GI253: Investing in Multifamily Properties with Cameron Pimm

GI253: Investing in Multifamily Properties with Cameron Pimm

Cameron Pimm is a multi-family and commercial real estate investor with experience spanning across the spectrum of real estate investment encompassing acquisitions, debt and equity structuring, asset and property management, and dispositions.  Cameron’s firm has acquired over 4600 apartment units, 20 full cycle deals over the last decade with a net to passive investor IRR of over 23%.

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Charles:
Welcome to another episode of the Global Investors Podcast; I’m your host, Charles Carillo. Today, we have Cameron Pimm. He is a multi-family and commercial real estate investor with experience spanning across the spectrum of real estate investment encompassing acquisitions, debt and equity structuring, asset and property management, and dispositions. Cameron’S firm has acquired over 4600 apartment units, 20 full cycle deals over the last decade with a net to passive investor IRR of over 23%. So thank you so much for coming on the show today.

Cameron:
Thank you. I appreciate it. You having me?

Charles:
So I’ll give you a little background there very briefly about what your firm does. Can you tell us a little bit more in depth about personally and professionally what you’ve done prior to getting involved with real estate?

Cameron:
Um the first two years out of college I was actually a financial advisor, you know, crafting plans and investments for people’s financial goals, which was, which was rewarding in its own. But one of the things that I found with that was that I couldn’t control the outcome of those investments. No matter how strong of a plan I created, it was subject to other people’s influence and market influences. And I always had a passion for real estate. So, you know, I, I went and got a job with a local developer and investor, really learned the ropes from an operational standpoint, asset management standpoint, and saw the way that they were putting together deals and then operating them post acquisition all the way through disposition. And at one point I had the, the crazy idea that, hey, I, I could do this for myself. And so started looking for opportunities to buy my own deals. Partnered up with a couple guys, a couple like-minded guys that had complimentary skill sets. And we bought our first deal a 36 unit apartment deal in Forest Park, which is a submarket of Atlanta by the by the airport. And that deal went well and that that was really the start of everything.

Charles:
That’s great. So when I was kinda looking over a little bit about what your firm does and and looking over some of your previous deals and what it really said is that you guys are doing everything from pretty much light renovations all the way up to heavy renovations, value add projects. Can you share a little bit about what your company’s current investment, really, your strategy and what type of properties you’re really focusing on?

Cameron:
Yeah. We are primarily a value add workforce housing provider. So what we’ve typically done has been buying older assets, you know, anywhere from 1920s being our oldest up to, you know, the older assets being up to like 1960s, 1970s. We have bought as, as recent as early two thousands. But our focus has been buying under positioned assets, typically mom and pop operators, maybe legacy owners that their kids don’t want to take it over. The, the rents in the condition of the, the apartment community reflect kind of a passive approach to managing the asset. And that’s a deal that we love to buy, where we can come in, put some money into the deal in renovations provide quality housing where people can feel proud of where they live in a great location. Most of those times we’re, we’re just down the street from a brand new, a class high-rise and we’re $500 a month cheaper.

Cameron:
Yeah. So, you know, we provide a great value proposition for our customers and you know, it’s, it’s been a, a really strong model for us. I think where we are in this cycle now, a lot of those older assets have already been, had the value add done. So now you are looking for a newer vintage that is ready for its first round of renovation. So stepping up quality of asset class in, in a lot of instances you know, to early to mid two thousands. And and maybe getting into the second turn on a, on a 1990s vintage deal. We have focused in growing Sunbelt and Mountain West markets that we’ve lived and worked in where we have strong relationships to execute any project that we do and also deep market knowledge of, of what we’re getting into and path of growth, et cetera.

Charles:
So being spread over a pretty large area, I know you guys are a larger firm, but over many different markets. Can you kinda give us an idea of how you would evaluate markets and the opportunities and the potential risks within that market before you guys make the decision of starting to invest there?

Cameron:
Yeah, I you know, a lot of it is, is you’re digging into the population growth, the cost per door, the rents where you think your rents are going to land what the cost per door is going to be at an exit as well. You wanna keep an eye on that ’cause somebody else is going to have to sell that to their equity and to lenders. You are looking at media and household income is, you know, does your project land and where your, you know, do your rents land where people can still afford them? Does it make sense for that area? And then you’re also looking at your competitors, Hey, what did they buy for? What is their basis? When did they buy a lot of that could tell you if there is a hiccup, who, who has an advantage in pricing if they need to, you know, drop prices, can you make it or can people really cut you out at the legs as well? I think that’s a, an under valued metric for, for a lot of people.

