Understanding the Two Types of Active Real Estate Investors
In the world of real estate investing, two distinct types of active investors emerge, each with their unique strengths and weaknesses. The first group comprises individuals who invest their own money into personal projects. These investors often develop a deep understanding of their local real estate markets, becoming highly knowledgeable about the properties they manage. Their hands-on experience provides them with a competitive edge, allowing them to navigate the nuances of real estate transactions effectively. However, this expertise often comes at a cost: a lack of familiarity with the complex financial structures that govern larger real estate deals, commonly referred to as the “capital stack.”
The second group of active investors typically operates within a corporate framework, pooling funds from multiple passive investors to tackle larger projects. These investors possess a robust understanding of the capital stack and the financial intricacies involved in real estate transactions. However, their focus is primarily financial, often leading to a disconnect from the intimate knowledge of local real estate markets that the first group possesses. This dichotomy highlights a significant gap in the industry: few companies can bridge the divide between the practical knowledge of real estate and the complexities of investment finance.
Altus: A Unique Blend of Expertise
One such company that successfully bridges this gap is Altus. CEO Forrest Jinks, who initially studied finance, stumbled into real estate investing shortly after college. “I almost literally fell into real estate investing,” he recalls. With limited funds to hire help, Jinks took on the challenge himself, learning the ins and outs of construction, planning, and property management. His hands-on experience, which included everything from jacking up buildings to replacing roofs, laid the groundwork for a company that values practical knowledge alongside financial acumen.
This ethos of experiential learning is echoed by Vice President of Finance Marie Cattrell. Like Jinks, Cattrell holds a finance degree but began her career in property management, where she gained invaluable insights into the intricate details of real estate operations. Her transition to a small development company further honed her skills, allowing her to take charge of finance and accounting while also learning the broader aspects of real estate development. “In a company that small, everyone had to learn to do everything to keep things progressing forward,” she explains, emphasizing the importance of versatility in the industry.
The Value of On-the-Ground Experience
The practical experience of the Altus team extends beyond just the leadership. Kent Borowick, an asset manager with three decades of experience, highlights the importance of understanding real estate from the ground up. “Third-party reports are useful, but they often miss critical details,” he notes. By leveraging their deep knowledge of physical structures and real estate intricacies, the Altus team has been able to avoid pitfalls and uncover hidden opportunities that others might overlook. This dual focus on real estate and finance enables them to maximize returns for their investors while effectively managing risks.
Over the past decade, Altus has experienced significant growth, expanding its portfolio and the scale of its projects. Their largest undertaking to date is the construction of 1.4 million square feet of industrial warehousing, currently in the lease-up phase. However, this growth has not come without its challenges. Senior VP of Investments Andrew Eicher acknowledges that the company’s thorough approach to due diligence can sometimes slow down their growth. “While our ability to get into the weeds has created substantial benefits for our investors, it can also limit how fast we can grow,” he explains.
The Accelerated Learning Program
To address the challenges of scaling while maintaining their commitment to hands-on learning, Altus developed the Accelerated Learning Program (ALP). This initiative replicates the real-life experience of being a small investor, allowing participants to take responsibility for every aspect of a real estate investment, from identification to underwriting and financing. Jinks emphasizes the program’s value, stating, “That real-life experience of stress and responsibility is invaluable in their roles for Altus and is great for their careers.”
The ALP not only equips participants with practical skills but also fosters a culture of accountability and innovation within the organization. By allowing team members to encounter challenges in a supportive environment, Altus ensures that they are well-prepared to navigate the complexities of real estate investing.
Investor Relations: A Commitment to Partnership
The ethos of hands-on experience extends to Altus’s investor relations team as well. Chad Richards, VP of Investor Relations, brings a wealth of experience from his background as a commercial real estate broker. His extensive involvement in transactions across the country has instilled a sense of urgency and commitment to service. “Our investors are critical to the success of our company, so we treat them like our partners,” Richards states. This partnership approach ensures that Altus remains responsive to investor needs while fostering long-term relationships built on trust and transparency.
Conclusion
The collective experience and unique approach of the Altus team position the company as a formidable player in the real estate investment landscape. By combining practical, on-the-ground knowledge with a deep understanding of financial structures, Altus not only uncovers hidden opportunities but also maximizes returns for its investors. This blend of expertise sets them apart in an industry where such dual proficiency is rare, making Altus a trusted partner for those looking to navigate the complexities of real estate investing.