How Smart Investors Find Multifamily Deals in the Next Real Estate Cycle

Cameron Pimm (00:00)
real estate is not for if you’re gonna be a sponsor more so

less so if you’re going to be just an investor in a deal, but it’s not for the weekend warrior. It’s not for the faint of heart. It takes, buying a deal is just the start of the battle. It takes obsessive operations and focus, making sure that you are executing at the site level, and then also monitoring the horizon for threats and opportunities. So it’s.

much like nature, right? You need to adapt or die.

Michelle Kesil (02:06)
Hey everybody, welcome to the Real Estate Pros podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’m looking forward to chatting with, Cameron Pimm of Urban Landings, helping create workforce housing, working on multi-family acquisitions and investments. So really excited to have you here today, Cameron.

Cameron Pimm (02:30)
Thanks for having me, Michelle.

Michelle Kesil (02:31)
Of course, let’s dive in. So first off, for those not familiar with you and your work yet, can you share what your main focus is these days?

Cameron Pimm (02:40)
Sure, we are focused on buying high quality multi-family and multi-tenant retail assets in growing Sunbelt and Mountain West markets where we have deep knowledge and relationships to execute.

Michelle Kesil (02:56)
Awesome. And so what do you feel are some of the main keys that have allowed your business to operate successfully and continue to grow?

Cameron Pimm (03:09)
⁓ Early in my career, I had the ⁓ benefit of working with some really bright and inspiring ⁓ investors, developers and institutional shops. So I got to learn on the job, got a lot of experience and then I’ve taken those lessons and experiences ⁓ and applied them in my own business.

Michelle Kesil (03:34)
Awesome. And yeah, can you expand a little bit more about what you guys are doing now and what the process looks like?

Cameron Pimm (03:42)
Yeah, you know, ⁓ we are looking to acquire ⁓ assets at positive leverage in growing Sunbelt Mountain West locations. So positive population growth, positive job growth. We are focused on creating durable investments that can withstand any

economic headwinds as we’ve seen so much of recently. So how we go about that is we focus on buying again with positive leverage at below replacement cost.

And we have our modeling is really conservative. We’re not betting on any sort of cap rate compression or outsized rent growth. I think if those happen, we’ll end up looking really smart and we’ll have very happy investors. But what we plan for are deliverable, reasonable returns ⁓ that are defensible.

for the long term.

Michelle Kesil (04:48)
Yeah, awesome. And what are you guys most focused on in terms of any goals or opportunities right now?

Cameron Pimm (05:44)
There’s really two main opportunities that I see. One in the multifamily space, we’re beginning to see the repricing of assets that were bought too aggressively in a time where interest rates were extremely low and cap rates were as well. So what we’re starting to see are deals that are being repriced because the lender is either forcing a sale or

the lender’s already taken it back and they’re looking to get those assets off their books. On the other side of things in the triple net space, what we’re finding is there’s a lot more yield for quality assets. You don’t have the same amount of distress there because you didn’t have these huge supply waves that we saw in 21, 22, 23 for multifamily and industrial assets.

Michelle Kesil (06:40)
And you mentioned like workforce housing. like why specifically is that your zone of genius?

Cameron Pimm (06:44)
Thanks.

⁓ You know, I think it’s just something that is that the market needs. Renters have been stretched. Everyone in the economy has been stretched due to inflation, rising rent rates. You’re starting to see.

especially in Sunbelt and in Mountain West markets that had big supplies. You’re seeing rent come down a bit, which I think is ultimately good for the affordability for renters. We focus on the backbones of our community, providing quality housing that they could be proud of. know, those that are teachers, public service workers, county workers, health tech workers. ⁓ It’s there’s there’s certainly a need there and

It’s a space that we’ve played a lot in and we’ve had a lot of success in due to understanding it and the demand that’s there.

Michelle Kesil (07:41)
Yeah, absolutely. And what are some obstacles or challenges that you’ve experienced in your investing journey?

Cameron Pimm (07:48)
⁓ You know, you go from a very competitive market to a frozen market. So you’ve got to be able to weather those storms, not just from an acquisition side of things, but also, you know, with all the new supply that came on, especially in markets ⁓ like Atlanta, where we’ve got historic supply waves, it’s been a matter of really focusing on

our operations and executing there, ⁓ making sure that we are driving ⁓ resident satisfaction, we are keeping our buildings full, and in order to do that we need to be really good about executing on the site level performance.

Michelle Kesil (08:36)
right and what are you predicting for where like the market is shifting into

Cameron Pimm (08:40)
I’m f-

Yeah, I think, you know, we’re on the multifamily side of things. We’re kind of entering the next cycle. And one way to think about that as new cycles don’t begin when things feel good. It’s when there’s distress in the market. We’re seeing that repricing that I mentioned earlier where ⁓

deals lenders are forcing sales or or taking them back and that’s where there’s an opportunity to buy great assets that ⁓ just had a bad capital structure. ⁓ The fundamentals for multifamily are certainly improving the the glut of the supply wave has been delivered and it’s starting to absorb so I see ⁓ blue skies ahead in that

in that space. It’ll take some time for all of this to be worked out, but it’s a great opportunity to pick up quality assets. On the retail side of things, we’re seeing a different story. And what I mean by that is the fundamentals are really strong. A lot of these markets, they have 5 % vacancy or less and no meaningful new supply coming on. And so if you’re buying the right

kind of multi-tenant center with grocery anchors or shadow anchors, ⁓ experiential uses, daily needs, medical. I think those are really great opportunities to pick up and we’re finding a lot more ⁓ yield in that space than we’re seeing in the multi-space right now.