Charles:
Yeah, that’s, that’s really important. I love the idea you mentioned earlier about being about $500 under that a class down the street because, you know, PE you can, that’s something that you’re not able to replicate. You can’t replicate a another, another prop build another property that’s $500 less than a new one because of the cost of everything goes into it. So that’s a, that’s a great way of really pricing out where you’re supposed to be and kind of what the competition is out there. Yeah,

Cameron:
I agree. You know, we like this space because there, there’s a limited supply of it, right? And like you said, you can’t really create new product, it’s just newer product aging into that space and it, it’s not doing it the same at a faster rate than, than our product. Right. So do

Charles:
You guys work with any type of development development projects or it’s strictly really a value add operation that you guys operate?

Cameron:
It’s a value add operation. We’ve got through a cog p venture, some build to rent where we’re bringing in some relationships in our own, an analysis of the markets. But I, I wouldn’t call ourselves a development firm.

Charles:
Yeah, no, that makes perfect sense. I like, it’s, it’s, it’s nice talking to people that have like their own lane. ’cause That’s what we do. We like really stay in our lane of what we’re buying. And because you have people that whenever something changes a little bit, they’re like, oh, now we’re doing this, now we’re doing this, we’re into this. And we’re like, what happened to like, you know, this, this strategy from two years ago?

Cameron:
Yeah. You know, I think specially specialization is key. Really understanding how you’re gonna roll this out. Execution is so important. And so we have a playbook from start, you know, from LOI all the way to disposition and you know, it’s very specific for the product type and our expectations. And you know, it’s a tried and true method at this point. So we’re, we’re very happy with the lane we’re in. Yeah. For, we, we understand it well for

Charles:
What you’re doing. You said, you know, I imagine you guys started with like because you have a lot of value add operators out there that are doing eighties and nineties bill property, and now you’re getting into obviously the ones that are going in for their first turn, which might be 15, 20 years old. How are those, obviously those are a much better, there’s gonna be less, I guess less bones that need to be replaced on something like that compared to like a, a property built in the 1980s. Is that make it, when you’re penciling in it, are these gonna be usually lighter value add type opportunities where you’re just going in and it’s really lot cosmetic? Is that mainly what those deals are?

Cameron:
They’re more so, yes. It depends on the quality of construction, but you certainly have kind of less of those need to reconfigure walls or the ability to reconfigure units to today’s modern renter just because less time has passed for that. You could still have deferred maintenance. And it really also def depends on the operator you’re buying from and how proactive they were in that. I mean, you could buy a really quality 60 seventies asset that’s been owned and operated well. Or you could have an eighties, nineties that’s been run down just from, you know, poor management, maybe lack of capital available to make the, the repairs. So it, it’s a mixed bag. DD is so important in any acquisition. So you, you wanna leave no stone unturned regardless of vintage.

Charles:
When you’re doing your due diligence on a property, are you bringing your own team that you use on every different property or are you really focusing on your boots on the ground there? Maybe your property management company that you have and other third party contractors that you’re utilizing?

Cameron:
It’s a mixed bag. The partners are, are very hands-on in the DD process, but we do also bring in local vendors that specialize in, in, you know, different, different lanes. And we have our local property management groups take a look at that as well. So a combination of the two and, and it’s nice having those local vendors that know exactly what to look for that have done these things before have had the benefit of seeing other people’s assets and other people’s problems and bringing that experience to the table as well.

Charles:
Yeah, yeah. No, that’s, that’s exactly true. But when I’ve hired third party managers, I remember one time I was hiring one and the, the guy that ran the firm knew exactly like, he’s like, he knew the expense ratio when you’re looking at property. He was like, it’s 48 and then it’s 46 if you do, like, he had it down, like, he’s like, that’s how we’ve done it over the last two decades and this market. And then I’m like, oh, okay. So like, you know, everything about this market perfectly <laugh>

Cameron:
That inspires a lot of confidence. Yes, it’s valuable information to have. You know, it, it’s great data when you are pitching that to equity or to your debt as well. Like, Hey, here’s an example of eight other assets in the market that they’ve operated and this is why, why we think that this is what the operating costs should be versus what the seller is operating them at.

Charles:
Yeah, yeah. That’s one thing I do a lot of passive investing in, in real estate as well, in addition to our own deals. And it’s like I spend more and more time on figuring out the property manager and reviewing them as I do also the lead sponsor and the operators on the deal.

Cameron:
I think that’s smart. You know, I, I think it the sponsors, their underwriting has to be on point and they have to be smart and hands-on, but I’ve always said this as the site level team will quickly either make or break your asset. You could have a great asset at acquisition if you have a really bad team on site, it quickly goes downhill. And then, you know, if you have a, an okay asset, but you have some rock stars as the property manager and maintenance supervisor that could be your best performing asset in your whole portfolio. I mean, they are critical to the, to the execution.

