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Show Summary
In this episode of the Real Estate Pro Show, host Erika interviews Christopher Cooney, CEO of Apoxion Capital Management. Christopher shares his journey into the real estate world, discussing the challenges and opportunities he has encountered. He emphasizes the importance of adaptability in investments, the current market landscape, and offers valuable advice for aspiring investors. The conversation also highlights the significance of networking and building relationships in the industry, as well as Christopher’s vision for future growth and investor engagement.
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Investor Fuel Show Transcript:
Christopher Cooney (00:00)
my first commercial deal and I’ve been in fixed income for awhile.I went into this deal, I bought a property for a little bit more north of 1.6 million. I did a 10 year note, it was a 25 year amortizer. So the payments were nice and stretched out.
And the bank that I dealt with did not want to give fixed rates. So I did an interest rate swap, which is a, a pretty simple derivative.
And what had happened then is I locked in a fixed rate of 3.88%. And what had kind of happened from there is that the swap counterparty contacted me and said,
Hey, listen, you know that swap that we went into where we’re no longer, you know, okay from that and it’s costing us too much money. Can we break it? And I said, you know, listen, if it, the shoe was on the other foot, you guys would never let me out of this contract. And this is exactly what I did to hedge my risks. So no, ⁓ they never called me again, but now they’re paying, you know, probably eight to 10,000 a month toward my note,
Erika Proctor (02:25)
Hey everyone, welcome to the Real Estate Pro Show. I’m your host, Erika and today I’m thrilled to be joined by Christopher Cooney. He’s the CEO of Apoxion Capital Management, and he’s going to be here to share his insights on the real estate world. It’s awesome to have you on the show, Christopher.Christopher Cooney (02:43)
Great, thanks, Erika. Great to be here.Erika Proctor (02:45)
So let’s get startedwith a bit about you. Tell us more about your journey. How did you find yourself in the real estate world?
Christopher Cooney (02:53)
Sure. So I was going as I graduated high school and going into college. I actually, you know, really trying to figure out what I wanted to do. And I became a lawyer, but I was focused on law and business. And I started seeing a lot in real estate as, my family was buying different businesses and different properties. You know, it really sparked my interest. And I tried to see like the kind of the gamut and range of what was available in real estate, you know, outside of just seeing, you know, what’s possible for residential real estate and owning a home.you know, seeing different commercial properties was really kind of interesting to me and seeing, you know, what can be done with multifamily with, ⁓ you know, larger scale commercial buildings, multi units, single tenant, triple net, you know, kind of all across the board. And then when I went into college, I had met a friend and he and he was investing actively in Philadelphia with some student housing opportunities. And I said, you know, look, we should partner up on that and try to put some money to work and
Kind of off to the races from there.
Erika Proctor (03:52)
Was there something in those early experiences that ended up shaping your approach to building epoxy on?Christopher Cooney (04:00)
Yeah, I think, I mean, it’s always been kind of changed. We’ve always been challenged. And I think every time that you kind of set your sights on something and go for it, it’s never a linear path, unfortunately. But I think from all of those challenges that you go through, it really helps to shape and define you. And, you know, you look at these obstacles and learn from them and build from them. You know, and early on, I think that that was really ⁓ very tantamount to my development because we went into this.first couple of acquisitions thinking that, you this is going to be a student housing portfolio. We’re going to find tenants. It’s going to be students. And then as we did that and needed to kind of carry ourselves, we realized that we were actually not renting to students, but we were renting to, you know, low income individuals and started looking at section eight. And it was a totally different dynamic than what we were expecting. ⁓ But for us to kind of, you know, keep the ball rolling and stay solvent and make a return.
We had to really quickly adapt ourselves to a different model ⁓ and it worked out.
Erika Proctor (05:01)
Yeah, absolutely. And fast forwarding to today now with what’s going on, what kind of unique opportunities or challenges do you see in the market right now?Christopher Cooney (05:59)
So yeah, the biggest thing I see is there’s still so much, ⁓ you know, kind of spilling over from the macroeconomic environment, especially with respect to inflation. I just think that asset values have gone up so much. It’s super expensive for people to get started today. You know, the Fed keeping rates high, it’s nothing but makes it more challenging for everybody. You know, I don’t see it as a positive. I understand that, you know, it was originally to curtail inflation, but at this point, ⁓ any kind of new investment is just beingyou know, it’s completely stifled with, with issues from, know, from a capital use perspective, from growth among others. ⁓ what I, what I’m trying to do today is I’m trying to basically figure out ways in which I can minimize headwind risk, which can come from, you know, potential collapse in the economy. ⁓ you know, which is what I’m most, most scared about. But I think that if there’s an issue that comes to housing,
I think that if we can get in and get out within a short amount of time, so shorter duration, I think that’s really the key to being successful right now. And then when the economy stabilizes and rates come back down, I think then we pivot and we try to do ⁓ some more buy and hold from there.
