a property generates $1 million in annual income and the cap rate is 5%, the property is valued at $20 million. However, if the cap rate increases to 6% due to rising interest rates, the property value drops to approximately $16.7 million. This inverse relationship between cap rates and property values has significantly impacted the commercial real estate market as shown below in the chart published by CBRE. The last time we experienced a significant uptick in cap rates was during The Great Recession.  

National Multifamily Cap Rate Forecast

 

Commercial Real Estate Supply and Demand 

Simply put, higher interest rates soften demand for commercial real estate. Businesses facing higher borrowing costs may delay or scale back expansion plans, reducing the demand for office spaces, retail locations, and industrial facilities. On the supply side, developers become more cautious, delaying new construction projects until borrowing costs become more favorable. This has resulted in multifamily building permits plummeting over the past couple of years as you can see in the chart below.  

Multifamily Units Permitted March 2024

 

The Silver Lining 

A rare opportunity is taking fold in commercial real estate this year. As the Fed has held rates steady for nearly a year and inflation has meaningfully declined since its peak in 2022, the expectation now is for rates to come down in the coming years.[3]  

Federal Reserve's Rate Expectation

PCE Inflation

When interest rates are lowered, the commercial real estate sector typically experiences several positive effects: 

#1 Increased Demand: 

  • With cheaper access to capital, real estate becomes more attractive to investors. This can lead to more buyers seeking commercial properties, which helps drive up prices.  

#2 Enhanced Returns: 

  • Investors benefit from lower mortgage rates, which can improve the profitability of their investments. Lower interest payments may lead to increases in the net income on properties, which can boost distributable cash flow to investors.  
  • Additionally, existing property owners often look to refinance their loans when rates are lowered, reducing their debt servicing costs and freeing up capital for renovations or expansions. Others may choose to do a cash out refinance and return capital to investors. 

#3 Rising Property Values 

  • As discussed previously, if cap rates decrease (which they are forecasted to do in the coming years) then property values typically increase. Similar to the previous example, if a property generates $1 million in annual income and the cap rate drops from 6% to 5%, the property value increases from approximately $16.7 million to $20 million. 

In the short term (if demand rebounds) there will be an increased lack of new supply in the coming years as builders have largely pulled back from starting new construction projects due to lack of supply and higher rates. For perspective, it typically takes 2-3 years to build a commercial property such as a large apartment building. According to the NMHC (National Multifamily Housing Council) the U.S. is already in short supply and needs to build 4.3 million more apartments by 2035 to meet demand for rental housing, meanwhile new permits are down nearly 40% from their peak in many U.S. markets. High demand coupled with a lack of supply often results in rising property values.[4]     

Annual Absorption and New Supply

As shown in the chart above published by CoStar, new supply is forecasted to taper off in the coming years as absorption (the number of units occupied within a market) outpaces the number of units available. This is great news for buyers in today’s market, assuming this forecast works out.  

 

Navigating the Federal Reserve’s Actions 

Higher interest rates have challenged the commercial real estate market, affecting short-term property values. However, suppressed valuations present an opportunity to “buy the dip” as demand remains strong. Savvy investors and developers can capitalize on this through careful planning and strategic investments. 

At Ashcroft Capital, we continue to focus on acquiring institutional-quality properties in strong growth markets. Since late 2022, we purchased properties at roughly a 25% discount compared to the peak pricing in 2021 and early 2022. This  rare opportunity allows us to leverage our fully integrated approach, covering  every facet of the investment lifecycle — from funding and construction to providing an exceptional resident experience. 

Together, our management company, Birchstone Residential, leverages their expertise and understanding of industry knowledge and best practices to create long-term results for our investors. Existing investors, we are grateful for your continued partnership, and new investors, welcome and please visit www.ashcroftcapital.com for current offerings and opportunities or give us a call at 646-308-1511. 

 

travis@ashcroftcapital.com

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Relocation Trends in 2024: Where Are Americans Moving?

June 4, 2024

By: Travis Watts, Director of Investor Development

2024 Relocation Trends

How Economic Shifts and Lifestyle Choices are Impacting Relocation Trends  

Events over the past few years, many of them a result of the pandemic, have created both new challenges and opportunities regarding where Americans are moving.   

The pandemic introduced new-found geographical freedom for many Americans, as work-from-home options gained popularity. As of March 2023, a Pew Research Center survey found that 35% of US workers who can remotely work from home all the time. Before the pandemic, only 7% of workers worked from home. This prompted a shift in priorities when choosing where to live. However, it’s interesting to note that most current moves are not primarily job-related, suggesting other factors like cost of living and quality of life may be additional drivers.[1]

Relocation Trends

 

High-cost cities continue to push renters and homeowners further out from the city center. Notable markets include Los Angeles, San Francisco, and New York City. These cities are among the most expensive in the U.S. and many residents are relocating to markets with lower overall costs, better access to outdoor spaces, and less congested living conditions. 

As the cost of living in the U.S. continues to rise, albeit at a slower pace compared to previous years, more residents are choosing to move to states where their dollar stretches further. [2]

US Consumer Price Index

 

With the consumer price index rising and the Federal Reserve maintaining high interest rates for nearly a year, the housing market continues to experience affordability challenges. The surge in living expenses (most notably in 2022) and ongoing high interest rates have complicated the home-buying process and continues to place demand on the rental market as more individuals find it difficult to afford mortgages.[3]

Renting for Longer

 

Southern states remain top relocation destinations, driven by their tax-friendly policies and growing job markets. Tax-friendly Sunbelt states, such as Florida and Texas, continue to drive the highest demand nationally.  

Share of Renters by Region

 

Southern Charm: U-Haul Reveals 2023 Relocation Trends  

The allure of the South continues to dominate relocation preferences. In fact, nine of the top ten metros with the highest net migration, between July 1, 2020, and July 1, 2023, were southern.[4]  The movement towards the South, particularly the Southeast, is influenced by factors such as lower income taxes, pleasant weather, and more affordable cost of living.  

According to U-Haul’s Growth Index, certain states emerged as hotspots for movers in 2023. This data outlays migration patterns in the US of leaving high-cost-of-living areas for new locales—with many focusing on Sunbelt submarkets.  

  1. Texas   
  2. Florida   
  3. North Carolina   
  4. South Carolina   
  5. Tennessee   
  6. Idaho   
  7. Washington   
  8. Arizona   
  9. Colorado   
  10. Virginia   

Texas led as the top destination for the sixth time in eight years, driven by its favorable tax policies and bustling job market. As many as 53 Fortune 500 companies have corporate headquarters in the state, with Houston and Dallas ranking in the top five municipalities in the country.   

For a second year in a row, Florida took the number two spot. For added perspective, this state has ranked in the top four of U-Haul’s Growth Index for the last nine years. A recognized absence of state income tax and overall lower living costs add to its warm weather allure, especially among high-income earners. According to a 2023 SmartAsset report, Florida gained the largest number of high-income workers defined as earning $200,000 per year or higher.   

These are not the only southern states that have become beacons for individuals and families looking for better economic prospects. Other states, like North and South Carolina, have also seen substantial inbound migration, attributed to diverse economic bases and high living standards. [5]  

  

Ashcroft Capital Targets Suburban Sunbelt Opportunities  

Ashcroft Capital continues to strategically invest in suburban markets throughout the Sunbelt region, targeting areas with strong signs of population and economic growth, diversified job markets, landlord-friendly laws, and tax-friendly locations.  

Ashcroft Capital Markets

Acquisitions and research teams are led by Ashcroft Capital’s CEO, Frank Roessler, and Chief Investment Officer, Scott Lebenhart. In any given year, 200+ acquisition opportunities are analyzed, and at a minimum of twice per year, Ashcroft Capital runs a proprietary research-based economic study used to identify the top U.S. markets best positioned for multifamily investment. This process is known as the Ashcroft Advantage Analyzer, or “AAA Process” for short.  

A combination of data is analyzed from third-party services, like CoStar, RealPage, Green Street, and U.S. Census. The information is collected from more than 200 markets across the United States, then it is applied as a weighting system to help the firm identify which multifamily markets have the strongest fundamentals to target. This multifaceted approach allows multifamily investment firms like Ashcroft Capital to strategically position their portfolios to capitalize on emerging real estate dynamics.     

Learn more about the process

 

Capitalizing on Change: Leveraging Relocation Trends  

As 2024 progresses, political policy, lifestyle, jobs, and work flexibility will continue to dictate relocation trends. Understanding these trends and shifting dynamics can help you make informed decisions about your next investment. If you would like to learn more about investing in multifamily assets, or investment opportunities, schedule a call with Investor Relations today. 

 

travis@ashcroftcapital.com

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From Global Business to Family Time: Leveraging Passive Income

May 13, 2024

Investor Feature - Passive Income - Ethan Nowak

“The key for my wife and me right now is making sure that the kids are always in focus. We always remind ourselves what our real priorities are in life.” 

 

A Volkswagen Executive’s Passive Income Journey 

Ethan Nowak and wife Steffani are raising three girls (all under five years old), while managing demanding, often jet-setting, careers. As a Quality Validation Testing leader at Volkswagen, Ethan frequently travels abroad; Steffani holds down the fort in Michigan, working as a purchaser. “I work with all the pre-series cars, testing those,” explains Ethan.  “It’s been a good ride over the past 13 years; I’ve had the opportunity to go to Germany, live abroad for a couple of years, and come back.”  

Ethan attributes part of his success to his bilingual skills, courtesy of his grandparents. “They immigrated from Austria, so I grew up speaking German at home, and I’ve used it as my career has gone along, through school, and then into the automotive industry. That’s been my superpower with Volkswagen, as I’m not an engineer, but I went to business school. It’s been a nice balance on the management side with Volkswagen, communicating back to the mothership while also steering operations here.”  

Juggling multiple time zones, and diaper duty, Ethan has happily created a passive income stream with real estate. “I’m excited to be a part of the Ashcroft journey and see how the fund does,” he says.  

“It’s been nice in terms of the passive income and cash flow, as well as participating in the upside as an LP. I think there are a lot of benefits that come with real estate investing, and syndication specifically, for people who just want to be limited partners to grow their wealth––especially for people like me whose priority is family time.”  

“Juggling all the challenges between work and personal life and the investing side of things, finding good operators was really important for us––people we can trust, so we can sleep well at night knowing that they’re doing the right things, executing the business plan, being custodians of the money that we’re investing and growing that.” 

Ethan Nowak Headshot

Drawing on a Lifetime of Experience for Real Estate Success 

Though actively managing property isn’t fit for Ethan’s family lifestyle, he intimately knows what it takes to do the job well, and that helps him spot educated partners. “My parents had always owned apartment complexes, so real estate is in my DNA, and I’ve always thought there’s something to this real estate investing. On Saturdays, my brother and I would be working at these apartment complexes, doing odd jobs, whether it was weeding or landscaping or helping my dad renovate a unit. It was a very hands-on, mom-and-pop-style ownership structure,” Ethan reminisces.  

It wasn’t too long before Ethan started his own portfolio. “Over the years, I did a lot of research. I used to listen to The Best Ever real estate podcast early in our real estate journey, and I read about the things that were going on with Ashcroft. At the time we weren’t accredited investors, so they’ve always been on my bucket list of teams to partner with as an LP,” Ethan says. 

“We ended up buying a four-unit property in Michigan and set it up with a management team. Then we exited the property after two years, getting good tenants in and renovating the units. We did really well on that,” recalls Ethan, “and as the family started to grow, free time became more of a necessity.”  

That’s when Ethan circled back to syndication as a key investment strategy. “As we started to grow our net worth, accreditation became an option in the last couple of years. We exited a deal as Ashcroft had their fund opening. So, that’s kind of where the switch flipped.” Ethan goes on to summarize his current holdings:  

“Syndication seemed like a good fit for us. We started in 2019 with two investments, and that has snowballed over the years. Now we’re in six or seven real estate syndications with different groups.” 


Ethan Novak Family

Building Financial Freedom by Investing in Tomorrow 

With an eye toward early retirement and funding education for three kids, the young couple plans to continue kicking their investments into higher gear for the foreseeable future. “When it comes to real estate, we’re just saving and reinvesting,” says Ethan.  

“All of our cash flow from our W2 jobs covers our day-to-day expenses. Everything on the investment side will grow bigger and bigger so that we can ultimately retire earlier and use some of that cash flow to enjoy our lives. Time freedom is a big topic right now, and having time freedom is one of the biggest things that you learn is pretty important.”  

Pondering the notion of extra time and funds, Ethan muses, “we definitely would like to open up the door to more travel and potentially purchasing a home in another state.” In the meantime, there’s no shortage of places to put extra cash a little closer to home. “We have a ton of home renovation planned right now, and my wife is really interested in a Suburban for the kids,” says the consummate family man.  

Ethan Novak Formal

Staying Confident Amid Market Fluctuations 

According to Ethan, his strategy is on track to help him meet his financial goals on his desired timeline. And despite the recent market turn, Ethan is confident that with the right partners and investments, there’s no cause for alarm.  

“Juggling all the challenges between work and personal life and the investing side of things, finding good operators was really important for us––people we can trust, so we can sleep well at night knowing that they’re doing the right things, executing the business plan, being custodians of the money that we’re investing and growing that.” 

“I think in the last two years, a lot of operators––especially ones that started coming into the business more recently––have had a really tough time putting the variable rate debt on their properties, and a lot of operators have struggled with the rising interest rates. I think buying properties in the last year and maybe until the end of the year, until the rates really do start going down, is a great time to get into properties,” remarks Ethan.  

