From the Desk of CF Capital: August Investor Report

Hello Friends and Investors,

The last month has been quite eventful in our country and across the world. As the 2024 U.S. presidential election approaches, we expect tensions to remain high. In July, President Trump miraculously survived an assassination attempt, and President Biden decided to drop out of the race, with VP Kamala Harris emerging as the presumptive Democratic nominee. Meanwhile, the Federal Reserve hinted at potential rate cuts in September, leading to a decline in treasury yields following revised economic data. Are we on the brink of a soft landing, or is a hard landing more likely as recession expectations rise?

In addition to these domestic developments, global conflicts in the Middle East, Eastern Europe, and South Asia are intensifying, fueling fears of broader geopolitical tensions. As investors, it’s crucial to stay informed without becoming overwhelmed or pessimistic, especially with many events beyond our control.

These factors impact our portfolio management and short-term growth strategies. However, our focus remains firmly on the long term, and these current events are just that—current—and they too shall pass. Our North Star continues to be investing for the long term and managing through short-term noise. During both good times and bad, we aim to find opportunities where we can identify and drive value.

We’ve been saying that the current multifamily market in our region presents a “window of opportunity” to acquire attractive deals at a compelling basis—below replacement cost and well off the historic highs of recent years. Now, we are assessing whether this window will expand, prolong, or retract. With rates potentially declining, the market could become more conducive to transactions, which have largely stalled over the past year. However, this could also reignite irrational exuberance, driving pricing and cap rate compression, trends that have eased since mid-2022.

We remain nimble and prepared for either scenario, maintaining our long-term perspective while avoiding the trap of short-term volatility. Long-term trends are our calling card, and partners like you resonate with this approach, knowing that it’s impossible to “outsmart” the market consistently.

For investors on this journey with us, thank you for your continued trust in our team to steward your capital. We are committed to elevating our performance for your success. For those considering joining us, we would be honored to discuss your goals, the current market conditions, and future opportunities.

Here's to wishing you a great month as the kids head back to school and routines return!

In Partnership,
Tyler & Bryan

PS. There's no higher compliment than you referring us to your friends, family, and colleagues. We'd be honored by the opportunity to become a part of their trusted networks. Share your experience investing with CF Capital & invite others to become an investor here.

From the Desk of CF Capital: May Investor Report

Hello Friends and Partners,

The 150th running of the Kentucky Derby was quite the exciting photo finish, creating the most dramatic race in over 70 years for the heralded event. For folks from Louisville, the greatest 2 minutes in sports capped off a spectacular week of pageantry and fellowship for our team and families. We participated in some of the festivities throughout the week, enjoying each others' company and discussing opportunities and developing further our ever so important long term relationships with team members, partners, and vendors.

Aside from enjoying ourselves at Churchill Downs, we've had an extremely active month. We officially launched our latest opportunity, Island Club, in Indianapolis and are more than 75% full with limited slots remaining. While the market remains challenging, we believe this opportunity is extremely compelling and project outsized returns on this deal. Due diligence has been a success and revealed our expectations are in line with the potential of the asset, and we along with our management team expect even further upside after gaining detailed familiarity with the asset. Needless to say, we're excited! If you'd like to learn more about the deal or discuss your specific questions, please reach out while the opportunity is still available.

On the day to day front, we're excited to share that we're actively recruiting for a Director of Asset Management to join the CF Capital family. If you know someone with experience driving results for multifamily real estate in this capacity, we'd welcome the opportunity to connect with them and explore the possibility of this role together.

Apply Here

On the "greater good front," we were proud to have hosted and facilitated a "Financial Literacy for Kids" event at a school for under-privileged middle school kids in our community. The name of the event was "How to Become a Millionaire" and we covered financial literacy topics such as making budgeting fun and approachable, making more money, and leveraging the wonderful concept of compounding. We believe that giving the gift of prosperity is one of the most important gifts we can give, and were very gratified to have delivered this experience. We look forward to these children applying these learnings in their future and continuing to give back to our community and to others around the country in the future.

