Jeronimo Hirshfeld on Multifamily Model: Safe, Profitable and Value-added Business

JULY 20, 2021

Jeronimo Hirschfeld, Founder and CEO of ONE Real Estate Investment (OREI) , details that although the real estate industry has shown strength throughout the different crises, the housing sector has been one of the most stable.

For this reason, it has also become one of the most attractive markets, mainly the multifamily market , in which it has more than 20 years of experience.

Experience he has built since 2001, the year he founded One Real Estate Investment, a private multi-family asset management and real estate investment company based in Miami, Florida.

“I saw the opportunity to acquire three properties that were empty and had few units. This is how the idea of ​​creating One Real Estate Investment came about”.

Company that is dedicated to the acquisition of multifamily assets in the southeastern United States, in cities such as Texas, Arizona, Colorado, North Carolina and Florida.

Mainly in properties of between 200 and 400 apartments; which are completely remodeled, both common areas and each of the units.

“What we do is make improvements in the common areas and then we get to remodel these apartments that are usually one or two rooms , that is, units of between 80 and 90 square meters. Which allows us to increase rents, create a greater appreciation of the property and a greater flow”.

Investments that last from 4 to 5 years (investment period) since sometimes the properties acquired are 95% occupied , so the remodeling of the apartments is carried out as the contracts expire month by month.

Similarly, it indicates that another of the factors that allows them to obtain a greater capital gain is location; which is why OREI focuses on buying properties close to major cities .

No more than 20 or 30 minutes away, allowing them to obtain higher demand and create added value.

Another situation that has also benefited them after the change in routine that 2020 left, is the market demand, since it has proven to be a 100% profitable and safe model compared to that of offices, which was seriously affected after the use of schemes such as the home office.

Which, according to the CEO, is expected to continue for at least two more years, so the idea of ​​the company is to continue creating spaces that offer recreation areas, quality of life and work at the same time.

“We are constantly looking for purchase opportunities, today there is a great appetite to acquire and invest in this type of property. In 2020 many investors decided not to risk it, so this year there is plenty of capital. Where they have to be investing today is in the multifamily”.

He explains that it is a market with little risk that gives quite generous returns, since it is about existing properties, of which their history and occupancy numbers are known.

Most of them are properties built between 1985 and 2010, so the improvements made make them even more competitive .

“They defend themselves quite well, especially during crises, since that is when occupation levels rise. Result of the slowdown in the economy, so those who paid rents of four or five thousand dollars, now look for something more accessible. Today we have about 14,000 people living in our complexes, a number that continues to increase”.

The rents that OREI manages are located in a range between 800 to 1,400 dollars, which allows it to capture a niche made up of approximately 200 million inhabitants in the United States.

2021: Synonym of Growth and Technological Vanguard

Currently, OREI has a portfolio of more than 5,800 departments, of which 2,000 correspond to nine transactions carried out last year .

So his vision for 2021 is to achieve the same numbers, staying within a range of 2,500 new units, that is, about 11 properties.

“The idea is to continue with the same business model and strategy that we have had for 20 years, we have become experts in this area. It is a very attractive market, especially when you balance the risk versus the return that we are generating for investors”.

Yields that to date, with the purchase of the most recent properties, are located in Tir annualized of around 14 to 16 percent .

“Very generous returns, if we take into consideration the type of risks with an existing property, which is already rented and has a high occupancy.”

On the other hand, the also founder of OREI, mentions that the company has implemented software that allows better communication with investors .

An application in which they can be aware of the financial statements of each of the properties in which they participate, which gives them access to information such as the level of occupancy and service and operating expenses.

“The more transparent and more information we can provide to investors, the more attractive it is to people; so as we grow and the company evolves, we focus on designing different options to facilitate communication with each of our investors.”

Finally, Jeronimo Hirschfeld, highlights that the multifamily market will continue to grow, which will bring greater benefits for the sector and those who decide to invest in it .