Erika Proctor (07:10)
specific markets are you targeting for these investments and what about them makes them attractive?Christopher Cooney (07:16)
Sure. So right now in New Jersey, where I live, it’s on the outskirt of New York. I commute, you know, back and forth to the city pretty frequently. You know, we’re we’re seeing a lot of families, younger families, but but people that are working in New York that have professional careers, they’re affluent, they’re doing well. A lot of people, I think, had babies during covid. A lot of people moved out of the city. And now that they have to return to work five days a week, they’re they’re trying to figure out where to grow and where they fit.And I think that the idea of living in a one to two bedroom apartment in Manhattan, which again is super expensive, I think it’s, doesn’t make sense to a lot of folks. So they’re looking at areas where they, you know, more on the suburban side where they can, can raise a family. ⁓ so where I am right now, and that’s in Monmouth County, New Jersey, ⁓ I’m seeing great, tremendous growth here. I’m still seeing houses sell for a hundred K over asking, you know, and that’s in the, you know, mid, mid million and a half range. ⁓ and, there’s bidding wars at those levels, which is pretty amazing.
⁓ but I think here, you know, there’s a lot of resiliency because it’s a great place to live. It has close access for people to still be able to go to work. ⁓ and you know, among other factors about, you know, ⁓ good schools and things like that, I think, I think the demand is super high and I’m seeing it be a little bit insulated as compared to other places across the United States. ⁓ you know, where I think a lot of these other factors and there’s, there’s more selling going on, you know, certain parts of South Florida right now. So you’re seeing way more, ⁓ come on the market.
And those markets are starting to be impacted a little bit more adversely. They’re more of a buyer’s market where sellers can’t get the prices that they thought that they could. They’re getting big, 100 to 200,000 less, and need to make a decision if that’s the right level to get out. So very different geographically speaking.
Erika Proctor (08:58)
Yeah, and the market just changes so much over time. You’ve been in the industry for over 10 years, so you have a lot of wealth of experience. Christopher, can you share a pivotal moment or deal that really defined your career or solidified your focus?Christopher Cooney (09:14)
Sure. Yeah, I think the first one, was probably 2021, pretty, you know, pretty recent. Um, I had went into a deal. wasmy first commercial deal and I’ve been in fixed income for awhile. So I’m really familiar with, know, when things go right, how they work and you know, the idea of, of, you know, having a fixed income come in, um, and then fixing your liability so that you understand how the, how the cashflow is going to work.
Well, in this deal, you know, again, we were in a very low interest rate environment because we were talking about, know, maybe a year into COVID or just before, you know, we started to see some issues from it. And I went into this deal, I bought a property for a little bit more north of 1.6 million. From a financing perspective, I did a 10 year amortizer. I’m sorry, a 10 year note, it was a 25 year amortizer. So the payments were nice and stretched out.
And the bank that I dealt with did not want to give fixed rates. So I had to take on a floating rate loan, but they did offer a swap. So I did an interest rate swap, which is a, a pretty simple derivative. But what it says is that you basically set the rate right before you close the transaction. And if you are in the money, meaning that the rate today’s market rate is higher than the rate that we fixed that, then the swap counterparty has to pay.
the difference to make sure that I’m always taking that fixed rate. And conversely, if the rates went lower than where they were, I would have to pay extra in order to make things ⁓ equal. So what had happened then is I locked in a fixed rate of 3.88%. And as we all know, the rates went up so much fast, so much and so quickly. And what had kind of happened from there is that the swap counterparty contacted me and said,
Hey, listen, you know that swap that we went into where we’re no longer, you know, okay from that and it’s costing us too much money. Can we break it? And I said, you know, listen, if it, the shoe was on the other foot, you guys would never let me out of this contract. And this is exactly what I did to hedge my risks. So no, ⁓ they never called me again, but now they’re paying, you know, probably eight to 10,000 a month toward, toward my note, which is pretty amazing. So it really showed me just, you know, being smart, taking your time.
being careful, understanding what risks are prevalent in the market. nobody had a crystal ball to realize that rates were going to go up as quickly as they did. However, we knew that we were at a pretty good point where we can say there was a floor. And in buying into that floor, I knew rates were going to go up at some point. So we made a prudent investment decision. ⁓ I have investors in that deal. And our rent was actually indexed for inflation.
the rent went up about 100 % over the course of me owning that property as well. So I have a public tenant, it’s a triple net property, the rents went up 100%, my liabilities are capped to 3.88%. We’re all making a ton of money on that deal. And now I’m just trying to figure out if when asset values come down or rates come down, if I want a 1031 out of that and buy something else, or kind of if I want to hold that on my books.