Charles:
Yeah. Yeah. Definitely one of the most important people on the team. Yeah. You mentioned before about the uncertainty in the market we’re going through, and I kind of want to, I mean, once we’ve had over these last couple years, we’ve had the increase in rates coming around, we’ve had a lot of floating rate debt that’s come, it’s coming due, these caps are coming off them. I mean, can you give us like an idea of how your team’s underwriting and business plan might change in these type of times? And you know, from everything from picking deals kind of structuring your business plan and maybe even speaking to investors.

Cameron:
Yeah. Well I, you know, you said maybe even speaking to investors, but I think you have to tailor your acquisition strategy to what your investors are willing to stomach in a market like this. There is a lot of uncertainty. There’s a lot of sentiment that there is more of a correction to come and more distress to come. And that’s really what people are looking for. So if you wanna get a deal done, you need to find that deal that, you know, checks all the boxes. You’re buying it at a distress price. So probably at, at the acquisition price or even at a discount, maybe at the debt. What is, what a lot of people are looking for. Pre 2020 pricing certainly helps assumable debt in this market is probably where the majority of the deals are getting done and outside of those distressed ones, but that still has to be priced fairly conservatively to get to get through anywhere.

Cameron:
You know, I think another big focus of, of everybody right now has been supply, even though we, we play in a space that doesn’t have a ton of new supply coming on, there are threats to it in high supply markets. Atlanta, for example, there’s so much a class delivered in the midtown Buckhead, east Atlanta market that they’re getting really competitive with some B class assets because of the concessions they’re having to offer. They’re dropping their rents just to fill up the building. And, you know, the sentiment there is, well, we’ll get it on the next, on the next renewal when the supply wave has subsided. So all of these things are, are, are big focal points for any of the for any investor and, and, and their equity behind them. So it, it’s certainly a different market. A lot less deals are getting done because of that bid ask spread between, you know, buyer and seller.

Cameron:
The, the hope is, is that maybe some of these assets start breaking free. We are seeing distress in the market. A lot of people saying, well, I’m having difficulty refinancing. Maybe it is time to just give up on this asset. There’s some bigger groups that have been in the headlines that I know a lot of people are circling their portfolios for that reason, understanding that they’re going to have to sell. But I don’t know that we’ve seen as much as we may have thought we were going to see when we were looking at our, our crystal ball 12 months ago. And I think banks are trying to work through it so that they don’t cause a crash in their own asset value. So it’s kind of trickling out rather than a a, the levees breaking as some may have thought was going to happen.

Charles:
Yeah, I that’s, that’s a definitely an interesting thing. We don’t have any capital calls in any of our assets or anything like that, but when I’ve spoken to operators that do it’s really the recurring theme there is that they’re having workouts, they’re work, they’re creating workouts with their lenders, and in lack of a better word, I guess, that what they’re doing is like you know, kicking the can down the road. So it’s, it’s very interesting and obviously when everybody says we’re going one way, it usually doesn’t happen that way. But I mean, I, I just, I don’t see it happening what everybody was saying that we’re gonna have all this stuff come back on the market and it’s gonna be all discounted and stuff like this. I think you have a lot of these lenders, like you were saying, kind of that you know just extending it out a few more years and trying to complete the business plan and hoping that rates come down.

Cameron:
Yeah. I think you and I both, I’m probably speaking for you on this one, miss, just a normal market where you could transact with you know, while there are great opportunities for distressed deals, it would be great to just be <laugh> back able to transact as we had in the past, find reasonably priced deals that make sense. But it’s been a little while since we’ve seen that.

Charles:
Do you have money sitting in the stock market? And you’re worried about it or worse. You have money sitting at the bank, not keeping up with inflation. My name is Charles Carillo, founder and managing partner of Harborside Partners. And since 2006, I’ve been investing my money and my family’s money into income producing properties. These are real assets, real properties with real addresses that produce real cash flow. At Harborside Partners, we provide passive investors who love real estate with a turnkey investing solution. If you want to put your money to work in real estate, but can’t find deals, don’t have the time to get funding in. The last thing that productive people want to do is manage real estate. We find the deals. We fund the deals and we manage the tenants, the termites and the properties. Partner with us at investwithharborside.com. That’s investwithharborside.com. Go to investwithharborside.com. If you love real estate, you like the idea of passive income and believe that income producing properties will appreciate over time. Go to investwithharborside.com. That’s investwithharborside.com.

