Real Estate News and Market Moves Week 60

I wanted to take this opportunity to share in greater detail my perspective on the market and the opportunity in front of us, and also outline the journey we are taking as Auben Capital Partners. As part of this journey, I also wanted to restate our investment philosophy which has not changed since my investment career began in 2004. 

We are (and always will be) value-based investors who do not seek speculative investments. We seek high-yield assets (B and C-class workforce housing) in growth markets. We seek opportunities where we are ensured of the value creation by pursuing:  

• Assets in need of significant renovation 

• Under-rented assets  

• Mismanaged/self-managed assets 

In addition to creating value we have control of, we also get the benefit of strong year-over-year rental and home price appreciation because we operate in markets with consistent population influxes and inventory supply constraints.  The speculative (home price appreciation and rent growth) increases do not define our investment returns, they simply supplement and compound them.     

Our foundational investment thesis, developed over the last 20 years of operating in every asset class in every market in the southeast and Midwest, for all our investment and fund activity also has a 3-part time component strategy designed to hedge against any market volatility.

We have used this strategy in every market cycle with success, including achieving some of our greatest success in the worst long-term market cycles post-2008-2014.

Our 3-part strategy which includes short-term, mid-term and long-term exposure components always to be executed in our new funds and all subsequent funds:   

• Short-term (always upon vacancy): Consistently reposition and sell rental properties to owner occupants (staying priced below the cost of new construction in all markets), selling them as they become vacant with cosmetic upgrades: granite countertops, LVP flooring etc.   

• Mid-term (3-5 years) Reposition small multifamily assets by doing renovations and increasing rents to sell stabilized/optimized to other investors in 3-5 years  

• Long-term (4-6 years) Purchase new construction rentals with lower maintenance and capital expenditures, to benefit from greater rental growth and appreciation based on location  

We want to always hold quality assets financed at the lowest rates for the longest term while also consistently repositioning single family homes (priced below new construction). We have done both in our Columbia Growth Fund I (launched in 2022), which has allowed us to achieve our 28% return in two years.  

As we grow our investment platform, we will continue to seek larger, more liquid investors but it is also very important to me from a mission perspective to always keep open institutional-grade real estate investment options to a much wider pool of people–especially friends, family and my most trusted investors. It’s a lot of work to create the infrastructure to do this. But it is what brought me home to Auben.  

Stay tuned for next week’s blog post, where we delve deeper into how our investment philosophy has demonstrated opportunity in today’s messy SFR market.