In summary, while we continue to strive to live life to the fullest, expand our existing and future relationships, we are continuing to acquire game changing multifamily investment opportunities, invest in our business, navigate day to day challenges, and give back to help make a massive difference for others. We're nowhere near perfect, but we appreciate the opportunity to continue to bring value to others around us in an exponential capacity. We welcome your continued and expanded partnership as we proceed forward! Reach out any time and let's discuss your goals.

In Partnership,

Tyler & Bryan

Effects of Inflation: Strategies for Wealth Preservation

While inflation has generally become a regular occurrence in the context of economic growth, elevated or unexpected inflation can present obstacles for prudent wealth preservation and economic stability. To safeguard and augment wealth over time, it is essential to understand the causes and ramifications of inflation. By proactively implementing effective strategies, investors can mitigate the impact of inflation and secure their financial well-being. Through a combination of foresight and ongoing vigilance, individuals can take control of their financial future—protecting their investments from the eroding effects of inflation and ensuring long-term prosperity.

Causes of Inflation

Various factors, such as imbalances in supply and demand, supply shocks, and expectations of future price increases, can drive inflation.

Imbalance in Supply and Demand

When demand for goods and services outpaces available supplies, inflation occurs. In such cases, producers and businesses may raise prices in response to the heightened demand, which can lead to inflationary pressures. On the other side of this equation, when the overall money supply increases and productivity remains generally equal, inflation tends to follow as well. In recent years, we’ve seen money supply increase exponentially, leading to very substantial inflation.

Supply Shocks

Disruptions in supplies can also trigger inflation. For example, a sudden decrease in global energy supplies due to geopolitical tensions or natural disasters can lead to a spike in energy prices. This increase in production costs can ripple through the economy, contributing to inflation.

Following Russia's invasion of Ukraine, international sanctions restricted countries in the "collective West" from purchasing energy supplies directly from Russia. While Russia still sells energy to some countries, the restriction on their exports impacted global energy markets and led to increased prices. This tightening of the market contributed to inflation.

Expectations of Inflation

Expectations of future price increases can also influence inflation. When people anticipate prices will rise in the future, they may demand higher wages to protect their purchasing power. In turn, businesses and producers may respond by raising prices to cover the increased labor costs. This dynamic of wage-price spirals can contribute to inflationary pressure.

*Inflation erodes money's value, diminishing purchasing power and challenging the maintenance of a consistent standard of living.*

The Effects of Inflation on Wealth Preservation

Reduced Purchasing Power

Inflation decreases the value of money over time, leading to a reduction in purchasing power. This erosion of purchasing power can gradually diminish the value of your wealth. As a result, it becomes more challenging to maintain the same standard of living because the same amount of money will buy fewer goods and services.

Erosion of Investment Returns

Inflation can erode the real returns on your investments. When the inflation rate exceeds the returns on your investments, it diminishes the purchasing power of your investment gains. For example, let's say you earn a 5% return on your investments, but inflation is at 3%. In this case, your real return is only 2%. This example illustrates that even when inflation is at a lower rate than your return, it still reduces the purchasing power of your investment gains.

Negative Impact on Fixed Income Investments

Fixed-income investments such as bonds and fixed-interest securities have a predetermined interest rate. In an inflationary environment, the purchasing power of the fixed income generated by fixed-income investments such as bonds and fixed-interest securities decreases—meaning the buying power of the interest income may not keep pace with the rising cost of goods and services. As a result, the real return on fixed-income investments may be lower, impacting your overall strategy for preserving wealth.

Real Estate Value Fluctuations

Inflation can have a dual impact on real estate. On one hand, property prices may increase in an inflationary environment, leading to appreciation in the value of your real estate holdings. On the other hand, the real value of the asset may decrease if the rate of inflation outpaces the growth in property prices. This can make it challenging to preserve and grow wealth through real estate investments. Inflation can also impact income and expenses that real estate properties generate, elevating both sides of the income statement.