“If you have a good business plan with some good debt in place and you can manage the expense side, as interest rates drop, I think that cap rates will start to go up and those properties will do well for the next three years. That’s my personal outlook on things.”  

However, Ethan reiterates that there are real challenges to consider, and a healthy amount of risk tolerance is needed when entering a deal. “It does bring a certain level of heartburn with some of the operators that we invested with. I’m not going to sugarcoat it…on the personal side of things at home, we’re fairly risk averse; but with investing, we’re open to a higher level of risk because we are still young as a family, and we have a longer time horizon to work with.”  

Ethan Novak Holidays 

Advocating for Real Estate Passive Income Opportunities 

Overall, Ethan’s experience with real estate syndication has made him an investment evangelist, and he is passionate about spreading the word and the wealth. “I’m a huge, huge fan of real estate syndications and I try to sell it to a lot of people,” says Ethan with a laugh.  

“I’ve been able to bring the opportunity to a large number of family members, friends, and work colleagues, many of whom have decided to invest. It’s been fun to see them grow through this journey. That’s something that I find personally gratifying––to help others find the same success with syndication as I have.”  

Ethan is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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Off-Market Deals: Less Competition, More Potential

May 10, 2024

By: Danielle Jackson, Investor Relations, Senior Manager

Off-Market Deals

Navigating Off-Market Deals in Multifamily Real Estate 

When an investor wants to add real estate to their portfolio, there is a wide range of investment opportunities they can select from. Among the hardest to access is an off-market deal, which involves a commercial or multifamily property being bought and sold without the property ever being listed on the market.  

It can take years to develop the strength of relationships with brokers to secure visibility to off-market opportunities. This is a key benefit to investors when working to find the right operator to invest with.[1] 

  

What Are Off-Market Deals?  

Off-market deals occur when a buyer and seller negotiate the sale of a property without it being placed on the market. Because the seller doesn’t create a listing agreement, it can be challenging for potential buyers to source off-market properties without having strong broker relationships. In most cases, off-market deals occur for two possible reasons.  

The first involves a company or organization searching for commercial property and working with a real estate broker who has the connections needed to identify off-market opportunities. The second is situations where the property owner might want to sell without listing it on the open market.  

With the help of a real estate broker, negotiations can take place between the seller and buyer to facilitate a mutual agreement on key terms before drafting an official contract or purchase agreement.  

Keep in mind that off-market commercial properties aren’t listed anywhere. Many buyers mistake off-market commercial properties to simply mean they aren’t listed online. The truth is many off-market conversations begin before the properties are even available for sale.   

Off-market deals have been completed for decades. However, they have become increasingly popular over the past few years because of increased market competition.   

Most in the investment community are aware of off-market deals but don’t have the relationships to source these opportunities. 

  

Strategic Advantages of Off-Market Deals 

There are many benefits associated with off-market deals, the primary of which is that these deals can be performed in a streamlined manner. Off-market deals don’t require as much lead time for the seller because there is no listing agreement. Buyers who have sourced off-market deals are generally extremely motivated to finalize and close the deal, and depending on the situation, sellers may be more willing to negotiate the terms of the deal.    

Many if not most sellers have some real estate investment experience and aren’t interested in considering every offer made on the asset they are trying to sell. Off-market deals are heavily marketed to a core group of potential buyers, but there will be less competition among a smaller buyer pool, making a bidding war less likely. As a result, the buyer may acquire the asset at a more favorable price.  

Each deal and seller have their own unique set of circumstances. Market environments may force an early exit for the seller, investment strategies may change, or personal affairs may require a sale. Whatever the reason for the sale of a multifamily asset, it generally creates a more ideal investment opportunity than a listed property.   

The right approach when sourcing off-market deals may provide buyers with more time to perform the necessary due diligence. In cases where the property is listed on the market, many unqualified buyers can access the deal and make offers, which expedites proceedings. When a piece of commercial real estate is kept off-market, the buyer has more time to complete the due diligence and investment underwriting process before sending an offer to the seller.[2]  

Many commercial property owners want to keep the sale of their property out of the public eye. Whether they want to make sure that current tenants aren’t too frustrated before the sale goes through or would like to keep employees from becoming concerned about the state of the business, commercial property owners may be more inclined to keep a property off-market compared to residential homeowners. Engaging in an off-market deal may preclude unnecessary roadblocks or issues that can delay or even terminate the deal. 

  

Comparing Closing Costs 

Depending on the location, closing costs on real estate deals typically range from 5 to 6% of the total sale price for the property. In most cases, the buyer is responsible for paying the majority of these fees. With an off-market commercial deal, the seller is usually able to complete the transaction without assistance from a listing agent, which may potentially reduce closing costs.  

Standard buyer closing costs include the following: 

  • A mortgage application fee 
  • Attorney fees 
  • Credit report fee 
  • Loan origination fee 
  • Home inspection and appraisal fees 
  • Title transfer taxes 
  • Insurance payments 

Sellers who are involved in an off-market real estate deal may be tasked with paying for the following:  

  • Any concessions that the buyer requests 
  • Attorney fees in some situations 
  • Home appraisal fees 
  • Title transfer taxes 
  • Title insurance policy 
  • Potential funds toward the buyer’s closing costs 
  • The buyer’s agent commission, which is applicable even if the buyer uses the assistance of a broker 

The seller may be able to avoid paying marketing fees because the property isn’t set to be listed on the MLS. Since there isn’t usually an ample amount of competition in off-market deals, the buyer often attempts to reduce closing costs during negotiations with the seller.  

  

Pursuing Off-Market Deals with Ashcroft Capital 

During the first quarter of 2024, the Commercial Real Estate market presented a mixed picture. Despite challenges in the office and industrial sectors, multifamily has shown resilience, with anticipated improvements.[3] Morning Star expects the Fed to start cutting rates beginning with the June 2024 meeting. Which would create a more favorable environment for the CRE market by reducing costs, increasing demand, and stimulating economic activity.[4] 

The wave of maturing loans in 2024 will likely result in increased multifamily sales volume. With higher borrowing costs, refinancing these loans at favorable terms proves to be difficult for many owners.[5] 

Ashcroft has spent years developing strong and meaningful relationships with industry peers, which will continue to be invaluable when sourcing off-market multifamily deals. In fact, by cultivating strong relationships with brokers, Ashcroft Capital has successfully completed 60% of its property acquisitions through off-market deals. These relationships coupled with our market reputation position Ashcroft with a strong competitive advantage when identifying and potentially acquiring off-market multifamily properties.   

Off-market deals have allowed buyers to find properties at reasonable prices for many years. When partnered with an experienced investment firm that has strength and depth of relationships, finding these types of deals may be even simpler.   

If you would like to learn more about investing in multifamily assets, or investment opportunities, schedule a call with Investor Relations today. 

danielle@ashcroftcapital.com

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Five Non-Traditional Investment Ideas Worth Considering

May 8, 2024

By: Travis Watts, Director of Investor Development

 

Five Non-Traditional Investment Ideas 

  1. Energy-Efficiency 
  2. Transportation 
  3. Tax Optimization 
  4. Insurance 
  5. Mortgages 

 

Mastering Personal Finance Might Be Your Best Investment Yet 

There is an interesting lesson I learned throughout childhood that I want to share with you. I was raised by two frugal parents who were not investors but had mastered personal finance. Conversations about money often centered around saving, using coupons, buying off brands, staying out of debt and maximizing every dollar we had.    

For many years, I embraced this philosophy whole-heartedly before becoming a full-time investor. In fact, throughout college I was living independently on $8,000 per year and managed to avoid debt altogether, while staying within my budget. While I do not advocate this extreme way of living, there is an important lesson that came from this experience.   

If you are reading this article, chances are you’re an investor like me, so I encourage you to assess the potential return-on-investment (ROI) when it comes to everyday expenses that are often overlooked. Though this topic may not be widely discussed or marketed, you may find that personal finance mastery can exceed the results of many traditional investments.  

 

A Closer Look at Each Investment Idea

Energy-Efficiency:

Installing a digital smart thermostat or upgrading an HVAC system might seem like mundane expenses, but their ROI can be quite enticing. For example, in our current home, my wife and I installed a $200 smart thermostat that has reduced our energy usage by about 10%. In the example of having a $300 monthly electric bill, this translates to a $30 per month savings which is a remarkable 180% return on investment in the first year alone. Review a list of the top 5 smart thermostats.

 Non-Traditional Investment Ideas Energy Efficiency

Transportation:

Transitioning to a more fuel-efficient vehicle can significantly impact both personal finances and the environment. Swapping out a car that offers 20 mpg for a more economical 40 mpg alternative can yield a great ROI, coupled with long-term savings on fuel costs. In recent years, my wife and I have been experimenting with hybrid and electric cars. This year we purchased a fully electric vehicle that uses 31kWh per 100 miles. This translates to about $4.65 to drive 100 miles. (Note *kWh vary from state to state). Many electric vehicles today are also eligible for the $7,500 Federal tax credit. Something to consider if you’re looking to upgrade a vehicle anyway.  

 Non-Traditional Investment Ideas Transportation

Tax Optimization:

Hiring a tax strategist may seem like an unnecessary expense, but the long-term benefits can be substantial. In my experience, learning to implement tax-saving strategies has resulted in significant savings, far outweighing my initial investment. Especially if you happen to be self-employed or invest in real estate. When I switched from using a typical CPA firm to a tax strategist, my filing costs increased from $1,500 to nearly $4,000. However, my tax savings since making this change have far exceeded these additional costs. The great thing about savings is that it’s dollar for dollar. In other words, spending $4,000 and in turn saving $8,000 is a true 100% return. When I invest, I have risk, hold time, and taxes to factor in. For a deeper dive on tax strategists check out this video on our Ashcroft Capital YouTube Channel.  

 Non-Traditional Investment Ideas Tax Optimization

Insurance:

Taking the time to review and switch insurance providers can lead to substantial savings without any financial investment. Spending an hour comparing policies and switching providers could result in hundreds or even thousands of dollars in annual savings. Last year, I decided to use an insurance broker who can pull policies and quotes from several firms. We switched most of our policies to another provider and saved over $700 in less than one hour. Zero investment required and the savings continue year after year. 

 Non-Traditional Investment Ideas Insurance

Mortgages:

Many homeowners are not aware that they can elect to make biweekly mortgage payments rather than one single payment each month. Biweekly payments accelerate your mortgage payoff by paying 1/2 of your normal monthly payment every two weeks. By the end of each year, you will have paid the equivalent of 13 monthly payments instead of 12. This simple technique can shave years off your mortgage and save you thousands of dollars in interest. No additional capital is required to do this; and most lenders allow it. Find out how much you could save with a free biweekly mortgage calculator. 

 

Review the Benefits of Non-Traditional Investment Ideas

Both saving and investing are critical elements of finance. Many non-traditional investment ideas can provide immediate and tangible benefits that may exceed traditional investment ROI. With that said, it has long been my opinion that investing is the most critical to master as your earning potential is unlimited, and saving is limited. By adopting a holistic approach to wealth management, you can have the best of both worlds as you maximize your dollars, reduce overhead, and build lasting wealth.  

If you are considering multifamily real estate investments in 2024, please reach out to learn more

Watch additional Passive Income Lifestyle episodes on the Ashcroft Capital YouTube channel

travis@ashcroftcapital.com

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Luxury Leather Maker With a Passive Plan for an Active Retirement

May 7, 2024

Investor Feature - Retirement - Rob Deits

“We’ve always believed in real estate—always, always, always. Like Mark Twain said, ‘Buy land, they’re not making it anymore.’” 

 

Building a Retirement Nest Egg Early 

The Deits family has a long history of successful entrepreneurship in business and real estate. Rob Deits, owner of The Hide House in Napa, CA, has worked hard to keep both traditions alive.   

While pursuing a degree in accounting and finance at San Francisco State University, Rob earned money for tuition in an unusual way. “I got a job at a gourmet butcher shop,” he explains. “And I’ve always had an interest in real estate. In fact, my mother became a renowned realtor here in Napa Valley. So, I bought my first condominium when I was 19 years old, with a $3,000 down payment (back when they were selling for $35,000).” 

 Rob Deits and Wife Boating  

 

Keeping the Family Legacy Alive

As Rob took notes on real estate from his mother, he also learned from his father’s experience in business. “My dad ended up buying an old glove company here in Napa back in 1976 that was going downhill, and he successfully resurrected the company.” The history of the industry, and his father’s success, inspired Rob to also take part.  

“In the early 1900s, there was quite a large leather industry centered on the Napa River and there were several tanneries producing hides,” says Rob. “Back when my dad was ordering leather from one of them, they had a retail store that served as a factory outlet for a couple of tanneries on the river. But they were so busy back then that it was more of a pain for them to operate the store. My dad had a conversation with the president of the tannery and said, before you shut down, my son might be interested.

“I had just gotten my degree, and at age 23, I came out and ran the store for them. I borrowed $5000 dollars on a 90-day note for some reject leather in there, and I said, ‘I don’t know how I’m going to pay you back, but I’ll pay you back!’ That’s how I got into the business.” 

Now The Hide House has 34,000 customers throughout the United States, with over 4,000 kinds of leather that they wholesale to different industries for furniture, equestrian and saddlery goods, motorcycles, footwear, and handbags. “We distribute all kinds of beautiful leathers that we procure from literally around the world,” boasts Rob.  

 

Developing a Tailor-Made Investment Strategy 

From the butcher shop to the leather business, Rob has never been afraid to get his hands dirty. However, when it comes to real estate, he prefers the passive approach.   