Michelle Kesil (11:02)
Yeah. And how is your business or strategy also adjusting with the market?

Cameron Pimm (11:13)
⁓ You know, on the multifamily side of things, we are looking to pick up below replacement cost with positive yield in place. ⁓ We are focused on affordability. So, you know, I think the days of doing a heavy value add

While there is going to be a place for that in the future, as I mentioned before, renters have been stretched. So I think being really mindful on what drives value and occupancy at the site level is a very important focus. Again, we’re looking for very achievable.

rents and rent growth and if we see if market fundamentals shift and they’re favorable like they were in 2020 and 2021, great we look smart.

That’s, as we think about the retail side, same fundamentals. We want to buy at below replacement cost, ⁓ below market. We like where rents are below market, where there’s an opportunity to ⁓ capture some value upon lease expiration.

But in modeling, so we are not being overly aggressive. We’re also really mindful about what our cap expend is in that space. Being really mindful about having an overall low all-in basis, which ultimately creates optionality over the life of the deal.

Michelle Kesil (12:42)
Yeah, absolutely. And when you guys are like in a growth or acquisition phase, how does, ⁓ like what are the type of leads or deals that you’re primarily looking for?

Cameron Pimm (13:04)
So on the retail side of things, we’re looking for established markets located in high traffic areas with ⁓ high residential density.

low vacancy, historically, other drivers that may not be a part of our center. For example, we’re working on a shopping center deal now where three of the most data-driven retail operations in McDonald’s, Dutch Brothers, and Starbucks are, while they’re not a part of the asset, they are in the immediate vicinity. And that shows a lot of the…

retail demand and high levels of traffic and a high confidence that that market will stay that way. ⁓ Overlapping in retail and multifamily, we’re also very mindful about supply side pipeline, very fresh in everyone’s memory ⁓ from the recent multifamily wave. ⁓ That’s what can really put pressure on an asset is

high levels of competition. So we are looking for moats around the assets that we’re and constantly monitoring for that. As far as sourcing deals, it’s a mixed bag. ⁓ We are going through traditional broker networks, owners that we know, we’re talking to lenders, we’re looking at auctions, we’re doing cold reach out, really a mixed bag on how we build our pipelines.

Michelle Kesil (15:23)
Okay, awesome. And what advice would you give to an investor that’s earlier on in their career?

Cameron Pimm (15:32)
So thanks.

⁓ You know

real estate is not for if you’re gonna be a sponsor more so

less so if you’re going to be just an investor in a deal, but it’s not for the weekend warrior. It’s not for the faint of heart. It takes, buying a deal is just the start of the battle. It takes obsessive operations and focus, making sure that you are executing at the site level, and then also monitoring the horizon for threats and opportunities. So it’s.

much like nature, right? You need to adapt or die.

Michelle Kesil (16:11)
Yeah, and what are some learning lessons that have stuck out to you on your journey?

Cameron Pimm (16:18)
⁓ You know, I think it’s really ⁓ being realistic and cautious in your modeling and acquisitions. I know everybody wants to build a huge portfolio and get rich in real estate, but you need to make sure that you’re buying the right deals because a bad deal will just suck up.

your time, your resources, investor confidence. And so a saying that’s really stuck with me is ⁓ the best deal you do is the bad deal that you don’t.

So don’t be overly eager to jump in. FOMO of missing out. We’re seeing what’s happening in the multifamily space as a result of that where everybody lost their heads and forgot the fundamentals of buying.

with cash flow in place, being conservative in your rent growth estimates, being conservative on what your cap rate exit could look like. We’re not modeling cap rate compression. I think if you’re doing that, you are putting yourself at risk. What we want to do through lessons learned and what we’ve seen through the market is giving ourselves

a lot of wiggle room to be able to have a successful investment because you cannot control the greater environment. So we look at things that we can control and are constantly tweaking those to see what fits best at each of those assets as the environment changes.

Michelle Kesil (17:54)
Yeah, absolutely. And is there any prediction that you have for where things are heading or different adjustments that you think investors will need to be making?

Cameron Pimm (18:06)
Yeah, you know, I think values are going to come back ⁓ in the multifamily space. I think you’re seeing the repricing of the market in the next new cycle.

At the start of the year, I was predicting that we’ll see more trades this year than we did in the past three combined. We may be a little bit behind on that. I haven’t seen ⁓ data yet, but it does feel like things are starting to move. Again, that’s being driven by lenders that are no longer taking a wait and see approach or survive till 25. That’s past. ⁓

On the retail side of things, I see smoother sailing simply because of the low vacancy rates and very limited supply pipeline. ⁓ One of the deals that I was mentioning earlier, if you look at the construction pipeline, it’s 0.01 % of the existing supply. So you’re not going to have the supply side pressure there and it’s in an already tight market.

That’s really how we’re evaluating those deals too, is not only where they currently are, but where they will be, and historically, what has vacancy looked like in those markets over a 10, 15 year period.

Michelle Kesil (19:24)
Yeah, thank you for sharing.

So before we begin wrapping up here, if someone wants to reach out, connect and learn more about what you are up to, where can people find you and connect with you?

Cameron Pimm (19:34)
Yep, you can go to the website, urbanlandings.com, or you can email me, [email protected] I’m also on LinkedIn, if anybody wants to reach out that way.

Michelle Kesil (19:46)
Okay, perfect. Well, appreciate your time and your story. Thank you for being here.

Cameron Pimm (19:50)
Thanks for having me.

Michelle Kesil (19:51)
And for the listeners tuning in, you got value, make sure you have subscribed. We have more conversations with operators like Cameron who are building real businesses and we’ll see you on the next episode.