Increased Cost of Living

Inflation leads to an increase in the cost of goods and services, which affects your cost of living. When prices rise, your day-to-day expenses will increase, impacting your ability to preserve wealth. The higher cost of housing, food, healthcare, and other necessities can eat into your savings and limit your wealth accumulation.

*Investing in multifamily real estate serves as an effective inflation hedge, leveraging historical property value appreciation*

Mitigating the Effects of Inflation

To mitigate the impact of inflation on wealth preservation, it is crucial to adopt various strategies, such as:

Diversification

Diversify your investment portfolio across different asset classes, such as equities, real estate, commodities, and fixed income. A diversified portfolio can help you spread risk and mitigate the potential negative impact of inflation on your overall wealth.

Inflation-Protected Securities

Consider investments in inflation-protected securities or bonds. These securities are designed to provide returns that keep pace with inflation, ensuring your purchasing power is preserved in an inflationary environment.

Real Estate Investments

Investing in real estate, specifically multifamily, can be an effective hedge against inflation. Historically, property values tend to rise with inflation. Furthermore, rents are marked to market on an every 12 month basis, taking inflationary effects into account on the income side of these investments for owners. By investing in this type of real estate, you can benefit from the appreciation of property values and protect your wealth from inflation.

Investing in multifamily real estate is beneficial for several reasons: stable cash flow from multiple rental units, economies of scale for cost-efficiency, diversification to spread risk, accessible financing opportunities, and the potential for property value appreciation over time.

Equity Investments

Equities have the potential to outpace inflation over the long term. Companies can raise prices for their products and services, generating higher revenues and deliver real returns which outpace inflation. However, it is essential to assess the risk profile of equity investments before making any decisions.

Regular Review and Adjustment

Review your investment strategy and make adjustments as needed to adapt to changing market conditions and inflationary pressures. Staying proactive and informed is crucial in preserving your wealth and ensuring its growth over time.

CF Captial Leveraging Real Estate as a Hedge Against Inflation

Inflation can have a significant impact on wealth preservation and growth. However, by implementing these strategies, you can navigate the challenges of inflation and ensure the preservation and growth of your wealth over time. At CF Capital, we focus on acquiring and operating multifamily assets that provide stable cash flow, capital appreciation, and a margin of safety. With our expertise in acquisitions and management, we prioritize capital preservation while delivering superior risk-adjusted returns. When you invest with CF Capital, you can navigate the complexities of inflation with confidence, knowing you have a trusted partner dedicated to optimizing your wealth preservation and growth strategies.

Elevate your investment portfolio with this infographic outlining 9 key benefits of investing in multifamily real estate. Download Here

From the Desk of CF Capital: January Investor Report

Hello Friends and Investors,

Happy New Year! As real estate investors, we are generally happy to see the calendar turn to 2024 after the very challenging and tumultuous year of 2023. While the change in the calendar is more a symbolic change and much of the uncertainty remains in the broader market, there seems to be a sentiment among market experts that this year will bring a renewed sense of clarity and stability in the overall commercial real estate market versus the opposite in the year in the rearview. For example, the Fed's recent "dovish" commentary introducing potentially 3 rate cuts in 2024 has enlivened investors for the potential of increased cash flow, improved financing dynamics and an overall de-icing in transaction velocity for the year. On the other hand, the 2024 election is now heating up and anyone with any form of a crystal ball to predict the state of the economy during such a time in the next year would be untrustworthy or a charlatan.