“Real estate has always been in our family. My parents said they always made more money in the real estate game than with the glove company. Over the years, they’ve been able to accumulate some homes, condominiums, and other property. It’s been a big part of our family’s portfolio. But I’m more of a passive investor kind of guy. I don’t want to deal with the broken toilet and the phone calls at three in the morning.” 

This is initially what drew Rob to Ashcroft. “I can get the best of both worlds––be involved in the real estate play without all the pain and aggravation of actually being a landlord,” he says. “I still have my original condo, and I deal with that. But I find Ashcroft to be a much greater vehicle for me personally, because I just don’t have the time to deal with all the chores and responsibilities of owning real estate outright.” 

Now that Rob is an Ashcroft investor, he finds that working with the team is a highlight of the experience. He adds, “I like the areas where you invest, then upgrade the properties. Reading the newsletters and listening to the videos on the website––I like all that.” 

“I like the freedom and flexibility this style of investing gives me without having to be in-the-know with the stock market. I don’t have to think about it every other day: did the Dow hit a new record, or the NASDAQ go down 2.2%?” 

 

A Retirement Plan to See the World 

Above all, Rob likes that real estate investing suits his lifestyle and future goals. “I have a sizable account with Morgan Stanley, which is vested in different types of income revenue streams, as well as equities, but I always harken back to real estate. And I believe in a balanced portfolio, so if one area of the economy goes down, you don’t get hurt in the other areas,” says Rob of his investment strategy.  

For Rob, this revenue stream is the most important benefit of his investments, especially as he feels the itch to travel more.

“Ashcroft provides a nice vehicle for me to travel on. I’m at an age where I really want to start seeing the world more than I ever have. Any upgrade in the capital value of the accounts is always welcomed, but I like the revenue stream on a timely basis that Ashcroft provides for this stage of my life.” 

As a history buff and museum enthusiast, Rob is planning plenty of things to look forward to with the help of his distribution income. In fact, he’s already packing his bags for Germany. “One of our suppliers is flying me over,” he explains. “We’re going to stay in an old castle by the Rhine River.” It’s the first of many dream trips to come, and Rob is willing to invest to make it happen. “I need revenue to help make those things become a reality!” 

Rob is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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How To Determine If You’re an Accredited Investor

April 30, 2024

By: Travis Watts, Director of Investor Development

How To Determine If You're an Accredited Investor

Are You an Accredited Investor?

Let’s take a look into the term “accredited investor.” Every week I have the privilege to speak with investors who are excited to start investing in multifamily syndications or real estate “private placements.” These investors are usually on the search to find access to deals.  However, it is essential to note that many offerings are limited to accredited investors.   

What Does Being an Accredited Investor Mean? 

The Securities and Exchange Commission (SEC) definition of an accredited investor, in the context of a natural person, includes anyone who:   

  • Earned income that exceeded $200,000 (or $300,000 together with a spouse or spousal equivalent) in each of the prior two years, and reasonably expects the same for the current year, OR 
  • Has a net worth over $1 million, either alone or together with a spouse or spousal equivalent (excluding the value of the person’s primary residence), OR [1]
  • Holds in good standing a Series 7, 65 or 82 license. 

There are other ways to qualify[2], but for this guide, I assume most of the audience falls under the individual accredited investor status. 

 

Why Accreditation Exists  

Essentially, the criteria for accredited investor status in certain offerings were established to ensure that all participating investors possess financial sophistication and are capable of independently managing or bearing the risk of loss. 

 

The Advantages to Being an Accredited Investor  

In short, the advantage is that you have an opportunity to hear about more deals, gain access to them, and ultimately invest in those deals if you choose.[4] 

Opportunities May Include: 

  • Real Estate Syndications (Private Placements)
  • Angel Investing/Venture Capital
  • Hedge Funds

 

Becoming an Accredited Investor

Some private placements require self-verification. Essentially, youcertify as part of the legal documents thatyou are an accredited investor and by which method you qualify.  

In other types of private placement offerings, such as an offering under Rule 506(c) of Regulation D, you may be required to submit a letter of accredited investor verification from a licensed attorney, a CPA, an SEC-registered investment adviser, or a registered broker-dealer certifying that you are accredited usually through a third-party verification service such as  Ashcroft Capital Accreditation (parallelmarkets.com).   

 

Reviewing the Advantages 

Ultimately, being an accredited investor allows you access to additional investment offerings and opportunities that most do not have access to. If you are actively looking for deals and talking to investment firms in the industry, it is likely that you will come across only opportunities that require this status for compliance and regulation purposes.  

If you would like to learn more about investing in multifamily assets, or investment opportunities, schedule a call with Investor Relations today. 

travis@ashcroftcapital.com

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Apartment Rents in 2024: The Return to Normal

April 26, 2024

By: Travis Watts, Director of Investor Development

Experts Predict Return to Normalcy for Apartment Rents 

As the multifamily rental market rebounds from the turbulent economic fluctuations, there is an emerging consensus among experts that we are witnessing a return to traditional market dynamics.  

In this episode of Multifamily Market Report, Director of Investor Development, Travis Watts highlights this change, underscoring the move toward stability after years of unpredictable rent growth. 

A recent chart from RealPage provides a complete view of asking rents from when Ashcroft Capital became a company in 2015. The trajectory of apartment rents was hovering steadily between 4-5% annually until the pandemic’s onset disrupted this pattern.1  Annual Change in Apartment Rents

The economic shock of 2020, characterized by widespread job losses and business closures, led to a sharp drop in demand. However, a surge in government stimulus subsequently reinvigorated the market, resulting in a substantial rent increase in 2021. 2 This spike, although significant, was recognized as neither healthy nor sustainable. 

Then demand dropped as people lost their jobs, businesses closed, and the economy struggled. That was the unfortunate reality of 2020. Soon, stimulus money was pumped out to Americans and businesses nationwide. As the economy began to reopen, rehire, and recover, a high level of demand was placed on apartments once again, seen by the massive uptick in rents in 2021.3 

 

Why Double-Digit Growth is Unsustainable  

Just imagine for a moment if apartment rents went up 10% a year for the foreseeable future, and the average American was getting about a 4% annualized pay raise. Obviously, apartments and shelter would become unaffordable for Americans after about a decade of this and completely unsustainable after 20 or 30 years. 

Reflecting on these trends, it’s clear that continuous double-digit growth would eventually render housing unaffordable, outstripping average annual pay raises and placing significant financial strain on American households. 

This is why historic data from RealPage shows long-term average rent growth has been about 2.9% a year. Freddie Mac supports this view in their 2024 economic forecast, suggesting a more modest rent growth of about 2.5% this year.4 

The normalization process was further influenced by the Federal Reserve’s interventions in 2022. The Federal Reserve began pumping the brakes on the overheating economy, and in turn aggressively raising interest rates. At the same time, government stimulus measures were gradually phasing out. 

 

Ongoing Multifamily Demand Fuels Apartment Rents in 2024 

As you undoubtedly stumble across fear-based headlines about no rent growth or declining rent growth in the multifamily sector, remember that this is a return to normalcy. The fundamentals of the multifamily sector remain strong. We cannot expect double-digit rent growth year over year.  

Despite the concerns of declining growth rates, the demand is out there. The ongoing need for rental units is bolstered by various factors, including the high cost of single-family homes which continues to price out many individuals, the steady stream of college graduates entering the market, and overall population growth. 

As the multifamily rental market recalibrates, it’s crucial for investors and stakeholders to understand the implications of these shifts and to approach market opportunities with a well-informed perspective. The current trend towards normalization is not just a phase, but a sustainable move towards long-term stability in the housing market. 

If you want to learn more, further insights or investment opportunities in the multifamily market, resources such as quarterly market reports, industry articles, and YouTube videos are available for proactive investors.  

travis@ashcroftcapital.com

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Entrepreneurial Drive: Highway Adventures and Real Estate Ventures

April 13, 2024

Investor Feature - Real Estate - Craig Wear

“I’m really excited about having passive income show up in the checking account, knowing that experts are making decisions, and I don’t have to micromanage every part of my financial life.” 

 

Navigating Life’s Highways 

After touring the country for seven years by motor coach, Craig Wear and his wife of 41 years have finally re-entered the “stick and brick world” and settled close to their sons in the Denver area. “I had a fee-based financial planning business for 32 years. When I sold it seven years ago, our kids were all gone doing their thing and we thought, ‘If we’re going to live the adventure, let’s go do it now.’ So, we sold almost everything we owned, bought the big bus, and off we went,” says Craig of their incredible journey.  

Despite offloading the business, Craig has kept himself busy with family, the great outdoors, and a new business venture. “We love to hike, flyfish, and ride motorcycles across the country; and we developed really neat relationships from the time we spent in the RV world,” he explains.

“Somewhere in those seven years, I started another business that is a pure financial consulting business focusing very specifically on solving tax issues for people who have large IRAs. That company has just taken off and done phenomenal things.” 

For Craig, one of the perks of assisting others with their finances is a more informed view of his own goals and strategies. At this new juncture, Craig reports, “the objectives we have are really tax-advantaged cash flow and appreciation over time. I still have my business and plan on being active in it for several years. That gives us time for a lot of these passive investments to really do their job––to shelter some income from my business in the short term and to provide us with a stable income once we transition.” 

 

On the Road to Real Estate Success 

Finance-savvy Craig views real estate investment as a family tradition. “My early investing experience was really as a teenager watching my father buy rent houses,” Craig recalls. “He did very well and ended up with 15 single family homes in the subdivision where we lived.” 

In addition to learning about cash flow and appreciation, Craig says, “the other part I learned was through personal experience. Dad worked all the time, so even at thirteen-years-old when somebody would move out of the house, it would be Craig on his banana-seat bicycle pulling an edger and mower with a broom and some plastic bags to go clean up. It was pretty formative for me; I learned how to paint and fix fences and all sorts of things.” 

After learning the fundamentals of investing through his college degree in finance, Craig entered the financial planning industry in the mid-1980s. “That’s when the real education started,” he says. “Not only in traditional stock and bonds, but there are a lot of wholesalers who spend their lives representing big retail, real estate syndications, calling financial advisors to convince them to sell those products to their clients. Many of those programs didn’t have a lot of economic benefit to them. You didn’t really care what happened to the money because you were getting a 70-, 80-, 90-percent tax deduction on the front end.” 

 

Planning the Next Investment Milestone 

Thirty years of experience in the field of finance convinced Craig that, “Investing only for tax benefits has its drawbacks. I learned that real estate did have some great returns, but I also learned that the typical available real estate syndications that come through the brokerage world and the securities world have so many layers of fees and so many people putting their hand in the investor’s pocket that by the time investors get to the deal, they don’t get the best returns.” 

Following his own instincts, Craig took a different approach––one that’s familiar to many real estate investors. “My wife and I bought single family homes; we managed them, we flipped them, and they did well by us, but they were also a lot of work,” Craig admits.

“I had clients that developed large real estate portfolios: single family portfolios of up to 90 houses and apartment complexes. I saw the benefits they were getting out of it. I also saw that it was a business for them. And it was lucrative, but it was a lot of work. I got to see their rates of return, cash flow, and everything else.”  

When it came time for Craig to make decisions for the next phase of life, these insights inspired him to research private syndicators that work directly with investors.  

 

 

Fueling the Future with Ashcroft Capital 

According to Craig, many of the options he found reminded him of the past. “A lot of them structure their deals where the benefit is mainly to them, or they don’t have a lot of experience. They have a great story and a good sales pitch, but they don’t have the real proof.”   

Then, Craig found Ashcroft. “One of the companies I got excited about was Ashcroft. I wanted passive because we’d done active, and we were at a place in our life where I’ve got more important things to do with my time than mowing a yard or hiring and firing a manager to run an apartment complex for me.”  

When Craig spoke to the Ashcroft team and learned more about the business, he says, “I was blown away by their performance history––the number of full terms they’ve done and the kinds of returns they’ve generated. What I really liked about them compared to a lot of the other syndicators is that all their management is in-house, so they control the whole process and have their own construction team. To me, that means lower costs to do the work and higher quality control.”  

“The confidence that I have in setting up the next chapter of our life is really enormous when I consider what Ashcroft is and what they’ve done in the past. I feel confident in the projections that I have for what’s going to happen for my wife and me.” 

Given that Craig has converted much of his savings to Roth IRAs, he also appreciates the tax advantages he’s able to enjoy through Ashcroft investments. “They’re allowing me to take full advantage of the tax code to offset other income that we have through some passive income that I get from my business,” states Craig. “A really big part of our future retirement plan is based on the income streams and returns from Ashcroft, as well as a few others.”  

 

Shifting Gears from Financial Worry to Financial Freedom 

Although Craig’s fruitful investment strategy is the culmination of decades of life experience and career success, he believes he is “one of the most fortunate men in the country for a lot of reasons.” Above all, he gives credit to his family. “I found a woman who’s very patient and just a fantastic wife and an equal partner to walk through life with, and she enables me to do all kinds of great things,” brags Craig.  

“Secondly, my career has afforded me an uncommon view into the lives of thousands of people who were always 15-20 years ahead of me,” he explains. “Somehow, I learned to listen and pay attention to what they did right and what they did wrong. The ones that really succeeded and had freedom from a lot of worry and anxiety were the people who put money in non-traditional or alternative places. So, I’m just trying to emulate a lot of what they did.” 