Erika Proctor (12:50)
Yeah, excellent. For our listeners who are looking to level up in real estate, what kind of advice would you give for them when it comes to deal selection or risk management? Kind of like what happened with you.Christopher Cooney (13:04)
Yep.Sure. mean, think, you know, reading reading is key. I think you have to inform yourself as much as you can. And not every book that you read is going to be relevant at the time. So there’s a lot, you know, and then same like I look at a lot of multifamily stuff, which I think is great. I think there are good opportunities and multifamily and there will be to come again. I think that right now as well, where people like I mentioned, might not be able to buy their first house because the asset values are so expensive. They may be able to buy an apartment.
they may be able to, you know, they might have to rent an apartment for a little bit longer. So there’s different areas in which you can invest in multifamily, but you really just have to be as informed as you possibly can across the different areas of real estate, which is, you know, all, all different types of resi and commercial. And then you have to just look at what’s going on in the economy. And no matter what people tell you, if they tell you that, you know, everything is great, you really need to always look at where are the holes, where are we headed? Where do you see there being an issue?
You know, think housing is always tantamount and, and, you know, people always need a place to live. But when you’re seeing people have to give something up, you know, what does that mean? Where is it? And I’m in another market, ⁓ in Colorado and you know, we saw it slow down because of interest rates where we’re looking at, you know, ultra luxury homes that are, you know, 2 million up and they were great. They were getting sold, you know, within a couple of months of being completed, everything was moving really quickly.
And then what happened is with high interest rates, a lot of people said, Hey, you know what? I don’t need the vacation home right now, or I don’t need this Airbnb property. I’m going to wait until rates come down. So, you know, it’s, not that we’re wrong in the investment. It’s just timing. So, you know, there’s always, there’s always much to be learned in every situation. ⁓
Erika Proctor (14:45)
Yeah, absolutely. ⁓ you know, speaking of the timing and that what kind of trends are you noticing in the market right now?Christopher Cooney (15:36)
Yeah, so right now, I think across the US, ⁓ I think we’re seeing asset values start to come down. I think some other markets where there’s either been overbuilding or over demand. I think a lot of, know, it’s true to COVID too, when people were able to move away from their homes and start looking at vacation destinations as the new place to live with the idea of remote work taking over, you know, certain places like in Texas and in Florida, you know, we’re seeing asset values kind of claw back to like 30 % less than what they were at the peak.⁓ In other areas, there’s definitely more resiliency, like in the primary markets, like in New Jersey, where I mentioned. But, know, secondary and tertiary markets, I think that there’s gonna be a kind of a rebound where houses are coming down. It might be six months to a year, but I think when rates start to come down, ⁓ I think those asset values will stabilize. And I think that, you know, the demand will come back. And I think that we’ll see them
approach normal levels. They’re probably still going to be, I would say 15 to 20 percent less than at the peak for now. But I think that there could be a good buying opportunity in the next couple of months for sure.
Erika Proctor (16:42)
Yeah, absolutely. Christopher, I want to pivot a little bit and talk about the the relationships that are built in real estate. As I’m sure you know, it’s a you know, essential. So for you, what’s one valuable lesson or connection that you learned from networking that you could pass on to our listeners?Christopher Cooney (17:02)
For sure. think, you know, giving everybody a chance is the right move. You shouldn’t, you you never know when you need somebody, I guess, in the process. And that’s true. So even if you have built a team and let’s just say it’s with development, you know, you have your subcontractors or you have your GC and, know, you think that you don’t need anybody else for a while. You never know what’s going to happen. You never know if somebody’s going to exit the industry. You never know if, you know, the subs are going to move away and, know, you lose valuable people. So referrals are super important.I think that you need to always find good people, keep good people around you, and then take their advice. ⁓ In this business too, some of the properties that I own, I own just with a really close friend of mine. We both bring different things to the relationship. I’m a lawyer and I’ve been in investment banking for a long time. My best friend is an architect and an engineer. And what he brings is a valuable perspective that I don’t. I don’t see things the same way that he does.
And he introduces me to people in the construction world that you never know. They kind of tap on my shoulder and say, hey, you know what? I actually want to buy a vacation rental. Are you guys building anything in this area? Or what do you think about it? And we’ll build a house and sell a house to somebody that I would have never come across had I not maintained that relationship with my buddy.