At CF Capital, one thing we can count on is family and each other. We appreciated the opportunity to spend more quality time with our families for the holidays and to celebrate our team's accomplishments in 2023. Here are a few photos of our team from our annual holiday dinner and with our families making memories during a very special time in our lives:

Bidding Farewell to Elevate Podcast

I come to you with a mix of emotions as I share some important news regarding our journey together on Elevate Podcast. After 4.5 incredible years and over 320 episodes with some of the world's most prolific investors, #1 NY Times Best-Selling Authors, Hall of Fame Athletes, Olympic Legends, world leaders in personal development, profoundly influential entrepreneurs, leaders, coaches and renowned economists, the time has come for me to bid farewell to this chapter of our podcasting adventure. Creating Elevate has been an extraordinary experience, and I am immensely grateful for the support, inspiration, and enthusiasm you've shared with me throughout this journey. Your engagement has fueled the growth of our like-minded community and has made every episode a meaningful conversation that transcended the digital airwaves. As I reflect on the countless conversations, insightful interviews, and shared moments of learning and growth, I am filled with a deep sense of gratitude for the impact this podcast has had on both myself and our community. The connections we've forged and the stories we've explored together will forever hold a special place in my heart.

While it's bittersweet to say goodbye to Elevate, I am excited to share that new creative endeavors are on the horizon. Although I can't reveal the details just yet, I am committed to bringing you content that continues to inspire, uplift, challenge and engage our community. I want to express my sincerest appreciation for you being a part of this incredible community. Your feedback, messages, and unwavering support have been the driving force behind Elevate's success, and I am genuinely excited to embark on a new chapter with you.

As we close this chapter together, I am encouraged that we are remaining connected and you'll be the first to know about upcoming projects. Thank you once again for being a part of the Elevate community. I look forward to the next adventure and continuing this incredible journey with you. In the meantime, our journey together with CF Capital is only just beginning, and many profound triumphs lie ahead of us as we conquer substantial goals in partnership.

Looking Ahead

As for 2024, we're expanding our team, forming new partnerships with investors and other strategic partners, growing our portfolio, protecting our partners' capital via capital events, and plugging into doing the hard things daily. Our focus remains in being your trusted real estate partner, which includes remaining plugged into the latest happenings in the market and reacting as necessary, yet also creating proactive opportunities through our expanding and extensive network.

If you're attending NMHC in San Diego at the end of this month, we'd love to meet with you, use the button below to schedule a meeting with us.

Meet with us at NMHC

If you are interested in being a part of our team or know someone who should be considered, please send your resume here.

If you are ready to discuss investing in our next project, schedule a call with us:

Schedule a Meeting with Tyler

Schedule a Meeting with Bryan

In Partnership,

Tyler & Bryan

Why Have a Real Estate Investment Portfolio?

Are you ready to turn your dreams into reality? Real estate investing may be the key to unlocking your desire to retire early, explore the world, or provide for your family. Whatever your aspirations, building an investment portfolio will help you achieve them. Take control of your financial future and build the life you've always wanted with this investment strategy!

What is a Real Estate Investment Portfolio?

A real estate investment portfolio is a collection of real estate assets you own for the purpose of generating income or deriving appreciation. This means you can invest in a variety of real estate assets, like residential rental properties, multifamily apartment communities, commercial buildings, vacant land, and even real estate investment trusts (REITs).

As an investor, generally the goal when building a portfolio is to achieve long-term financial benefits. This includes earning a steady stream of income and seeing your investments appreciated over time. To reduce your risk and protect your investments from market volatility, it's important to diversify your portfolio by investing in different types of real estate assets and different markets.

Why Have a Real Estate Investment Portfolio?

It's no secret that real estate investments have been gaining popularity among investors who want to diversify their portfolios and build long-term wealth beyond paper assets, and it's not hard to see why: there are many reasons why investing in real estate can be advantageous.

Real estate investing allows investors to generate passive income from rental properties. By investing in rental properties, investors can receive regular rental income without having to actively work for it. Secondly, real estate investing offers numerous tax benefits. For example, rental income is generally subject to lower tax rates than ordinary income, and real estate investors can take advantage of various deductions and credits to reduce their tax liability. It can also provide diversification benefits. Real estate markets do not always move in tandem with other asset classes, such as stocks and bonds. This provides a hedge against market volatility. Lastly, owning real estate can help build equity over time. As the property value appreciates and the mortgage is paid down, the investor's equity in the property increases. This can provide a valuable source of wealth and financial stability over the long term.

How to Build an Investment Portfolio?