The most important lesson Craig would pass on to would-be investors is that investing in real estate is like starting a business. “And they’re going to learn some things, just like any business,” he says. “I’m choosing to let the pros manage that section of my financial portfolio. I want their team (who has a tremendous amount of experience in acquisitions) to make the management decisions, deal with the financing, and ultimately decide when the best time is to get rid of a property.” 

“Real estate is a business, you’re going to put a lot of money into it. You’re going to make mistakes if you go do it yourself, whereas syndicators have already made their mistakes years ago. Now, they’re presenting the best options available through the experience and wisdom they have.” 

Without financial worry keeping him awake at night, Craig can focus on what matters most to him. “I’m really excited about having the option to work until I don’t want to, and to be at a place in my life where I’m able to make significant additions to our investment portfolio.” And the ultimate payoff? “Ten acres looking up at the Rocky Mountains, in a house that my wife chooses, with a shop for me to work on my motorcycles and build furniture. I don’t know if it’s going to get any better than that.”  

Craig is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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Exploring REITs and Syndications in 2024

April 10, 2024

By: Lennon Lee, Investor Relations Associate

REITs and Syndications

Understanding the Difference Between REITs and Syndications 

Investing in real estate offers many avenues for both seasoned investors and novices, with Real Estate Syndications and Real Estate Investment Trusts (REITs) standing out as two prominent options. Understanding the nuances, advantages, and drawbacks of each is essential for making informed investment decisions. Let us delve into the disparities between REITs and syndications, exploring their pros and cons objectively.

Real Estate Syndications: Harnessing the Power of Direct Ownership

Real Estate Syndications involve pooling funds from multiple investors to acquire and manage real estate properties. Additionally, investors can leverage the expertise of experienced sponsors or operators in the syndication process. Here are the key pros and cons associated with this investment avenue:

Pros: 
1. Direct Ownership: Investors in syndications enjoy direct ownership of the underlying properties, enabling them to benefit from potential appreciation and cash flow.
2. Higher Returns: Syndications often offer the potential for higher returns compared to REITs, particularly in value-add or opportunistic real estate strategies.
3. Tax Benefits: Syndication investors may benefit from tax advantages such as depreciation deductions, and potential capital gains advantages.
4. Alignment of Interests: Syndication sponsors typically co-invest alongside other investors, fostering alignment of interests and potentially mitigating conflicts of interest.

Cons: 
1. Higher Minimum Investments: Real Estate Syndications typically require higher minimum investments compared to REITs, making them less accessible to some investors.
2. Illiquidity: Syndications are illiquid investments, with limited opportunities for early exit or liquidity compared to publicly traded REITs.
3. Accessibility: Syndications may not always be available or accessible to everyday investors due to their exclusive nature and higher minimum investment requirements.

 

REITs: Embracing Liquidity and Diversification

REITs are publicly traded companies that own, operate, or finance income-producing real estate across various sectors. Let us examine the pros and cons associated with investing in REITs:

Pros:
1. Liquidity: REIT shares can be bought and sold on stock exchanges, offering investors liquidity and flexibility to adjust their investment positions.
2. Diversification: REITs typically provide investors with exposure to a diversified portfolio of properties across different sectors, geographies, and property types.
3. Public Accessibility: REITs are accessible to a broad spectrum of investors, allowing for easy entry and exit from the investment.

Cons:
1. Lower Potential Returns: REITs may offer lower potential returns compared to direct real estate investments or syndications, particularly in certain market environments.
2. Lack of Control: Investors in REITs have limited control over the underlying properties and investment decisions, relying on the expertise of management teams.
3. No Tax Efficiencies: Unlike syndications, REITs do not offer the same level of tax efficiency or benefits like pass-through depreciation, potentially reducing overall investment returns.

Ultimately, investors should carefully evaluate their financial goals, risk tolerance, and investment horizon when choosing between these options, ensuring alignment with their overall investment strategy. 

 

What more to consider when investing in REITs or Syndications in 2024 

By investing in a syndication, investors have a more hands-on approach in the selection of the sponsor and management team. This level of control allows for greater customization and alignment with specific investment goals and preferences. 

It is important to note that with syndication, you have the advantage of investing directly in the underlying real estate. This may provide tax benefits, including depreciation. In syndication deals, investors may be able to offset their income with depreciation expenses, depending on their particular circumstances.  

Furthermore, real estate syndications offer the potential for higher returns as syndicators normally focus on acquiring properties with substantial growth prospects. The combination of potential tax benefits, cash flow, and the ability to tap into the expertise of seasoned sponsors makes syndication an attractive option for those seeking optimal returns on their investments. 

 

Ashcroft Capital: Your Trusted Partner in Syndication 

When considering real estate syndication, it is crucial to partner with a reputable firm with a proven track record of success. Ashcroft Capital is a leading real estate investment firm specializing in multifamily properties. With an experienced team, a thorough due diligence process, and a commitment to transparency, Ashcroft Capital offers investors the opportunity to access high-quality syndication deals. 

Our investments aim to deliver substantial returns, considering both consistent cash flow and profits generated from the eventual sale of the asset. On average, our syndication deals have yielded annual returns exceeding 25 percent. 

As you navigate the investing landscape in 2024, consider the benefits of real estate syndication over REITs. Syndication provides greater transparency, customization, and potential for higher returns—partner with a trusted firm, like Ashcroft Capital, to explore the exciting opportunities syndication offers. Remember, thoughtful and well-informed decisions are the key to success in the ever-changing financial market. 

If you would like to learn more about REITs and Syndications or are interested in Ashcroft Capital’s current offerings, schedule a call with Investor Relations today.

lennon@ashcroftcapital.com

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Creating Your Own Economy: Focus on What is in Your Control

April 4, 2024

By: Travis Watts, Director of Investor Development

Three Practical Steps to Shape Your Own Economy: 

  1. Market Opportunities: Market shifts, such as fluctuations in interest rates, present opportunities for savvy investors. For instance, the recent rise in interest rates has led to a decline in commercial real estate prices, offering an opportunity to capitalize and “buy-the-dip.” At least for those willing to take action. 
  2. Short-Term Spending: Wage increases, and high inflation have no doubt impacted consumer prices. Take for example restaurants increasing their prices. While this may be the case, the reality is we can adjust our spending habits – opting to dine out less frequently or cooking at home – we can mitigate the effects of this inflation on our personal budget. It is simply a choice. 
  3. Long-Term Savings: Rising fuel prices might prompt consideration of alternative transportation options, such as electric vehicles. Likewise, escalating electricity costs could incentivize investment in renewable energy sources like solar panels. These cost savings can continue for years to come. 

  

Multifamily Investments Beyond the Headlines 

In a world inundated with ads, opinions, and fear-based headlines, it can be useful to take a step back and consider our own individual reality from time to time.   

I recently had an epiphany during a conversation with an investor as we discussed the multifamily real estate sector. The classic question arose, “Is now a good time to invest in multifamily?” His concern was prompted by a news report he had read. The report suggested that apartment rents could soften in 2024.  

Reflecting upon this information, I could not help but consider the multifamily investments I have made over the past year. In the deals I have been involved in, the rents are steadily on the rise; many of them are on track to achieve a 5-10% rent increase by the end of the year.  

This reflects investing in value-add business plans where an older property is purchased at a discount because it needs renovation and has below market rents in place due to its outdated condition. The business plan is simply to renovate and improve the property, while increasing the rents back to the market level.  

So, the disparity between “rents declining” according to a news report and “rents increasing” according to my actual portfolio, underscored a fundamental truth: our perspectives shape our reality. 

  

Scenarios to Consider:

#1 If a news report stated the national median household income was $75,000, but your personal income was $150,000, the report would hold little relevance, because your personal economy is what matters to you.  

#2 If a news headline stated “US inflation peaked out around 9% in 2022, Americans are now scrambling” the reality is your individual inflation rate could have varied significantly based on your specific circumstances that year. For example, if you chose to cut your expenses by 9% in 2022, you might have experienced minimal inflation impact, even none at all.  

 

Building Your Financial Future Beyond Media Narratives  

The point is: you are the architect of your own reality. It is not dictated by headlines, news, or media narratives – it is determined by your choices, and actions. 

We control our own economy, and we can steer our financial future toward success, despite what is on the news or in the media. With uncertainty and economic volatility, opportunities are reserved for those willing to act. By remaining adaptable during market shifts, we can navigate the ever-changing economic landscape with confidence and resilience. 

Want to learn more about multifamily investment or our current offerings? We welcome you to schedule a call with our investor relations team today.

travis@ashcroftcapital.com

 

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Beyond Retirement: From Air Force Wings to Real Estate Roots

April 2, 2024

Investor Feature - Real Estate Retirement - Jim Cummings

“One of my biggest realizations was that no matter what business you’re in, you’re actually in business for yourself.” 

 

Refusing to Retire 

Air Force veteran, and still-active real estate broker, Jim Cummings is celebrating his 81st birthday this year. He has devoted his career and a large portion of his investment portfolio to real estate––and he’s still not in the mood to retire.  

“I got licensed in 1988, progressed through being an agent, then a broker, and eventually went out on my own,” says Jim, summarizing his long and successful career. Along the way, he’s amassed a great deal of wisdom (and property), and his investment journey is a classic study in transitioning from single-family property management to real estate investing.   

Jim Cummings - Air Force

 

Getting the Hang of Real Estate 

“In a military career, you move every few years, and you become familiar with buying and selling houses,” explains Jim. “So, that sparked an interest in real estate. I actually got a license before I left the service. When I retired from the Air Force, the economy was not good, but a friend of mine I’d been stationed with before was an agent, and I just decided that if I’m going to do it, now is the time to take the plunge.”  

It was the bottom of the dotcom bust, but more experienced colleagues encouraged Jim that he would do well as soon as the market recovered. “I just kind of persevered. Fortunately, my wife was working, and I was bringing enough money from the military that we could keep food on the table, the lights turned on, and the rent paid. As the market turned up, those first few years were probably the hardest I’ve ever worked in any job––and I’ve worked in an oil field.” 

Jim recalls learning how to work “smarter, not harder” in those early years. “You learn what you have to do and what you need to make happen,” he says. And he was helped along by the advice of a trusted mentor:

“It doesn’t matter if you go with a big company, a small company, or a medium sized company. It’s all up to you. You either make it yourself or you don’t make it.”  

 

Learning to Make Smart Real Estate Investments 

Luckily Jim was a quick learner––and determined to find success in his career as well as his investment strategy. But it wasn’t without trial and error. “While I was still in the Air Force at the last duty station, I bought a vacant lot with the idea that if I end up staying, I’m going to build a triplex. It was in a relatively renewed duplex community that was within a mile or so of where we lived at that point. When we decided we weren’t going to stay there, I just put up a sign and made a few thousand dollars on it.” 

Around the same time, Jim acquired two rental properties in Austin, Texas. “Market timing was not good––I lost my shirt on both of them!” he laments in good humor. “When I moved back to Austin, I basically ended up giving them both away to get out from under the expense of it.” 

With his investment feet now firmly underneath him, it was smooth sailing into the future for Jim and his family. “I bought a foreclosure, which we moved into, but it wasn’t in great shape,” Jim explains. “There was actually a lot in the same neighborhood that I ended up buying myself with the idea that I’d build a house on it and resell it. But once we got the house built, we decided to move into the new house and keep the old one for rental property. That’s really where the investment started.” 

“I always could see the potential for real estate. It’s a good way to make use of other people’s money, and over time you can grow yourself a real estate business.” 

Jim was able to quickly pay off the note for his first home using rental income, and even remodeled it before selling when he moved the family to College Station. “I made a pretty good pile of money on it, so I took the proceeds from the sale and ended up putting down the minimum required on one new property, and then put all the rest into another one.” 

This became Jim’s preferred real estate investment strategy. He’s since added two additional properties, with the eventual goal of up to eight. “Interest rates have kind of taken me out of meeting my income goals on properties at this point in time, so that’s where I am now. I have four investment properties of my own. One will be paid off in June, and the others are cash flowing pretty well.”  

Additionally, Jim still manages three properties for his clients, down from a hefty load of 25 under his purview in the past. And the result of all this experience in the industry? “I’ve been bloodied a little bit, so I have a pretty good feel for what makes real estate profitable or not,” he says.  

Jim Cummings - Kids

 

Letting Ashcroft Capital Do the Heavy Lifting 

Jim is a self-described “recovering workaholic” and doesn’t plan to ever fully retire, but he recently found himself needing to offload some of the labor of single-family property management. That’s when he turned to Ashcroft to facilitate a more passive income investing strategy. “I’ve reached the point that I’m getting too old to continue pursuing more single-family properties. And with the market the way it is, I just want to put my money to work.”  

After hearing about Ashcroft on BiggerPockets, Jim was inspired to connect with the team.

“With the interest rate staying up there and some money on hand, I just said, ‘Now’s the time to take the plunge.’ So, we took off a small chunk and invested with Ashcroft just to see how well it worked. I was looking to get more return than CDs, which at that point were doing little or nothing. The fact that I could expect a 13-14%, maybe even up to 20%, total return on the investment was attractive to me.”  

However, for Jim, money is just the byproduct of good decisions and good intentions––and we couldn’t agree more. His philosophy is, “Take care of the customer; the money will take care of itself. They’re paying good hard-earned money, and they deserve a great place to live. That’s what you’re there to provide, and ideally, you’re making a profit in the end.”  

