RG 065 – Building a portfolio of +5000 units through focusing on relationships with John Azar

About John

  • John is executive vice president of MACC venture partners and Capstone Multifamily Group.
  • His firm owns 5000 units across the US
  • John’s background is in investment and financing.

Nuts and Bolts

John is the vice president and member principle of MACC venture Partners and Capstone Multifamily Group Company. He works in overseas alternative financing and investor portfolio development and his firm own 500 units across the US. John used to work at Morgan Stanley and learnt about wealth management during his time there, and in 2007 he started his own company doing real estate development and consulting. However in 2008 the pipeline dried up and he rebranded into venture consulting and launched MACC Venture Partners in 2013 with his brother. When the company reached a certain size in 2015 they changed their investor profile and shed the smaller properties and decided to focus on large institutional investors buying large value add properties.

Due diligence

MACC Venture Partners is a family run business where John and his brother organize the business and family members help out with deals and due diligence. The diligence starts when the deal comes into the inbox when he sizes it up financially and then think strategically about location. If he decides the property is still viable the whole family go to look at the deal and then the underwriters have a second look at the figures. Only at this point will they make a decision about going ahead with the deal and then bring it in front of the financial institutional partners. The partners then do their own underwriting and a bid is placed. They calculate the maximum amount they would pay for the deal by working back from an 8-10% return to investors on an annual referential rate. If they calculate that the return to investors would only be 6-8% then the deal isn’t viable. They also calculate the IRR rate and aim to stay in the upper teens and early twenties. The 8-10% return for investors wouldn’t be finalized in the first year of the deal but they aim to reach this rate after 18 months .

Inflection points

John and his brother have grown the business from nothing to 5000 units in a few short years and over that time they have made changes to the business structurally and strategically at important growth points. John calls these moments “inflection points” and this is when the business reached a specific number of units, for example they took all property management in-house after they reached 1000 units. At this point they also started their own property management company, which is run by other members of his family. When the business reached 3000 units they decided to reshape internally and bring in specific marketing teams and change their investor partners. The next inflection point will be at 5000 units (they’re currently just under) and they will reshuffle internally in processes and management.

Investors and capital

John has found that he has had an easier ride getting access to investors as he came from a venture capital background. However he advises that finding investors is all about building relationships and following three tips; The first tip is have credibility when you come to the table with an investor. This is credibility can either be from a past success or other operations outside of the real estate world. The second tip is you need ot have operational efficiency and proven operations, the investor needs to see that you’re doing things now and that you have projects underway. They don’t want to see that you’re just sitting around doing nothing. The third tips is have strategic vision and a goal. John alsoadvises that to keep this money coming through the door you need ot network, go to investor meetings and tell your story and grown relationships. Don’t limit yourself to just real estate investors; build relationships with everyone because you never know when it might be important. And finally don’t expect to put effort in for immediate results, sometimes these investor relationships can take a while to flourish and bear fruit.

Top 5 investing tips

Most important habit – Getting out of his comfort zone.

Most influential person – His older brother who is his business partner.

Most important tool – His phone.

Most important mistake – A mid-town Manhattan conversion project which he spent a year on and it failed.

Contact – john@maccvp.com or LinkedIn at John Azar

Twitter – @businessanarchy

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