Set Goals

Before diving into real estate investing, consider your goals. What do you want to achieve with your investment? Do you want to earn passive income? Build long-term wealth? A combination of both? By setting clear goals, you can better determine the real estate investing strategy for you. Remember, when it comes to real estate investing, there's no one-size-fits-all approach, so be sure to tailor your strategy to fit your unique goals and circumstances.

Do Research

Once you have set your financial goals and decided on the type of real estate investment strategy you want to pursue, the next step is to conduct thorough research. It is essential to learn about the various types of real estate investments available in the market and identify which ones align with your goals. For example, you may be interested in investing in rental properties to generate passive income, or you may prefer to invest in commercial properties for long-term capital appreciation.

In addition to understanding the different investment options available, it is also important to research the local real estate market, analyze the market trends, and identify potential opportunities to make more informed investment decisions. Some factors to consider when researching the local real estate market include vacancy rates, rental prices, property values, and economic conditions.

Start Small

Starting small is a great way to gain experience and refine your investment strategy without putting yourself at undue risk. For example, you might consider starting with a single rental property, and then gradually expanding your portfolio as you become more experienced. This approach allows you to learn the ropes of real estate investing and adjust as needed without overextending yourself financially.

Monitor Investments

Continuously monitoring your real estate investments is crucial for your portfolio’s success. Real estate markets are constantly evolving, which can significantly impact your investments. By keeping a close eye on your portfolio, you can identify potential risks and opportunities, and adjust as needed to maximize returns and minimize risks.

Want to Build Your Investment Portfolio? Contact CF Capital

Building your investment portfolio is a great way to generate passive income and build long-term wealth. By conducting thorough research and continuously monitoring your investments, you can make informed decisions and maximize your returns. However, this requires diligence and careful consideration. When you pool your resources with other investors and partner with an experienced syndicator, you access higher-quality multifamily properties that may not be available to individual investors. This investment strategy offers many benefits, including the potential for regular cash flow, tax advantages, and a hedge against inflation. Want to learn more? Get in touch with CF Capital.

Investing in CDs vs Multifamily Syndication

Investing in CDs vs multifamily syndication, which one is better? Understanding the key differences between CDs and multifamily real estate can be an example that helps you decide where to invest your capital. These investment strategies offer a range of differing benefits and risks. Let’s take a look!

What is Investing in CDs?

When you open a CD (Certificate of Deposit), you agree to entrust a certain amount of money with a bank or credit union for a/over fixed period of time: generally ranging from a few months to several years. In return, the bank or credit union agrees to pay you a guaranteed interest rate on your deposit during the term of the CD. This is different from a savings account since the money must not be withdrawn for the entirety of the term. Generally, CDs have a higher interest rate than a savings account, however, the rate of return is typically lower than other investment types. CDs are still appealing, though, because they are considered a safe and predictable investment with minimal risk.

What is Multifamily Syndication?

Multifamily syndication is a real estate investment that is a way for investors to pool their capital into a larger real estate project, such as an apartment complex or other types of residential or commercial properties that have multiple units. In this type of investment, a professional real estate sponsor researches and identifies a real estate investment opportunity and then invites multiple investors to contribute their capital to passively invest alongside the sponsorship team. The best part of this type of investment is that you will not be responsible for managing the property, leasing, and dealing with the many day-to-day issues. Instead, the sponsor will manage the investment on your behalf. You can receive returns in the form of positive cash flow generated by the property and from the appreciation of the property’s value over time.

Multifamily real estate syndications can be an attractive investment option for investors looking to diversify their portfolio without the responsibilities of property management. It can also provide access to larger, higher-quality real estate assets that may not be available to individual investors.

Investing in CDs vs Multifamily Syndication: Which is Better?

Risk and Return: Multifamily investments have higher risk and higher potential returns; whereas CDs are low-risk investments with a low rate of return. According to the National Council of Real Estate Investment Fiduciaries (NCREIF) report, the return rate for multifamily real estate investments was 7.52% over the past 10 years, while CDs typically provide a lower rate of return: usually 1% to 2%.