Jim is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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Master Networking at Conferences: Strategies for Success

March 26, 2024

By: Travis Watts, Director of Investor Development

Master Networking at Conferences

Preparation Meets Opportunity: Strategic Networking at Conferences 

Mastering networking at conferences is a critical skill set for professionals seeking to expand their personal and business networks. These events offer opportunities to forge new connections, elevate your brand, and explore avenues for growth, whether in seeking investment opportunities, staying current with economic trends, or cultivating strategic partnerships.  

However, effective networking requires a deliberate and strategic approach. Conferences, such as the Best Ever Conference are renowned for the ability to deliver these objectives, but success ultimately hinges on proactive engagement and preparation. 

Five Strategies for Networking at Conferences 

  1. Define Specific Goals 
  2. Preparation and Research 
  3. Add Value to Others 
  4. Follow Up 
  5. Remain Open-Minded 

 

Best Ever Conference Networking

 

To optimize your conference experience, several key strategies can be employed. Firstly, it is imperative to enter the event with a clear understanding of your goals and objectives. Defining specific goals provide a roadmap for productive networking endeavors. Moreover, cultivating a growth mindset and a willingness to contribute value in every interaction fosters meaningful connections and enhances the overall experience. 

Preparation is key. Conducting research ahead of time on fellow attendees by utilizing networking platforms, like the Whova App, allows individuals to identify potential contacts and initiate conversations proactively. Additionally, leveraging social media platforms, such as LinkedIn or BiggerPockets, for engagement can further expand networking opportunities before, during, and after the conference. 

Central to effective networking is the ability to add value to those you connect with. Whether it involves showcasing your expertise, offering assistance, making introductions, or identifying synergies, prioritizing the needs of others fosters reciprocal relationships and lays the groundwork for future collaborations. By adopting a long-term perspective and focusing on quality interactions over quantity, you can cultivate professional relationships that yield mutual benefits. 

 

Best Ever Conference Recap

 

Following up on initial interactions is essential for sustaining momentum and solidifying connections. Thoughtful follow-up communications, characterized by authenticity and professionalism, reinforce rapport and demonstrate commitment to nurturing relationships beyond the confines of the conference environment. 

Lastly, maintaining an open-minded approach is paramount. Acknowledging the diversity of perspectives and skill sets among fellow attendees fosters humility and curiosity, which can open doors to unforeseen opportunities and collaborations. Embracing this mindset not only enriches the networking experience, but also fosters personal and professional growth. 

The True Value of Networking at Conferences 

In summary, mastering networking at conferences demands a strategic blend of preparation, engagement, and follow-through. By adhering to these principles and embodying a commitment to mutual value creation, you can transform conference networking into a catalyst for meaningful connections and professional advancement. Ultimately, success in networking goes far beyond exchanging business cards; it hinges on the cultivation of genuine relationships founded on trust, reciprocity, and shared objectives. 

travis@ashcroftcapital.com

 

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The History of Taxes for Investors

March 22, 2024

By: Travis Watts, Director of Investor Development

How the History of Taxes Shapes Today’s Investment Opportunities 

Taxes have been intertwined with America’s story since its early days, evolving significantly over the centuries. Understanding the history of taxes can shed light on today’s investment landscape and the advantages awaiting investors in 2024. 

 

The History of Taxes: A Journey Through Time 

The Roots of Taxation:

Dating back to the 1700s, the U.S. taxation journey began with tariffs and excise taxes. In this article, we’ll fast forward to a more recognizable tax system that began to take shape later. 

Civil War Era Taxation:

In 1862, the IRS was established under President Lincoln and the Revenue Act was passed. Lasting a decade, this marked the advent of the first progressive tax structure, with tax rates ranging from 3% to 5%. Tax withholding was first introduced, which essentially turned employers into tax collectors on behalf of the government. This was to settle Civil War debts, and the taxation was intended to be temporary until these debts were cleared. 

Permanent Income Tax:

Fast forward to 1913, we witnessed the birth of the first permanent income tax structure in the U.S., featuring progressive rates from 1% to 7% based on income brackets. This was the first modernized taxation system in the U.S.   

World Wars and Tax Changes:

During World War I, the top marginal tax rate surged from 7% in 1913 to 67% by 1917 to alleviate World War I related expenses. The Great Depression era saw FDR’s presidency introduce Social Security and minimum wage, causing tax rates to climb to 79% in 1936. By the end of World War II in 1945, the top tax bracket peaked at a staggering 94%. The U.S. maintained high top tier tax rates for 24 years that ranged between 81% to 91%.  

Shifts in Taxation Policy:

In 1963, President Kennedy proposed major tax cuts, culminating in the Revenue Act of 1964, reducing the top tax bracket down to 70%. President Reagan’s tenure in 1981 further slashed these rates to 50%, marking significant reductions in top line and bottom-line tax brackets as well as reducing corporate taxes and capital gains rates.  

Modern Taxation and Investor Advantage:

As we fast forward to today, the top tax bracket for earned income stands at 37%, and many Americans pay rates much lower than that. For investors, today’s landscape is an even more favorable scenario. Long-term capital gains rates range from 0%, 15%, and 20% (based on income level) for investments held over a year and real estate investments also offer depreciation benefits, which can be a valuable tool offering immediate and significant tax relief for investors.  

 

2024 Investors: Key Takeaways from the History of Taxes 

  1. Today’s tax rates are historically low, compared to many U.S. periods of time.   
  2. There are strategies and investments that can help reduce tax burdens. 
  3. Long-term investing can be tax-efficient (holding longer than 1 year) 
  4. Real estate investment offers tax benefits such as depreciation that you may be able to utilize. 

If you’re looking to learn more about multifamily real estate investments in 2024, please reach out to learn more. 

Watch additional Passive Income Lifestyle episodes on the Ashcroft Capital YouTube channel. 

travis@ashcroftcapital.com

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Ashcroft Capital’s Deal Sourcing Strategies: Maximizing Value

March 19, 2024

By: Travis Watts, Director of Investor Development

Deal Sourcing Strategies

Deal Sourcing Strategies in 2024

Think of a professional sports team scouting for talent. Just as a team meticulously evaluates players to ensure they’re getting the best fit for their roster, we at Ashcroft Capital meticulously analyze apartment communities to ensure they’re the perfect fit for our investors.

Just like a sports team needs top-performing players to excel on the field, we need top-performing properties to excel in the market. But, deal sourcing in 2024 is no easy task.

In fact, last year multifamily investment volume fell by 60% from 2022 to $117.5 billion, marking the lowest annual multifamily investment volume since 2014. General Partners and investors have been scrambling over the past two years to find deals that pencil and many have been unsuccessful in their pursuit.

However, Ashcroft Capital has a competitive advantage in this area. Our thorough deal sourcing strategies ensure that we are acquiring best-in-class properties for our investors. Let’s examine the three ways we go about sourcing deals.  

 

#1 Off-Market Transactions – Unlocking Hidden Gems

In the realm of commercial multifamily transactions, the significance of off-market deals cannot be overstated. Despite the amount of publicly listed properties you may see online, a significant portion of transactions in the commercial space occur discreetly. This is a selling strategy that can help avoid disruptions to current residents and can help ensure that a deal closes on time.

An off-market transaction refers to a deal that occurs directly between two parties without being facilitated through a public marketplace, such as a real estate listing service. A broker is often involved to help facilitate the transaction, though this is not always the case.  

Consider being the owner of a large apartment community and you’re looking to sell. There is a high demand of buyers interested in making a purchase, but every buyer also wants to conduct their own due diligence, walk the units, do inspections, surveys, appraisals and so on. This process will not only disrupt the current residents, but there is also risk if the potential buyer cannot raise the capital needed or if the deal gets re-traded, which means renegotiating the price or terms after getting the property under contract.

This is why off-market transactions are common in the commercial space. In fact, at Ashcroft Capital, over 60% of our acquisitions have been sourced off-market. 

One example of a property we purchased off-market was Elliot Norcross in Atlanta, GA. A broker who we had previously worked with on another deal knew that the owner was thinking about selling this deal. Given the ease of a transaction that we had with the broker, he was able to get us an off market look at this deal and convinced the owner to sell to us. This provided us with the opportunity to forgo multiple bids or having to compete with other buyers in the market.    

Deal Sourcing Elliot Norcross

Photo: Elliot Norcross (Atlanta, GA) 

 

#2 Direct to Seller – Cutting Out the Middleman

In a similar instance, we purchased Vista 121 in Dallas, TX directly from the seller. This was our 2nd deal that we bought from them. They wanted to close and given our previous experience with them and their knowledge of our other deal in the market, they reached out to us about buying Vista 121.

No seller wants to be re-traded or have a deal to fall out of contract. These setbacks can be costly and cause tenant disruption and delays. At Ashcroft Capital, we have an excellent reputation of buying more than 60 acquisitions and selling 26 of them after completing the business plan. This track record of fast and easy transactions is attractive to sellers and brokers.  

Deal Sourcing Vista 121

Photo: Vista 121 (Dallas, TX)  

 

#3 On-Market Multifamily Gems  

Now let’s discuss finding on-market deals that are publicly listed. Some sellers want to get as many eyes on the property as possible in hopes of creating a bidding war. In other cases, it can be a requirement among sellers to market a deal publicly when it comes time to sell.

In acquiring Midtown 501 in Chapel Hill, NC, we bought the property from a group that we had purchased two other deals from and have an extremely strong personal relationship with. We negotiated a purchase price and terms and were able to purchase Midtown 501 at a 20%+ discount relative to previous pricing in that market. Our pre-existing relationship with the seller set us apart from the competition and made this transaction possible.  

Deal Sourcing Midtown 501

Photo: Midtown 501(Chapel Hill, NC)  

 

Why 60% of Our Acquisitions Have Been Sourced Off-Market

Considering all three deal sourcing strategies, most of our deals have been acquired as off-market transactions, but there are pros and cons to consider with each acquisition. Below are a few things to keep in mind when seeking off-market deals.  

 

Exclusivity: Off-market deals offer a level of exclusivity, allowing buyers to access properties that are not widely available to the general market. This can provide a competitive advantage and potentially lead to better negotiating terms. 

Reduced Competition: Since off-market deals are not openly advertised, there is typically less competition from other buyers. This can give buyers a better chance of securing a property at a favorable price without engaging in bidding wars. 

Privacy: Off-market deals provide sellers with privacy and discretion, which can be desirable for various reasons. Sellers may prefer to keep the sale of their property confidential, especially in sensitive situations such as financial distress. 

Potential for Better Deals: Sellers may be more willing to negotiate favorable terms or pricing in off-market transactions, especially if they are motivated to sell quickly or avoid the costs associated with traditional marketing. 

  

Limited Exposure: Off-market deals lack the exposure and visibility that come with listing properties on MLS or other public platforms. This means that sellers may miss out on potential buyers who are not part of their immediate network. 

Risk of Undervaluation: Without the competitive pressure of an open market, sellers may undervalue their properties or settle for lower offers than they could potentially achieve through broader exposure and competition. 

Difficulty Deal Sourcing: Buyers may find it challenging to identify off-market opportunities since these properties are not openly advertised. Securing access to off-market listings often requires strong networks, industry connections, and working with experienced real estate professionals and brokers.  

 

Discovering Diamonds: The Broker Connection 

Brokers can also serve as indispensable allies in our pursuit of exceptional deals. Through close collaboration and clear communication, we leverage their expertise to help source new opportunities. We work closely with brokers specializing in Class B, value-add, garden-style, multifamily properties in Sunbelt markets. We provide them with specific investment criteria and our preferences, and brokers then alert us to new listings and off-market opportunities that match our criteria, ensuring a comprehensive approach to finding the best investments. 

Deal Sourcing Broker Connection

 

Excellence Starts with Location: Maximizing Investor Value

Headquartered in New York City, Ashcroft Capital strategically positions itself to capitalize on opportunities arising from proximity to buyers and sellers. We transact with many large institutional investment firms who are also headquartered in New York City. Our proactive engagement within the real estate investment community affords us invaluable insights and access to exclusive deals that many of our competitors will never see. These relationships have provided dozens of multifamily opportunities for our investors over the years.  

Ashcroft Capital Headquarters

Photo: Ashcroft Capital Headquarters (NYC) 

 

From Vision to Venture: Where We Invest

Focused primarily on US Sunbelt markets, our strategic footprint spans across Texas, Florida, North Carolina, and Georgia. With over 62 acquisitions since inception, our targeted approach aligns seamlessly with the prevailing trend of Americans migrating to Sunbelt metros in pursuit of employment prospects, affordability, and an appealing lifestyle. As these regions flourish with increasing populations and economic growth, the demand for multifamily properties remains robust. 

Deal Sourcing Where We Invest

 

Investing Made Simple 

At Ashcroft Capital, we want to make it simple and easy for our investors. We have you covered from start to finish. From deal sourcing strategies, to evaluating markets, to acquisition, to managing the properties on your behalf. Our investment model is tailored to investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. We are known for our best-in-class value-add strategy that creates forced appreciation in addition to organic market growth.  

 

Our Track Record is a Testament to our Capabilities

Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors. 

Ashcroft Capital Track Record Overview

 

Investing is a Team Sport

Whether you’re a new investor stepping onto the field or a seasoned professional looking to gain further insight into deal sourcing strategies, we welcome you to meet with our team. If you are an accredited investor, please schedule a call to learn more about our current offerings and opportunities. Remember, no investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions. 

travis@ashcroftcapital.com

*Past performance is not indicative of future results; investors may loose investment capital. Please see “disclosures” for additional importance information. The number of units, purchase price, and disposition price sum. The average year built is a weighted average based on number of units. All other values are weighted averages based on disposition price. Please see “Disclosures” for more information.