Erika Proctor (18:18)
Yeah, absolutely. Christopher, what is next on the horizon for you and Apoxion? What vision do you have or goal you’re looking to scale?Christopher Cooney (18:19)
Ahem.Yeah, thanks. So
what I’m really focused on, I want to grow and I want to take on investors. You know, I’ve done I’ve done pretty well, but using all of my own money and I’ve tapped into family and friends and fortunate enough to say that, you know, I’ve helped them grow money as well. You know, they’re with me and they want to stay invested. But I feel like to really appropriately scale, I have to take an outside capital.
So what I want to focus on is getting the right relationships with people that have a shared vision and understand what I’m investing in and why. ⁓ We have a three year lock up mostly for things in the fund because the next six months could be very choppy and we might not hit a ton of home runs in the next six months, but I can keep us solvent. I can keep making money and bringing a return to my investors. But if I’m right with my philosophy in that
As rates come down, these asset values will go up, the demand will resurge. Having the right investors behind me will allow me to really scale the fund. And instead of doing, you know, three to six houses in a half a year, I can bring that up to 10 to 12, you know, in my local region. And then I think, you know, we’ll be in a very different position and we can look at, you know, other asset classes and other geographies and, you know, similar stories of scaling and bringing good returns to my investors.
Erika Proctor (19:48)
What kind of strategies are you using to attract investors and also what is your process like for building trust with those potential partners?Christopher Cooney (19:57)
Sure. So, you I hate cold solicitations. You know, I think sometimes people get like a list of potential investors or family office investors and, know, they’re sending emails out and they’re throwing the pitch book right in their face. And, you know, you don’t even know these people. You don’t know that the family office even invests in real estate. And if they do invest in real estate, you don’t know that they want, you know, your deal for wherever you’re located. They might have very specific criteria and they just delete your email. ⁓ So I’m trying to get a little bit more selective.I’m actually for the first time starting social media marketing campaigns. ⁓ I had spoken to somebody that was raising capital himself. He was more of a bridge lender. So what he would do is he’d raise capital at like 9%. And then he would turn around and find operators that needed hard money loans and then, you know, charge them points and, you know, lend, re lend the money out about 12 and a half percent. So he was making a spread from three to three and a half percent plus the points.
And he said that on social media marketing, he was able to raise $140 million from investors that understood his model, his philosophy, that were good with his underwriting. ⁓ And, that really opened my eyes because for the most part, it had just been exploring my own network and dealing with people from, you know, from my past life, right? Be going in investment banking. I know people are interested in investing, trying to make them comfortable with real estate. ⁓ And, you know, having an expansive network is really helpful and looking for referrals.
but it doesn’t always get you commitments, you know, and, and even at those times, you know, people could have been doing well, but they don’t have the money or the resources, you know, to always get into a deal when you need them to. ⁓ so social media right now is, is one, ⁓ those family offices and networking. I like to do it a little bit, ⁓ a little softer than, the cold email solicitations, but I’m trying to find events might be at country clubs or other places where, you know, investors might be present.
And there’s a lot of good conferences like in Florida and New York. So trying to just go there and just rub elbows with people, and just network and let people know what I’m doing. ⁓ Getting into different real estate forums. And then even in construction, surprisingly, I’ve gone on a number of those ⁓ conferences as well. And a lot of folks that are owners ⁓ from my contact with my partner that I mentioned.
⁓ you know, we’re getting into, into some different rooms and these guys are saying, Hey, you know, I run a big construction company or making a lot of money. They’re not really sure outside of construction where to invest it. You know, so I’m trying to see if those guys, if we can get relationships and put deals together for what we’re doing and you know, we get us, we’re, diversifying their portfolio outside of what they’ve been doing every day.
Erika Proctor (22:33)
That’s exciting. Well, Christopher, this has been an incredible conversation for our listeners who want to connect with you or collaborate. What’s the best way for them to reach out?Christopher Cooney (22:44)
Sure. So please email me at [email protected]. You can visit us on the on the web. And you know, if you ever want to just reach out if you’re in the area, if you want to have a coffee or do something, I’m always open to that call for your lunch. Otherwise, I’m happy to answer questions. And you know, I think a big part of this too is giving back. You know, I’mby no means a guru in this space, but I’m happy to share my experiences and, you know, help folks figure out the right path and track for them. And if they want to invest as well, I mean, that would, that’d be amazing. Great.
Erika Proctor (23:22)
Yeah,well that was fantastic. Christopher, thank you so much for joining us on the show and sharing your insights.
Christopher Cooney (23:28)
Great, thank you so much.It was a pleasure. Take care.
Erika Proctor (23:31)
And for our listeners, if you got value from this episode, make sure that you’re subscribed to the Real Estate Pro Show. We’ve got more conversations coming up with pros like Chris, Chris, who are crushing it in the real estate world. We’ll see you on the next episode.