Liquidity: CDs are very liquid, which means you can withdraw your money at any time, however, if you withdraw your money before the fixed period, you may have to pay a penalty. On the other hand, multifamily real estate is illiquid, which means it can be difficult to sell your stake quickly. Typically, real estate investment takes more time and effort to sell compared to liquid assets.

Management: Both require little management. CDs require you to simply deposit your money and wait for the CD to mature; multifamily syndication management responsibilities are handled by the sponsor.

Diversification: CDs investments are stable and diverse, but they’re low-risk, and therefore low-returning. Multifamily real estate investments also provide diversification with the potential for high returns, especially since they are not directly tied to the stock market or other traditional investments.

CF Capital: Your Investment Partner

Ultimately, the decision between CD investing vs multifamily real estate investing depends on your goals and risk tolerance. However, if you are looking to make the most out of your capital, then multifamily investment may be the right investment opportunity for you. When you invest alongside the CF Capital team, we will be committed to maximizing your returns and minimizing the risks associated. Get in touch with CF Capital to see how we do it and get started on passively investing with us.

From the Desk of CF Capital: February Investor Report

Hello Friends and Investors,

The 2023 sprint is now kicking into high gear - how did your first 30 days of 2023 go? The fact that it's already February is a reminder for us to course correct where appropriate and focus on what we've committed to for the first 90 days of the new year, along with the more grand vision we have for this year. While time passing can sometimes feel like a sprint, we're reminded that in the business of real estate investments, it's really a marathon. We're focused on long term relationships, long term decisions, and long term values. Your relationship with us is really the most important, and one that drives our thinking day in and day out.

In the short term, the market is still absorbing much of the rapid shift that was initiated last year. While we're seeing a bit of an uptick in new acquisition opportunities since the turn of the year, we anticipate that the most compelling opportunities will begin to surface later in the year. That still could be later this quarter, and time will certainly tell. Nevertheless, we remain nimble and prepared to strike on game-changing opportunities to provide attractive investments for you to protect and grow your wealth during volatile times alongside CF Capital. We remain patiently aggressive.

Throughout whatever stage of the market cycle we're in, our focus at CF Capital is on driving value to you, our highly valued investor partners. With that, we'd love to hear from you. What are the biggest dangers or challenges you're facing with your investments and finances this year? What do you see as your most powerful opportunities? How about your greatest strengths? Respond to this email and let us know exactly what's going on in your world from these angles, so we can support your most optimal outcomes. If you'd like to set up a virtual or in-person meeting, we'd love to make ourselves available for you - simply schedule a time with us via the link below.

Prior to wrapping up this month's dialogue, we wanted to update you on a few things going on in our world, aside from the day-to-day blocking and tackling in the business and our prime focus on 'Elevating Communities Together.' Here's what else has been going on in our world:

Louisville Business First did an expose on our new headquarters. Take a sneak peek here.
Elevate Podcast has a brand new podcast studio within the new CF Capital HQ. Some massive shows are coming out over the next month to help you elevate your real estate investment performance and lifestyle through mindset, mind expansion, and personal development.

Tyler recently has interviewed several highly influential thought leaders including Benjamin Hardy (Author of Who Not How, The Gap and the Gain - both with legendary entrepreneurial coach Dan Sullivan - Willpower Doesn't Work, and 10X is Easier Than 2X - coming soon - along with other highly impactful books). This episode, along with several others, are some of the very best and most impactful productions we've ever produced. Buckle up and get your notebook ready for some life-changing breakthroughs.

Bryan and Tyler, along with our marketing team, created a brand new presentation that shows you how to "Elevate Your Financial Security and Prosperity Through Apartments". If you want to learn exactly how CF Capital can help you reach your goals, you should absolutely check out this on demand webinar (coming soon!).

In summary, we deeply appreciate your partnership and interest in furthering your partnership with CF Capital. We're confident that exciting days and opportunities are on the near term horizon, and that for the long term, we will continue to capture upside together through course correction, adaptation, and expansion.