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Identifying Multifamily Markets: Ashcroft Capital’s AAA Process

March 7, 2024

By: Travis Watts, Director of Investor Development

Identifying Multifamily Markets

Choosing the right market to invest in is critical to investing success. In this article we will explore our process for identifying multifamily markets at Ashcroft Capital.  

 

Where We Invest 

Our footprint spans across U.S. Sunbelt markets, throughout Texas, Florida, North Carolina, and Georgia, with over 62 acquisitions since inception. There is a strong trend of Americans migrating from across the country to Sunbelt metros. This has been the case for many years, which has led to us acquiring properties in these markets; however, multifamily markets can change over time, and these metros may not always be in high growth with strong demand. Let’s dive into our selection process and reveal how we navigate this ever-changing landscape when identifying multifamily markets for our investors.  

 

The AAA Process for Identifying Multifamily Markets 

At a minimum of twice per year, we run our Ashcroft Advantage Analyzer, “AAA,” which is our proprietary research-based economic study used to identify the top U.S. markets best positioned for multifamily investment. We utilize a combination of data from third party services, like CoStar, RealPage, and Green Street, as well as U.S. Census information, to collect data on markets across the United States. We then analyze this data and apply a weighting system to help us identify which multifamily markets have the strongest fundamentals for us to target. 

 

Fundamentals We Look For When Identifying Multifamily Markets 

Two fundamental trends we look at very closely are migration trends (where people are moving to) and employment trends (where companies are locating to and where they are already established).  

A growing population helps to reduce vacancies and places demand on the housing sector, which can boost rent growth over time. A diversified and growing job market helps reduce risk by ensuring that our residents have many employment opportunities nearby if one or two sectors are impacted.  

Take for example Dallas, Texas where we have acquired 18 properties.  

Texas has joined California as the only other state in the nation with a population of more than 30 million, according to recent data from the U.S. Census Bureau. Texas’ population has grown by 470,708 people since July 2021, the highest in the country.  

Net domestic migration accounted for roughly half of that growth. This is the number of people moving to Texas from other states, while the other half is split almost evenly between net international migration and natural increase. Natural increase is the difference between births and deaths. 

This increased population growth has created demand for more local housing and has helped push property values and rental rates up. In addition, there is an ongoing need for safe, affordable residential rental housing as many residents are currently priced out of the single-family housing market or cannot afford the rents of newly built, luxury properties in DFW.  

Below, we can see that the employment sectors for Dallas, TX are highly diversified, and many sectors are expanding: 

 

Identifying Multifamily Markets - Dallas Employment Growth by Sector

Additional Metrics 

There are many other categories and trends to consider when it comes to identifying multifamily markets aside from migration trends and the job market. These include, but are not limited to: 

1. Economic Indicators:

  • Employment rates and trends 
  • GDP growth and economic stability 
  • Median household income 
  • Consumer confidence levels 

2. Demographics:

  • Age distribution 
  • Household size and composition 
  • Migration patterns 

3. Housing Market Metrics:

  • Supply and demand dynamics (inventory levels, new construction) 
  • Homeownership rates 
  • Rental vacancy rates 
  • Price trends (median home prices, price-to-rent ratios) 

4. Infrastructure and Development:

  • Transportation infrastructure (highways, public transit) 
  • Accessibility to amenities (schools, shopping centers, parks) 
  • Planned or ongoing developments and infrastructure projects 

5. Regulatory Environment:

  • Zoning regulations and land use policies 
  • Property tax rates 
  • Regulatory environment for landlords and property investors 

6. Market Sentiment and Investment Activity:

  • Investor interest and activity levels 
  • Market sentiment indicators (surveys, sentiment indexes) 
  • Capital flows (investment volume, sources of capital) 

7. Risk Factors:

  • Natural disaster risk (flood zones, earthquake-prone areas) 
  • Environmental concerns (pollution, contamination) 
  • Socio-political stability 

8. Rental Market Dynamics:

  • Rent growth trends 
  • Occupancy rates 
  • Rental yield potential 
  • Affordability for renters 

Analyzing this amount of data is no easy task. That is why we created the AAA process and built an industry-leading team comprised of hundreds of employees, including Analysts, Acquisitions Associates, a Managing Director of Asset Management, a Chief Investment Officer, and a Managing Director of Capital Markets.  

 

Investing Made Simple  

At Ashcroft Capital, we want to make it simple and easy for our investors. We have you covered from start to finish. From identifying multifamily markets, locating properties, and structuring deals, to managing the properties and business plan. Our investment model is tailored for investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. Ashcroft Capital negotiates the purchasing and financing of institutional-quality properties on behalf of investors. We are known for our best-in-class value-add strategy that creates forced appreciation in addition to organic market growth.  

 

Ashcroft Capital’s Track Record 

Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors. Ashcroft Capital Track Record

Next Steps 

Whether you are a new investor or seasoned professional, we welcome you to meet our team.  Accredited investors can schedule a call with one of our team members to learn more about our current offerings and opportunities. No investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions.  

 

travis@ashcroftcapital.com

*Past performance is not indicative of future results; investors may lose investment capital. Please see “Disclosures” for more information.

Sources:

  1. Ura, Alexa. “Texas is Now Home to 30 Million People.” The Texas Tribune. December 22, 2022. https://www.texastribune.org/2022/12/22/texas-population-growth-30-million-census/#:~:text=Texas%20has%20joined%20California%20as,from%20the%20U.S.%20Census%20Bureau.
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Generational Wealth: A Keen Accountant’s Investment Strategy

March 5, 2024

Investor Feature - Generational Wealth - William Barry

“What really struck me when I found Ashcroft was that it seemed to be a very conservative company––under-promise, over-deliver.” 

 

Navigating the Seas of Wealth: A Naval Veteran’s Approach to Generational Wealth 

Florida-based William Barry isn’t your average corporate accountant. A world-traveling Naval veteran and family man, William now uses his background in financial analysis and passion for entrepreneurship to build generational wealth.  

Describing his investment journey, William explains, “I had some exposure to investments as an accountant, but it wasn’t until I ended up working at Raymond James that I learned about all the structured products available out there. My sister got involved in raising money for private equity investments, and that really opened my eyes to the world of accredited investors. When I finally hit that mark, I went all in. About 70% of my investments are in private equity, and Ashcroft is part of that split.”

According to William, Ashcroft has one key advantage over his other holdings. “The private equity world is a very slow moving animal,” he says.

“Whatever you put in, it’s going to be five-plus years before you see it come out. That’s the nice part about Ashcroft. It’s one of the few that actually pays the monthly coupon. What that has allowed me to do is build up more funds to do more subscriptions to some other smaller private equity investments.” 

 

 

Investing with Intention 

With much of his net worth wrapped up in investments, William has become a pro at identifying what’s worthy of his hard earned contributions. Before committing to partnership, William always works to understand if there’s “an itch in the market,” as he puts it. “I think the people who have a good idea are those fulfilling a real need,” he says. “However, I really invest more in people than I do businesses. Ashcroft is one of the ‘people’ investments.” 

William first learned of Ashcroft while evaluating his investment strategy in the wake of COVID-19. “I was watching Bloomberg during the pandemic,” he recalls. “I was working from home and had it on in the background. I was looking at what to invest in because the market was going crazy, and I started hearing about companies doing work similar to Ashcroft, but they just didn’t fully click for me.”  

Things finally did click when William discovered Ashcroft through his research. He quickly found that several factors aligned with his values, future vision, and risk tolerance. “I like the rate of return that you guys were making. You also have a strong model that you’re following,” he explains.  

“First of all, your selection criteria is good. And that’s really the first and most key element. After that, you have a team in place to do all the transformation necessary to make that investment grow in value. I like that you’re very vertically integrated. Everybody’s on the same team with the property managers and the construction company that’s doing the work.”

 William Barry Vacation

 

Laying the Foundations for Generational Wealth and Future Prosperity 

While happy to have found a trusted long term partner for passive investing, William isn’t quite ready to give up his work as an accountant and live off the interest. “With all my money tied up in private equity, I’m still living pretty modestly right now––basically, no debt; and although I’m traveling, I’m doing it pretty affordably,” he says.  

“But this is going to be a somewhat extravagant year,” William admits. “I’m going to Peru this month and Kenya in May. We just did Romania in December. I’m probably going to do England in the Fall, and we’re going to throw Colorado in there, too. But mostly, we plan to continue living within our means and watching our investments grow.”  

When it comes time to retire, William will be poised for a comfortable life with even more  international travel. “When I get onto a fixed income platform, it’s pretty much all going to be the Ashcroft funds that drive that,” he says.

“I’m going to push as much money as I can into Ashcroft from my Roth, so I’m not paying any taxes. As I keep getting funds from other PE, the plan is to put it into Ashcroft until I’m at that point where my monthly passive income reaches a level where I don’t have to worry about it.”   

Of course, William isn’t just worried about stockpiling cash for his own retirement. He has a vision for building financial security and generational wealth for his extended family and its future members. “I want to set up a family office for both my mom’s side and my dad’s side. With that base, everyone will be able to buy in (at any level of their investing strategy) for just a portion, even $500, to piggyback off of what the trust is doing. I don’t think my family has had that cohesive idea of us all working together to achieve much greater goals. So, I would like to change that thinking.”  

“It’s not going to benefit my generation. It’s really for the next generation to come.”

William is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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Ashcroft Capital’s Procurement Process: Driving Efficiency and Innovation

February 29, 2024

By: Travis Watts, Director of Investor Development

Inside Ashcroft Capital’s Procurement Process – Streamlining Operations for Unmatched Efficiency 

Typically, a real estate syndicator identifies, structures and acquires assets on behalf of investors.  However, a firm seeking greater self-reliance may opt to internalize additional aspects of the process, such as directly overseeing asset management and ensuring the full implementation of the business plan from inception to completion. This strategy is commonly referred to as vertical integration. At Ashcroft Capital, we aim to set a Gold Standard.   

Our property management company, Birchstone Residential, and its in-house construction team, Birchstone Construction,  have one of the best streamlined in-house procurement processes around. Ashcroft Capital handles all steps of the investment life cycle, yielding the strongest possible returns for investors by streamlining operations in true vertical integration fashion.  

Beyond our property management and construction arms, Ashcroft Capital’s procurement process is a one-of-a-kind cornerstone that truly sets us apart from the competition. This process has decreased our unit renovations timeline to sub-30 days, which is among the fastest turnaround in the industry. 

 

Four Step Procurement Process 

  1. We source materials directly from manufacturers. 
  2. We ship the materials to our Birchstone warehouse in Dallas, TX. 
  3. We organize the materials into individual unit renovation kits. 
  4. We disseminate the renovation kits to our communities. 

Procurement Process

 

20-30% Savings 

We source most renovation materials directly from the manufacturer. This allows for the best possible pricing with the additional benefit of our hardware always being in stock.   

The savings we tend to see are 20 to 30% less than what we see when buying the same amount in bulk from U.S. retailers. We re-run these comparisons on a bi-annual basis to make sure our costs are well below market. This approach creates tremendous efficiencies and locks in pricing to help offset future inflation. In addition, we mitigate supply chain delays by having bulk inventory on-hand for our properties, which is stored in our own warehouse in Dallas, TX. Typically, we place material orders of $5 million or more and forecast the need for about 9 months’ worth of inventory in our orders.  

Procurement Process - Warehouse

 

30% Custom Designed 

About 30% of our renovation materials are custom designed at no additional cost because of our large volume orders. Custom designed items include pendant lights, faucets, vanity lights, and cabinet hardware. Most groups cut items to save money, while we operate more efficiently with higher quality products. Our focus is on providing high quality renovation finishes while saving money through bulk orders comprised of the best materials.  

Procurement Process - Renovations

 

Small Details Lead to Big Savings

Some Examples: 

Light Fixtures – In a standard apartment community, you might see brushed nickel dome lights in the hallways or entrances. We renovate our properties so that they not only have an updated modern look, but also for efficiency. For example, standard dome lights require two light bulbs, resulting in more maintenance. Instead, we use flush mount lights that have a modern sleek look and only require one light bulb. In addition, these custom-made lights are $4 less than the standard dome lights. On a final note, as it pertains to light fixtures, we replace the glass, not the product. Pendent lights are beautiful, they make the space pop for the resident, but sometimes the maintenance team makes a mistake and breaks the glass when installing them. We have a process that accounts for that by having extra glass on hand so that we don’t have to replace the entire unit.  

While these small savings may not seem significant, as we apply this process to thousands of units, a real cost savings benefit adds up for our investors.  

Procurement Process - Fixtures

 

Bar Pulls – The pulls we have on our cabinets are zinc die cast. Working directly with the manufacturers, we can dictate the finishes. Not only does this mean we don’t have to pay a premium for the current trend, but we can also manufacture in a more durable way. For items like cabinet and door pulls, we dictate a zinc die cast finish, which is more durable to wear and tear and from surface rust. Our bar pulls cost about 20 cents less than what most of our competitors pay, and about 30 pulls are needed for each apartment unit we renovate. That’s a $6 savings per unit, but more importantly, a six-figure savings across the portfolio.  

Procurement Process - Bar Pulls

 

Ashcroft Capital’s Procurement Process is Customized to Benefit Investors.    

