Want to invest in a metro Phoenix apartment-building boom?
It could cost you as little as $1,000, about as much as a monthly rent payment.
Neighborhood Ventures, Arizona’s first crowdfunding real-estate company, recently formed to invest in Phoenix-area apartments. A veteran Valley apartment broker, a multifamily-research expert and a former Wall Street analyst teamed up to create the company.
“I have never really been able to help individuals invest and make money in the Valley’s apartment market. Now I can.”
John Kobierowski, Neighborhood Ventures
Potential investors can sign up now, and the first offering to buy a Phoenix-area apartment complex is expected to be announced by Neighborhood Ventures in a few weeks.
“After 25 years in apartment business, one thing haunts me,” said John Kobierowski, one of the crowdfunding group’s founders.
Kobierowski is senior managing partner at Phoenix-based ABI Multifamily. “I have never really been able to help individuals invest and make money in the Valley’s apartment market. Now I can.”
Arizona crowdfunding legislation that was passed in 2015 allows small firms to raise cash from investors with fewer requirements than firms traded on the stock market must follow. Crowdfunding firms must be headquartered in Arizona and only seek money from state residents.
Another partner with Neighborhood Ventures, former Goldman Sachs tech analyst Jamison Manwaring, said taking crowdfunding to the apartment industry will allow Arizona residents to own part of a multifamily project in their own neighborhood, if they want.
Apartment booms and busts
Thomas Brophy, the other Neighborhood Ventures partner, is director of research for ABI.
When he described the plan to launch a crowdfunding program to buy metro Phoenix apartments, my first question was why now, with so many new rental complexes under construction.
He has been saying for the past several months that apartment developers aren’t overbuilding in the Valley — not even in central Phoenix, where it seems as if a new complex is underway or has recently opened at every major intersection.
Brophy dug down into the numbers. Here are the stats behind why he and the rest of the crowdfunding group partners believe the apartment market isn’t overbuilding, and why it’s a good time to invest.
- On average, Phoenix-area rental complexes are leasing 24 apartments a month, up from 20 a month last year. And that rate of leasing increased even as 2,600 new apartments opened to renters during the summer.
- Downtown Phoenix apartments are filing up faster than before, even with all the new construction. An average of 20 central Phoenix apartments a month were leased during the past year, up from 17 a month the year before.
- Metro Phoenix’s apartment-occupancy rate is at a healthy 94.2 percent.
- 17,350 apartments are under construction now across the Valley. But the number of new apartment units planned has plummeted by more than half from last year, to 11,700.
That means construction on significantly fewer apartment complexes in the near future. That’s a good sign pointing toward a slowdown in building to prevent a boom and bust.
Why apartments now?
The big question is, what will the apartment-building boom mean for the Valley’s housing market? Wochit
Metro Phoenix’s housing market has nearly recovered from the crash, with home sales at a high for a normal, healthy year.
But based on the apartment-leasing numbers, obviously more people are also renting.
Founders of Neighborhood Ventures say that’s because more Millennials and Baby Boomers are renting instead of buying in the Valley now, especially in cool urban neighborhoods close to light rail, restaurants, bars and jobs.
A recent study by the apartment industry found metro Phoenix will need another 150,000 apartments by 2030.
“There are plenty of renters in the Valley now, particularly for apartments closer in,” said Diana Creason, a Valley apartment manager who wants to invest in the apartment crowdfunding company.
She said investing in Neighborhood Ventures lets a small investor like her buy into big properties like big investors.
Kobierowski said his group will buy apartments in popular Valley urban areas that may be older and need some work. Investors can track their investment’s progress and renovations through the company’s website and go on property tours. Neighborhood Ventures will launch its first offering to buy a stake for as little as $1,000 in a Phoenix-area apartment complex in the next few weeks. I’ll be watching what they buy. And many of us will keep watching whether all of the Valley’s new apartment complexes going up will fill up with renters as well.