In Partnership,

Tyler & Bryan

CF Capital Awarded 2022 Top Owners Distinction

CF Capital is pleased to announce that our firm has been ranked in Midwest Real Estate News Magazine Best of the Best 2022 issue as one of the Top Owners. This publication honors the top commercial real estate companies throughout the Midwest. Each year, this issue lists the top-ranked brokers, developers, construction companies, real estate law firms, financial intermediaries, lenders, and owners. CF Capital was ranked thirty-six out of all the owners across the Midwest.

"Our business is about locating inefficiencies in the multifamily marketplace and driving value for the betterment of our residents, staff, and enhancing returns for our investment partners. While we’re hyper-focused on those outcomes, we appreciate the recognition as we further our mission to ‘Elevate Communities Together.’ We are energized to make a substantial impact through this market for years to come.”

-Tyler Chesser

CF Capital is a national real estate investment firm that focuses on acquiring and operating multifamily assets. Our company’s success comes from our team’s experience, dedicated leadership, and the strive to serve our clients. The team’s vibrant culture is built on the power of our people and the relentless pursuit of elevating communities together. We are proud to be included as one of the top owners in the Midwest and we will continue to pursue our vision of delivering integrity, leadership, excellence, and purpose.

How Would a Housing Market Recession Impact Multifamily Property Investing?

Many macroeconomic forecasters are saying that the United States (and many countries throughout the world, for that matter) is currently or is going to be in a recession soon, which has many investors concerned. During a housing market recession, (one angle of the economy that experts are forecasting may be entering recession territory) depending on your timing and the particulars of the strategy, it may not be the ideal time to invest in single-family homes. However, history has proven it can be an ideal time for multifamily property investments if you’re careful and diligent. While the impact of a recession is often felt in almost every aspect of business and investing, multifamily real estate can be a recession-resilient investment vehicle.

Why is Multifamily Property Generally Stable during a Housing Market Recession?

Although recessions can cause people to stop spending money on unnecessary consumer goods like luxury cars, housing is a must. However, the home-selling inventory is tight, and prices have skyrocketed over the past few years. This leads potential buyers to struggle as they search for an affordable home. These consumers are less likely to purchase a home because of the sub-optimal state of the housing market. Since purchasing a home is out of the picture for most individuals, they are more likely to rent. This means there is an increased demand for rental homes, like multifamily properties. In past recessions, multifamily investments remained stable in the midst of rising prices. Today, in the United States, there is an increase in demand for multifamily apartments, which is one significant reason it’s generally a great time to invest in them.

Multifamily Property Investment: Vehicle to Success

The economy fluctuates and markets can be unpredictable. But commercial real estate opportunities have built-in protections, for example—current trends of population growth in specific geographical areas. Investing in prime locations for multifamily apartments targets existing or new tenants because they want a safe, comfortable, and affordable place to live. Multifamily property areas need strong fundamentals like good neighborhoods and good job access, and when these criteria are met along with buying well, financing appropriately, and managing prudently, your investment will produce consistent cash flow via strong occupancy and rent growth.

Potential Risks of Multifamily Property Investment

There is a clear relationship between inflation and rising interest rates. The Federal Reserve has increased interest rates in order to decrease demand across the economy, and therefore prevent further increases in prices. Obviously, this makes borrowing money more expensive. Getting a loan after these interest rates rise can cause your debt burden to increase substantially. Although the purchasing power of money could decrease allowing future loan payments to be “cheaper,” it still can be a risky proposition.

Also, although the cost of housing might decrease, inflation causes the cost of construction materials and labor to rise. Having to invest more into a renovation could cause your return on investment to decrease. Therefore, having an experienced and resourceful investment partner is key. With the right team, tactics, and expertise implemented, multifamily property investments can be a dependable investment vehicle for profits and success.