We mitigate risk by:  

  • Decreasing turnaround time for renovations 
  • Avoiding supply chain delays via bulk ordering  
  • Offsetting inflation costs via bulk ordering  
  • Utilizing In-house construction teams vs third-parties 
  • Using less packaging to reduce our environmental impact 

We increase potential profits by:  

  • 30% cost savings in materials by buying in bulk  
  • Custom-made high-quality materials for our residents leading to higher tenant retention and decreases turnover  

 

Adding Value  

The collaboration of Ashcroft’s fully integrated platform enables us to execute each property’s business plan immediately upon acquisition. Through renovating and revitalizing our apartment communities with our industry-leading value-add business plan, we enhance the quality of our properties, making them more attractive, safer, and appealing for our residents. Simultaneously, we improve value for our investors by boosting net operating income, addressing inefficiencies, and ultimately enhancing property valuation upon sale. 

Ashcroft Capital has you covered from start to finish. From locating properties, to structuring deals, to overseeing property management. Our investment model is tailored to investors who want to enjoy all the benefits of owning multifamily real estate without the headaches of being a landlord. We negotiate the purchasing and financing of institutional-quality properties on behalf of investors and are best known for our best-in-class value-add strategy that creates forced appreciation.  

Procurement Process - Value Add

 

Ashcroft Capital’s Track Record 

Since inception, we have delivered 25%+ annualized cash-on-cash returns to investors on the first 26 deals we have taken full cycle through the business plan. We have over $2.8 billion dollars in assets under management (AUM) and more than 21,000 units. Our track record is a direct result of a commitment to excellence in property management and a focus on capital preservation for our investors.  

Ashcroft Capital Track Record Overview

 

Next Steps 

Whether you are a new investor or seasoned professional, we welcome you to meet our team.  Accredited investors can schedule a call with one of our team members to learn more about our current offerings and opportunities. No investment is without risk. Make sure to consult your investment advisor or speak to an Ashcroft Capital team member before making any financial decisions.  

travis@ashcroftcapital.com

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Leaving Your W2 Job: Navigating the Transition

February 27, 2024

By: Travis Watts, Director of Investor Development

Exploring the Financial Implications of Leaving Your W2 Job 

In the realm of personal finance, few decisions rival the magnitude of leaving behind the security of a W2 job to pursue entrepreneurial ventures or become a full-time investor. It’s a decision with complexities, uncertainties, and profound implications for one’s financial future, but it may be a risk worth taking. In this article, we’ll explore some considerations if you are looking to take the leap yourself.  

 

Key Considerations Before Leaving Your W2 Job 

1. Building a Financial Safety Net

At the heart of the transition lies the importance of financial preparedness. Establishing a cash safety net, typically six months of living expenses, serves as a buffer against unforeseen events in the near term. New businesses can take time to become profitable, and new investments can take time to yield results.

Depending on your circumstances and desired path, you may warrant a more conservative approach, necessitating a year’s worth of reserves or alternative liquidity sources. Planning and budgeting accordingly can improve the odds of long-term success.  

2. Navigating Health Insurance:

Transitioning from an employer-sponsored healthcare plan to private insurance entails a reevaluation of healthcare costs. Understanding the financial implications of health insurance premiums is paramount, as the cost may come as a surprise if you have never shopped for private health insurance.

A recent ValuePenguin.com analysis found that in 2024, Americans will spend a record $584 per month, or $7,008 per year on health insurance, if they purchase a private health insurance plan.  

The cost of private health insurance varies based on several factors, including how you buy your plan. When you buy private health insurance through your state or federal exchange, you could be eligible for subsidies to help with monthly payments and other insurance costs.  

3. Prioritizing Passive Income

Whether embarking on entrepreneurial endeavors or embracing full-time investing, prioritizing passive income is imperative. Passive income offers a world of possibilities from offsetting monthly expenses, adding flexibility to your lifestyle, and providing long-term financial security. According to the legendary investor Warren Buffett, free cash flow—the cash remaining after a company has covered expenses, interest, taxes, and long-term investments—is the most crucial metric.

With this in mind, if you are starting a business, how long will it take before it cash flows? If the business will not cash flow, how will you generate income in the meantime? For investors, cash flow is often overlooked and is not widely taught. Many financial products are intended to be held for long-term equity growth and appreciation. If you intend to venture out today, these may not be useful. Suppose you invested 100% into growth investments and the market declines for the next two years. How will you generate income?   

4. Evaluating Credit Dynamics

The role of credit in post-transition endeavors cannot be overstated. While W2 income is often most favorable with lenders, self-employed individuals may encounter challenges in accessing credit once they branch out on their own. Proactively addressing any upcoming credit needs, like obtaining a mortgage, financing a vehicle, personal loans, or opening new credit cards while you still have W2 income, can put you in a better position for making the transition.  

5. Embracing New Income Opportunities

If you are departing from a W2 job to pursue investing, it does not have to mean active income is a thing of the past. Many investors choose to pursue part-time employment, side hobbies, passion projects, or charity work and often derive fulfillment and financial rewards beyond the traditional 9-5. Many widely known investors. such as Carl Icahn, Jack Bogle, George Soros, and Peter Lynch, have active income sources aside from their investments and Investors are actively engaging in their careers well into their 80s and 90s. 

6. Worst-Case Scenario – Reentry into the Workforce

The thought of branching out into the unknown can seem intimidating, but what is the worst-case scenario if your business or investments don’t end up supporting your lifestyle? There is always the option to return to the workforce, and guess what? That’s what everyone else is doing anyway. Here’s a quick example for perspective.

Boxing legend Mike Tyson earned nearly $400 million dollars during his career, then filed for bankruptcy in 2003. Since then, he “returned to work” and has been featured in films, commercials, and TV shows. He’s launched multiple businesses and even returned to the boxing ring in 2020. He has now reclaimed multi-millionaire status, albeit not at a $400-million-dollar level…yet. 

 

Conclusion: Forging Your Path to Financial Freedom 

The decision to leave your W2 job represents a profound juncture in one’s financial journey. It’s a decision that entails both risk and opportunity and demands planning and balance. While the path is not without its uncertainties, it can often unlock unparalleled growth and self-actualization. Ultimately, the decision to depart from the familiar shores of traditional employment is a testament to one’s courage, preparation, and unwavering commitment to charting a course towards new adventures and experiences. To your success. 

 

Want to explore more content like this? 

Tune into new episodes of The Passive Income Lifestyle on YouTube

Talk to Travis

 

Sources:

  1. Shepard, Daniel. “Average Cost of Health Insurance (2024).” ValuePenguin. December 15, 2023. https://www.valuepenguin.com/average-cost-of-health-insurance.
  2. Mishra, Neena. “Why Investors Should Focus on High Cash Flow Stocks & ETFs.” yahoo!finance. August 29, 2023. https://finance.yahoo.com/news/why-investors-focus-high-cash-162900708.html.
  3. Rodgers, Josh. “How Mike Tyson Earned $400M, Filed For Bankruptcy, And Recovered.” AFROTECH. April 19, 2023. https://afrotech.com/mike-tyson-bankruptcy.
  4. Nelson, Allie. “Pigeons, Tigers, and Bears—Oh Mike! All About Mike Tyson’s Net Worth in 2024.” Parade. January 11, 2024. https://parade.com/celebrities/mike-tyson-net-worth.
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Ashcroft Welcomes a Proven Real Estate Entrepreneur to the Investor Relations Team

February 23, 2024

Investor Feature - Lennon Lee

“Multifamily real estate deals are a financial product I love––that’s why my family and I are personally heavily invested.” 

Lennon Lee has been raising capital for multifamily projects and looking after investors for nearly a decade. He’s just joined the Investor Relations team at Ashcroft to “help investors better navigate deals and strategy.” Lennon observes, “times like these can be challenging and even scary for investors, so I will be on top of their questions and concerns. Investor education is something that I’m very passionate about.” 

Lennon Lee Real Estate 

Real Estate is a Family Tradition  

Due to ongoing political unrest in their native Venezuela, Lennon and his family relocated multiple times between their South American residence and the United States.  

“We always had some single family properties in Venezuela. My mom told me her grandfather always said that the goal was to live off the rent. He owned some retail shops in the small town where we’re from. So, my mom and dad always knew they wanted to take whatever little bit of money they had and park it somewhere, somehow in real estate.”  

Lennon remembers visiting the U.S. frequently with his family. “We like this country a lot, and we understand exactly what it means for us in terms of safety––personal, fiscal, and judicial. Investing here was a way for us to protect capital.” 

“My parents were always hard workers,” he remembers. “And as a family, we asked how we could protect what we have and try to make it grow. That was the thought process when I came to Miami and my family put me in charge of managing the portfolio.”  

Lennon Lee Real Estate Family

After completing his graduate degree, Lennon says, “I really didn’t want to do the nine-to-five, so I decided to go the real estate route and became a realtor. I started educating myself through books and countless hours listening to podcasts. That’s how I heard about Joe. I knew he was doing exactly what I wanted to do.” This inspired Lennon to contact Joe Fairless and further his real estate career. 

“I started working with Joe as a student of his program. Then I began investing as an LP on a few deals. That ultimately led me to start my own private equity company,” he says. “I also started a podcast in Spanish called Se Habla Real Estate, educating investors on multifamily and real estate in general.”  

Lennon says he was eager to put all this experience to work in his new position at Ashcroft, where he plans to level up his knowledge and make a positive impact on even more investors.  

“I wanted to bring my experience and expertise to a company with a bigger structure and a larger base of investors to further develop my career as an investor relations manager.” 

Lennon Lee Joe Fairless Real Estate 

Bringing Multifamily Deals to New Audiences 

His unique experience as an immigrant investor led to Lennon’s love affair with multifamily projects and syndications. Sharing his story has inspired countless new investors to embark on their own real estate investment journey. 

“For us in Latin America, if you want to protect your capital, there’s no security in our countries, generally speaking. The main idea when an investor like us comes to this country and wants to invest in real estate is capital preservation––making sure your money is placed in a safe haven,” Lennon explains. “What that typically looks like for us is buying a few condos or a house in South Florida and renting them. But after spending a few years here and managing our properties, I started to understand how difficult it was to do it all myself. Even our small portfolio started taking a lot of my time,” he recalls.  

“Eventually I saw there were other avenues that were more attractive not just in terms of capital preservation, but maximizing capital. I wanted to see how we could achieve cash flow by putting our money somewhere where we don’t depend on the market to see the property value go up, but we can actually control it.”  

Lennon found the answer in commercial real estate. “In commercial real estate, you might have the exact same property that I have, but at the end of the day, it’s a business. If I manage my business better (reduce expenses, optimize operations), my property is going to be more valuable, and I will increase my income. That, to me, was an eye opener.” 

 

Reasons to Believe in Multifamily Real Estate Investing 

Lennon’s commercial real estate endeavors led him to the multifamily asset class. “It caught my attention because it was easy to understand. Everyone needs a roof over their head. Then, there’s steady immigration, Millennials and Gen Z starting to create households, and Boomers retiring and downsizing. So at the macro level, it’s an asset class that I think is going to be very strong long term. And the passive [income] component is just so attractive.” 

For Lennon, what really matters is working with the right partner––especially since he advises his parents and sister on their financial future.

“It’s a matter of building trust and understanding the track record. If the team has proven they’re able to execute, then they’re probably going to do a better job than you will on your own.”  

When it comes to his own future, Lennon is confident that his investment strategy can lead to “total financial freedom,” allowing him to pursue other passions like travel, high-stakes poker, advising entrepreneurs, and starting a family of his own.  

If you would like to learn more about investing in multifamily assets or our current offering, Lennon would love to connect with you.

Schedule a Call

Lennon is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.

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The Multifamily Market in 2024: What to Expect

February 21, 2024

By: Travis Watts, Director of Investor Development

A Year of Stability Amid Challenges 

The multifamily market in 2023 has shown resilience and adaptability in a sea of economic uncertainties. With an unemployment rate that remained impressively low at 3.9%, and rental growth predictions between 2.5% and 3.7%, the sector has shown remarkable resilience.[1] 

However, it’s not all smooth sailing. A noticeable dip in new construction raised eyebrows, signaling a potential future shortage of housing.  

 

Economic Tailwinds and Multifamily Market Stability 

As we progress into 2024, the multifamily market appears poised for a year of dynamic growth and opportunity. Despite the challenges of recent years, including economic fluctuations and interest rate hikes, strategic market shifts set the stage for a promising year ahead. 

In 2024, the multifamily market is expected to benefit from a combination of economic recovery and strategic adjustments. With the unemployment rate maintaining a low profile and a positive outlook on rent growth, investors and property owners could anticipate a stable and potentially lucrative landscape. This stability is further bolstered by a nuanced understanding of the Federal Reserve’s monetary policies, which is centered on market stability. 

2024 Multifamily Market Outlook

 

Interest Rates and Investment Dynamics 

The Federal Reserve took a firm stance against inflation with rate hikes in 2022, aiming to stabilize the economy. This monetary policy shift directly impacted the multifamily market, affecting property values and investment decisions. While higher interest rates pressured valuations, there’s a silver lining: the anticipation of rate normalization could favor investors in the long run.[2] 

  

Navigating Supply and Demand Dynamics 

One of the critical factors influencing the multifamily market in 2024 will be the balance of supply and demand. While new construction has slowed in response to economic pressures, the demand for rental units continues to climb, especially in high-growth regions like the Sun Belt.[3] This imbalance presents both challenges and opportunities, as developers and investors race to meet the demand without oversaturating the market.  

