EP370 Navigating from Single-Family Homes to Multifamily with Jonathan Nichols

A Canadian Investing in the U.S. with Glen Sutherland

In this episode of "A Canadian Investing in the U.S.," host Glen Sutherland interviews Jonathan Nichols, co-founder of Apogee Capital, a multifamily real estate investment company based in the Dallas-Fort Worth area. Jonathan shares his journey into real estate investing, which began about seven or eight years ago with single-family rentals. Along with his wife Paula, they transitioned from buying single-family homes to pursuing multifamily syndication. Key Points Discussed: Background and Company Formation: Jonathan describes his background as an aerospace engineer and how it influenced the naming of his company, Apogee Capital. The term "apogee" refers to reaching the peak or apex, symbolizing their goal of helping investors achieve financial success. Investment Strategies: Jonathan explains their investment strategy, which initially focused on single-family properties with a BRRRR (Buy, Rehab, Rent, Refinance, Repeat) approach. They later pivoted to multifamily investments, primarily focusing on light value-add projects to enhance cash flow. Transition from Single-Family to Multifamily: He emphasizes the lessons learned from single-family investments, particularly the mistakes made that provided valuable experience without risking other people's money. Jonathan highlights the importance of aligning investment strategies with personal skill sets, noting that their engineering backgrounds suited the analytical and operational demands of multifamily investing. Current Projects: Jonathan discusses their recent acquisition of a heavy value-add property in Lubbock, Texas, which they purchased at a low price due to its occupancy challenges. He shares that they moved to Lubbock for three months to oversee renovations and stabilize the property, which is now seeing significant occupancy improvements. Financing Challenges: The conversation touches on financing strategies, including the use of bridge loans with high interest rates and plans to transition to long-term financing through agency loans. Jonathan highlights the difficulties in raising capital for heavier value-add projects in the current market climate, where investors are more cautious. Market Insights: Jonathan shares insights on market conditions, emphasizing the importance of diversifying job sources in the areas they invest in, particularly in university towns, which provide stability. He explains how understanding local demographics and economic factors can significantly impact investment success. Future Outlook: Looking ahead, Jonathan expresses optimism about their current projects and the multifamily market's potential despite challenges. He encourages listeners to be diligent in their research and due diligence, emphasizing the need for conservative underwriting in today’s economic environment.