Invest with CF Capital

During a recession that includes persistent inflation, certain markets across the United States may be affected by rising prices. Those who struggle to purchase a home because of skyrocketing prices and interest rates become more reliant on the multifamily market. This means having a diverse investment portfolio in multiple multifamily assets will help ensure that your cash flow continues to increase for the foreseeable future. Get in touch with our team at CF Capital, to learn about how you can passively invest alongside our team to protect and grow your wealth.

From the Desk of CF Capital: December Investor Report

Hello Friends and Investors,

The holiday season is officially upon us, and the federal reserve continues their march forward on their fight against inflation. Our team at CF Capital has been in the spirit of giving by committing time to serve in our community and we've been hyper-focused on up-leveling our asset & property management teams in an effort to optimize the fundamentals of our investments as we navigate this market cycle.

Ahead of the December FOMC meeting next week, markets anticipate another hike, yet in a slightly reduced capacity from the November and four preceding months’ counterparts (all of which saw a 75 BPS increase). Recent comments from Federal Reserve Chairman Jerome Powell noted that “Despite some promising developments, we have a long way to go in restoring price stability." He indicated that policy moves such as interest rate increases and the reduction of the Fed’s bond holdings generally take time to make their way through the system. “Thus, it makes sense to moderate the pace of our rate increases as we approach the level of restraint that will be sufficient to bring inflation down,” he added. “The time for moderating the pace of rate increases may come as soon as the December meeting.”

Interest rates and inflation have been the central theme of 2022, and they continue to have a tremendous impact on the multifamily real estate investment market, and most assets across the landscape for that matter. No one can truly predict where things are headed in 2023, but thus far, we've seen a seismic shift from a historic sellers market, to a market that is beginning to favor buyers. Still, we're seeing ROI expectations diminish as a result of higher costs of financing, but the few deals that are actually trading are trading for substantial discounts (in some cases 15%+ less than two quarters ago, an intriguing proposition in reduced going in basis for long term investors like us). We're anticipating some further runway in corrected values as we enter 2023, and are optimistic for the resulting acquisition opportunities on the horizon. Deals we're targeting are being projected as longer term holds (ie. 7-10 years) in an effort to optimize fixed rate debt and weather any impending economic storm. It's more important than ever to be prudent in underwriting and stress test our acquisitions, which is exactly what we're doing. To date, we've completed a deep-dive underwrite on 170 deals, and offered on 55 deals at where we feel returns are appropriate commensurate to the risk profile of the asset. We've closed 2 deals in an otherwise tumultuous macro environment in 2022, and are looking to acquire somewhere in the ballpark of 4-6 deals in 2023.

Aside from the acquisition trail, in asset management we have been focusing on the fundamentals of maximizing NOI in all of our assets through leasing, collections, and expense management. All the while our substantial renovation projects continued across the portfolio.

Outside of the blocking and tackling of the day-to-day business, we welcomed a new Executive Assistant in Rachael Chapman, a wonderful talent with a background in the Air Force and administration in the medical field. We also were able to lend a "day of service" the day before Thanksgiving supporting prep for a meal that fed approximately 600 homeless people in the Louisville area.

Lastly, some of our team had the pleasure of attending the annual March of Dimes Commercial Real Estate Achievement Award (REACH) Breakfast Banquet at Churchill Downs, supporting families of premature babies, a cause especially near and dear to Tyler and his family after their experience in the NICU earlier this year.

In summary, while the December month seems to get busier and busier each year, we would like to challenge everyone to take time to pause and remember the reason for the season. Express your gratitude for all the good things in your life. Take a moment to help out someone else in need. As we continue to forge greater prosperity in our lives as investors, it is our duty to pay it forward to others and make our world a better place. Instead of complaining that "they" aren't doing what you think should be done in the world, take it upon yourself to be that leader and the change that you'd like to see.

Happy Holidays and Merry Christmas from all of us at CF Capital and thank you for being a part of our community!

In Partnership,

Tyler & Bryan

P.S. There's no higher compliment than you referring us to your friends, family, and colleagues. We'd be honored by the opportunity to become a part of their trusted networks. Share your experience investing with CF Capital & invite others to become an investor here.