The upcoming year is expected to bring a flood of new units to the market, a result of the development boom in 2021. However, this surge coincides with less favorable economic conditions, making the competition fiercer. The expected drop in construction by summer 2024 highlights a crucial supply challenge, especially with a significant number of multifamily loans maturing in the near term.[4] 

 

Rental Market Trends: A Mixed Bag 

Demographic shifts towards the southern and Sun Belt regions are reshaping demand, creating hotspots for multifamily investments. As the gap between owning and renting widens, renting becomes an increasingly attractive option, supporting the rental market’s strength.  

Rent averages nationally have steadied at around $1700, a figure influenced by the Fed’s interventions which have tempered rent growth.[5] Despite this stabilization, experts like CoStar are optimistic, forecasting a rebound in rent growth and occupancy rates into 2024, thanks to economic recovery and a tight supply of new units.[6]  

Average Rent Growth

Strategies for Success: Value-Add Multifamily Investments 

Success in the multifamily market in 2024 will require a blend of adaptability and innovation. Investors who are quick to identify the shift towards value-add projects and sustainable building practices could position themselves well to capitalize on the evolving landscape. 

By revitalizing older properties, investors may unlock potential rent increases, aligning with the broader trend of positive rent growth over time. Focusing on Class B apartments targets the substantial middle-income demographic, offering a blend of affordability and quality. Additionally, a focus on tenant needs and preferences, such as the demand for flexible living spaces and amenities, will be key to maintaining high occupancy rates and driving rental growth. 

  

The Role of Technology and Data Analytics 

Technology and data analytics will play an increasingly important role in shaping the multifamily market in 2024. From optimizing property management to enhancing tenant engagement, the integration of tech-driven solutions will be a critical factor in differentiating competitive offerings. Moreover, data analytics will provide invaluable insights into market trends, tenant behavior, and investment opportunities, enabling more informed decision-making.  

Ashcroft Capital’s property management group, Birchstone Residential has already implemented and is benefiting from these new technology solutions.  

  • AI led follow-up tool (6:52) 
  • Fraudulent application software (8:23) 
  • Purchase order program (18:35) 
  • Online reputation auditor (21:10) 

 

Conclusion: A Year of Opportunity Awaits the Multifamily Market 

Looking ahead, the multifamily market is poised for a transformative phase. With interest rates expected to ease and strategic investments in growing markets, the outlook is bright for those who adapt and plan ahead.  

As the sector continues to evolve, adapting to economic shifts and capitalizing on emerging trends will be key to achieving sustained success in the multifamily market. Whether you’re an investor, developer, or property manager, the multifamily market in 2024 promises a landscape rich with potential for growth, innovation, and long-term success.  

 

Want to take a deeper dive?  

Tune into new episodes of Multifamily Market Report on YouTube

Talk to Travis

 

Sources:

  1. Munger, Paula. “2024 Apartment Housing Outlook.” National Apartment Association. December 4, 2023. https://www.naahq.org/2024-apartment-housing-outlook.
  2. Caldwell, Preston. “When Will the Fed Start Cutting Interest Rates?” Morningstar. January 29, 2024. https://www.morningstar.com/markets/when-will-fed-start-cutting-interest-rates.
  3. “U.S. Population Trends Return to Pre-Pandemic Norms as More States Gain Population.” United States Census Bureau. https://www.census.gov/newsroom/press-releases/2023/population-trends-return-to-pre-pandemic-norms.html.
  4. “United States Multifamily Capital Markets Report.” Newmark. 3Q 2023. https://www.nmrk.com/insights/market-report/united-states-multifamily-capital-markets-report.
  5. “Multifamily Rents Remain Flat in January, Reports Yardi Matrix.” Yardi. February 14, 2024. https://www.yardi.com/news/press-releases/multifamily-rents-remain-flat-in-january-reports-yardi-matrix.
  6. Munger, Paula. “2024 Apartment Housing Outlook.” National Apartment Association. December 4, 2023. https://www.naahq.org/2024-apartment-housing-outlook.
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The FIRE Movement: Financial Independence Through Real Estate

February 16, 2024

 

By: Travis Watts, Director of Investor Development

The FIRE Movement

The FIRE Movement, an acronym for Financial Independence Retire Early, has gained significant traction since its inception, particularly after the 2008 financial crisis. Primarily centered around stocks, this movement advocates for aggressive savings coupled with low-cost index fund investing to amass a nest egg substantial enough to sustain a person’s lifestyle indefinitely.[1]  

However, beyond the realm of stocks, there lies a compelling avenue within the real estate sector that aligns seamlessly with the principles of the FIRE Movement. 

 

Understanding the FIRE Movement with Stocks 

A core staple of the FIRE Movement revolves around building a robust portfolio through diligent saving and disciplined investment. Participants typically channel a significant portion of their income – often 50% or more – into low-cost index funds (stocks) over a span of 10 to 20 years. Upon reaching a predetermined financial milestone, typically a one to two-million-dollar portfolio, individuals then sell off 4% a year from their investments to sustain their lifestyle.  

The Simple Math  

4% of $1,000,000 = $40,000 per year 

4% of $2,000,000 = $80,000 per year  

The idea behind the “4% Rule” is that historically the stock market has averaged around 8-9% a year in equity growth, thereby, withdrawing 4% a year creates a buffer to account for inflation while also facilitating continued portfolio growth.[2]

 

Extending the FIRE Strategy to Real Estate

In parallel with the principles of the FIRE Movement, real estate offers a compelling alternative investment avenue. Considering the innate cash flow potential that real estate can provide, investors can adopt a strategy where they use passive income as the “withdrawal rate”, rather than selling off the portfolio. Private real estate investments are inherently illiquid, so selling off a percentage of a portfolio is usually not applicable. Instead, collected rent and revenue can provide monthly income and any equity gains (when a property sells at a profit) allows the portfolio to grow over time, and could provide a buffer for inflation similar to that of the 4% Rule’s methodology.

 

Realizing the Benefits of Real Estate Investment

The allure of real estate investment lies not only in the potential for diversified income streams, but it also offers a myriad of tax advantages, it is not highly correlated to stocks, it offers relatively low volatility and since the year 2000, private real estate has outperformed US Equities on an annualized basis.

 

Crafting a Personalized Path to Financial Independence

While the FIRE Movement underscores the pursuit of financial independence and early retirement, its implementation remains inherently flexible. Investors can tailor their approach based on individual preferences and risk appetite. For many investors, the addition of real estate can simply be a way to diversify a portfolio while unlocking new avenues for income generation.

Bob’s Case Study

Let’s examine a quick case study for example purposes:

  • Bob has $100,000 to invest.
  • Bob earns $125,000 a year at this job ($100,000 after taxes).
  • Bob maintains a 50% savings rate (after taxes)
  • Bob lives on $50,000 every year.
  • Bob allocates $50,000 toward his investments every year.

Simply saving this amount of income could amass a portfolio worth around $600,000 in a 10-year timeframe without factoring in any investment returns. But if we factor in an 8% annualized rate of return for these 10 years, Bob’s portfolio would be close to $1,000,000. This calculation does not include equity gains, this is purely generated from cash flow, so the portfolio could amount to much more.

At this point, FIRE begins to unfold. Bob can choose to live on his cashflow; roughly $80,000 a year assuming an 8% yield, or he may choose to take some time off, retire a spouse, switch careers, or embrace charity. The point is, Bob has options.

 

Summary: The FIRE Movement

In recap, that is what the FIRE movement is all about. It’s about having more options. Many choose to continue working after reaching “FI” and opt-out of the “RE” retirement component because they enjoy their career or see a need for contribution. That is the beauty of it, it’s completely in your hands to modify your lifestyle the way you see fit. Something to think about for the week.  

 

Want to take a deeper dive?  

Tune into weekly episodes on YouTube

Talk to Travis

 

Sources:

  1. Kerr, Alexandra. “Financial Independence, Retire Early (FIRE) Explained: How It Works.” Investopedia. January 31, 2024. https://www.investopedia.com/terms/f/financial-independence-retire-early-fire.asp
  2. Suknanan, Jasmin. “What is the 4% rule and how can it help you save for retirement?” CNBC. November 30, 2022. https://www.cnbc.com/select/what-is-the-4-percent-retirement-savings-rule.
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High Net Worth Investor Focuses on What Matters Most

February 8, 2024

Investor Feature - Scott Rasband

“I was tired of watching my net worth go up and down with the stock market, and I had the realization that I should monetize it––have my money pay me.” 

Forty-eight year old Scott Rasband is planning his next trip to Costa Rica with his wife and four kids rather than obsessing over his finances. Savvy career choices and a new real estate investment strategy have positioned Scott for early-morning surf lessons instead of waking up to market reports.  

After 15 years of working his way to the top of the medical device industry, Scott Rasband had an epiphany.

“I realized that being in senior leadership was where I thought I wanted to go, but it was actually endless traveling, and your time is not your own. I had to ask myself what I really wanted to do with my life.”  

 

Cooking Up a Better Way to Live  

That’s when he transitioned into owning a Chick-fil-A franchise. “I started all over with a Chick-fil-A eight years ago, and it’s been the best decision I’ve ever made. The money’s still great, and what I love about it most is that I get to employ a hundred people, have influence over their lives, and serve them and the community.” 

After seeing his net worth rise to about $4 million (and sometimes fall along with the market), Scott decided he needed to develop an investment strategy that would better protect his net worth––as well as pay dividends.  

 

Learning How to Monetize Net Worth 

“You have friends doing real estate and people are talking about it,” says Scott of his introduction to real estate investment. “I thought I would dabble there a little bit and started learning about all the benefits––especially the tax advantages. I went into single family real estate. I got a duplex in a great area in Utah that I got for a steal, and it’s got a ton of equity in it. I purchased a townhome that I got off-market. I flipped an office building. I got another single family property and flipped it in six months. I made $130,000 on that.”  

But soon, Scott realized that his new lucrative financial strategy was taking up a lot of his time.

“I did well, and I made some money, but I don’t need to be pulling up carpet. Every decision for me now is about how much of my time it’s going to take.”  

He continued to educate himself through networking and podcasts like Wealth Without Wall Street, Left Field Investors, and Money Ripples to learn all about passive investing. Then, he got in touch with Ashcroft’s Travis Watts. “We set up a call and, sure enough, he was right there talking to me,” says Scott. “I showed him my spreadsheet and my goals, and I was able to really pick his brain on the different things he’s doing.”  

 

The Perks of Passive Income 

This led Scott to his new approach to real estate investing. “My strategy has been to do one to four deals every year for the next 10 years where my principal balance (the golden goose) stays the same, and it just pays me monthly,” summarizes Scott.   

“I’m in five deals right now; I’ve just started this transition last year. I’m still learning, and it’s been interesting. I’m trying to diversify, so I’m in different types of funds. The Ashcroft fund I’m in is an A share, and it’s nearly a guaranteed monthly payment of 9% no matter what. I’m in a single apartment complex in Austin, Texas, a mobile home park in Kentucky, and I’m in a fund that does a bunch of mobile homes and self storage. So, that’s four different categories. I want to watch how they perform and how they pay.”  

“Of the five deals I’m in, Ashcroft is the one that’s gone exactly as they said it would.” 

Now that Scott has a firm footing in real estate syndication, he has more confidence that his hard-earned money is working hard for him. “I feel like the stock market is a game. This is more consistent, to me,” he explains. “I’ve decided I’m going to take portions of my net worth and have it pay me. My goal is to get to $30,000 a month passive. It’s almost just simple math. How many deals do I need to be in to generate this much income spread over time?”  

Consistency of income is a top priority for Scott and his family. “That’s where these types of deals come in,” he says. “What I love about this versus the stock market is, with stocks your balance can fluctuate up or down (you might be drawing on principle), but with these deals (if they go right), your principle should increase 1.5x or 2x. And you’re still getting paid along the way. Then when you exit, you can recycle that money into new deals.” 

At the end of the day, this helps Scott rest easier about his financial future. “I have more peace of mind,” says Scott.

“I don’t wake up checking stocks every day and wondering if I should sell this or sell that. With the gambling, gaming nature of stocks nowadays, personally, if I’m trading, I can’t leave it alone. It’s been really peaceful to let that go and have this consistent plan of what I want to accomplish and just follow the plan. It’s just easy; I don’t really have to do anything!”  

“Another advantage is that I’ve set up an LLC for all these passive investments to go into and that money for me is not touchable. I’m not living off of it. It’s just growing. So, any distribution goes into this account. When it hits a new $50,000 or a new $100,000, it goes into another deal. If anything exits, that stays in the account until I’m ready to fully live off of it.”  

According to Scott, one of the key advantages of investing with a syndicator like Aschroft is “the K1s and write-offs.” He goes on to explain, “You see these returns of 12%, to 15%, to 20%, and you’re literally not paying taxes on that money because of cost segregation. So those returns are much higher than you think. Whereas if I’m in the stock market and I sell, I’m paying capital gains tax. Or, if I flip a house and I sell it, that’s all taxed. The K1’s have been nice and helpful––and they’re piling up.”   

 

Where Syndication Leads Next  

Scott isn’t ready to retire yet, but he’s happy to reap the financial and emotional benefits of his investment strategy when the time comes. “As much as I love my employees, I love my Chick-fil-A, and I love my business, I look forward to the day of zero liability. So, I think being a limited partner is a great strategy for that,” he muses.  

“I already live my dream life. My family, my business are amazing. I get to do anything I want to do whenever I want to, while having a positive influence over people. In the end, I’ll probably be in 30 or 40 deals and surfing in Costa Rica.”  

Scott is just one of our 3,000+ investors. Hear what passive income has meant to over 100 of our investors.