Charles:
So you mentioned one thing earlier about you know, being in a market with, and what we’re talking about here is mainly B class assets that you’re investing into and doing value add, repositioning, ’em. How do you, if you’re owning property in an area and there is B class property, 20, 25, 30-year-old, whatever it might be and there’s a whole flood of new property coming on and they’re having concessions and they’re, you know, one, two months, all these different moving specials. I mean, how do you position your asset? So I mean, how do you position that in the best sense of marketing that to bring in tenants? I mean, how would you do that? Because at some points up for that first year, you’re rent, your rent might be very similar, you know what I mean, per month if they break down those couple months of free rent and they’re just hoping for that burn off of the lost lease.

Cameron:
Yeah. I think you have to be mindful of concessions being offered in the market and you may actually have to start offering concessions. I think the most important thing is to understand your place in the market and how you provide value from a pro and, and prices right at the top of that. Secondarily, I think you need to focus your marketing in a way that is targeting people in different price points or, or your specific price point. So you could do a lot of the PPC campaigns or SEO kind of targeting people. So understanding who your customer is and then tailoring your marketing to what is the best resource to, to get this sort of tenant or where am I having the most success? So I think those are, are two main focal points. And then the third is once you get these people in the door, you have to have the right team that makes ’em feel welcome.

Cameron:
This is home, come in, please, how can I help you? So that’s, that’s your site level team in person and also the online reviews. I think you need to be really mindful that you are driving existing resident satisfaction promoting that online, and then also making sure that you’re closing that back door to keep those people, you know, you can go somewhere and it may cost you more and moving’s a pain. Are you sure? You know, are you going to get as good of service as you are here? So when you have really good team members, they’re building a sense of community with these residents and a sense of trust that they know, hey, if anything ever breaks, it’s, it’s fixed. I really like these people. There’s no, there’s no sense in going through the hassle of moving.

Charles:
Yeah, no, that’s a lot of great information. When you’re seeing your, you know, offering deals that your past investors are interested in, what have you seen as kind of hearing from them over these last say year? What have been some of the main points that have been coming up over and over again where you are finding deals that fit that

Cameron:
Well? Candidly, we haven’t found anything that we were able to make sense of since the end of 22. So last year was the first year since we got started in this business on our own that we didn’t buy anything. We’ve, we’ve gotten close on a couple deals, but we don’t feel like now is the time to stretch. But what I’m seeing from our existing investors is a concern about floating rate debt. When does it mature? Do we have a rate cap? What does a refi look like? What does cashflow look like? Or, you know, how are we positioned to weather this? That is certainly a recurring theme from sort of our, our retail investors. We’ve done some deals using friends and family money as well as through cloudstreet, so that seems to be top of mind for a lot of people.

Cameron:
What else have we seen? Yeah, o other than that, it’s really making sure that, you know, there’s a focus, there’s a focus on the monthly financials and are we hitting budget and are we cash flowing? Where does that stand? What does it look like? What, what kind of challenges are we seeing? You know, some people are hearing about the supply wave and asking how to, how are we weathering that wave? And you know, fortunately what we’ve seen is robust demand for our product type and, and at the majority of our assets. Others we’ve had to adjust, like I said earlier, and, and offer concessions similar to an A class just because of, you know, market pressures and, and the supply wave. But nonetheless, the the assets are still performing and we’re, we’re still competitive.

Charles:
Yeah. I think is when people see those concessions burn off the year two and they actually look at that, that’s something, it changes the whole dynamic of the pricing for the year two. So it’s a, it’s a different proposition. So what are some common mistakes you see other real estate investors make over the your decades of experience around real estate investing and doing deals?

Cameron:
I think too aggressive of underwriting, whether that’s from a purchase price or from what you think your rents are going to be underestimating operating expenses, underestimating CapEx not only from a cost perspective, but from a timing perspective. You know, I think it’s really important to get through your CapEx in a timely fashion so that you’re, you’re ready to take advantage of market conditions when they are right. And, you know, a lot of people stumbled out of the gates. I’ve seen some deals that we’ve underwritten where people bought at a very aggressive cap rate and not, you know, that was gonna be a challenge to start with, but then they didn’t execute on their value add plan. You know, they stumbled out of the starting blocks and missed the market and there’s, you know, now there’s meat on the bone for the next investor that wants to buy that deal.

Charles:
Yeah, yeah. No, that’s, that’s great to eat. One of the things is what I found is like when you’re having the, a lot of mistakes with the investors when they’re doing their underwriting, and if they, you know, years back people weren’t really looking at interest rates as much. They were looking at other expenses, and now it’s become such for passive investors and also for investors. It’s, it’s the importance on that on that, the debt and where that’s gonna come out. And the thing is I found is that with people that are having to deal workouts with their lenders, and I ask them about their business plan as my second deal, they’re always telling me that they’re executing the business plan. So I think you might see deals come on the market, just my, just my opinion, that are deals and operators that haven’t, like you were saying, you know, fulfilling out and really executing that business plan. Those might be the ones that make their way back on the market. What do you think?

Cameron:
I think you’re right. I think think people really underestimate how long that takes, how hard it is to execute the cost of doing so, especially in this environment with rising labor and, and product cost. I think you have to have a very detailed construction manager or partner that oversees that to make sure that that runs smoothly. I think you need to pay close attention to what are the components of your value add that are driving the most value and then adjusting that plan to, you know, hey, maybe, maybe I don’t need to do the tile back splash. Or maybe, you know, instead of doing quartz countertops, this tenant base doesn’t place as much of a premium on it and, you know, sprayed for Micah countertop is just fine, right? So what, what are people willing to pay for and what are they not willing to pay for?

Charles:
Yeah, that was actually gonna be my next question, is how you’re editing any of your value add projects during any of this time. So that’s some great examples there.

Cameron:
Yeah. Yeah. I, I think that that’s really important. You don’t want to overspend you know, you’re not going to be rescued by by the market anymore at, at least in the near future. So, yeah,

Charles:
No, that’s a lot of great information. We’ve done it with some of our deals where maybe we’re doing three or four renovations per unit and now we’re maybe doing one or two, you know, full renovations and just kind of keeping, checking that appetite for it in the market. And then the other ones are really just, you know, paying clean whatever, and they’re back on there. Yeah. Yeah. So, awesome. So when you are, you know, with everything you’ve done over all the years with where you’ve worked, what you’re doing now, I mean, what are some of the main factors contributing to your success over your whole working lifetime?

Cameron:
I think a lot of it has been great experience and great mentors from where I worked before and other partners. I think having the right partners in place that understand their role is, is key and putting everybody in the right place to succeed and then continually learning, you know, always reading about our market. The market is ever changing. There’s a lot of great information on podcasts like this books, conferences. I think you have to be a student of the industry to stay up to what’s, what’s important. And then working with a other resources such as brokers, equity learning, how are they looking at things, what are they seeing? Keeping an ear to the ground for those that are really close to it as well. I think that kind of helps educate what your future plan should be.

Charles:
So That’s great. So how can our listeners learn more about you and your business? I know you guys recently merged with another company, so maybe you can talk about that and then how people can learn more about it.

Cameron:
Yeah, so you know, we were formally Urban Landings merged with a group that we’ve done a number of joint ventures with in Stone Mark capital. We are now going by stone mark landings to keep the identity of kind of both groups. You can reach us at stonemarklandings.com or [email protected] if you’d like to email us. And you can find me on LinkedIn at Cameron Pim.

Charles:
Well, thank you so much for coming on and looking forward to touching base with you here in the near future.

Cameron:
Thanks for having me, Charles. I appreciate it.

Charles:
Hi guys! It’s Charles from the Global Investors Podcast. I hope you enjoyed the show. If you’re interested in get involved with real estate, but you don’t know where to begin, set up a free 30 minute strategy call with me at schedulecharles.com. That’s schedulecharles.com. Thank you.

Announcer:
Nothing in this episode should be considered specific, personal or professional advice. Any investment opportunities mentioned on this podcast are limited to accredited investors. Any investments will only be made with proper disclosure, subscription documentation, and are subject to all applicable laws. Please consult an appropriate tax legal, real estate, financial or business professional for individualized advice. Opinions of guests are their own information is not guaranteed. All investment strategies have the potential for profit or loss. The host is operating on behalf of Syndication Superstar, LLC, exclusively.

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About Cameron Pimm

Cameron Pimm is a multi-family and commercial real estate professional with experience spanning across the spectrum of real estate investment encompassing acquisitions, debt and equity structuring, asset and property management, and dispositions. Cameron’s experience prior to Stonemark Landings includes co-founding successful real estate investment companies focusing on repositioning undervalued multifamily assets and acquiring in-town commercial properties. He has also worked for industry leaders to oversee portfolios of multifamily assets for institutional and private clients, direct the operations of a portfolio of shopping centers throughout the Southeast, and consulting for the Governor of Tennessee on the highest and best uses for state owned real estate.  Mr. Pimm earned a Bachelor of Business Administration degree from Goizueta Business School of Emory University with focuses in Real Estate, Management, and Marketing.

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