“When you look at residential real estate trends over the years, even when there is a slowdown, the market always bounces back.” This was the conclusion of Yaron Shamir and Dmitry Rozin, co-CEOs of Nathan Holdings, in a recent joint interview with The Jerusalem Post.
Certified public accountants who share a background in economics and law, Shamir and Rozin specialize in investment and management of multifamily real estate properties in the United States, mainly in Florida and the Sun Belt.
They sat down with The Post to discuss the US residential housing market, the effects of the COVID-19 pandemic, and future real estate trends.
“Multifamily is a complex of units for residential lease,” Shamir explained. “They can start with five units and go up to thousands of units. Rather than selling a single house or apartment, you deal with buying and selling the entire complex as a whole.”
According to Shamir and Rozin, multifamily real estate accounts for the majority of the residential rental market in the United States today. It is considered a very stable market with consistently increasing demand that is less affected by the fluctuations characteristic of the stock market and other investment types.
This stability is one of the main advantages of investing in the residential real estate sector.
“We are very conservative investors,” Rozin said. “We use balanced growth predictions, based on actual market research and realistic assumptions in our underwriting. ‘Luck’ isn’t a factor in our models, and we try not to rely on transitory market trends. For us, this is the best way to reach our goals.”
The co-CEOs stated that multifamily investments are made for the medium-long term range and provide investors with both cash returns from rent and a long-term capital gain due to the increase in value.
With multifamily investments “you are buying the income” and the properties’ value is mostly affected by the income generated. In other words, the more income or rent a property can generate, the more value is added to the property.
“This is all very dependent on the management,” they said.
In the US, rental units need a management company. The property owners are responsible for almost everything – plumbing, water and electric bills, taxes, landscaping, gym facilities, and maintenance, even for appliances and lighting fixtures.
“So, you have to have an active management company – and this is why we opened our own management company, with the aim of increasing value through creating the best management.”
Shamir and Rozin said this is one of the pillars of their business.
“We don’t rely on third party companies that may have their own interests. We maintain full control, full transparency, and this allows us to better serve our residents and thereby increase the value of the property,” they said.
This strategy also served as a distinct advantage when the COVID-19 pandemic hit.
“We were able to respond and adapt in a better, faster way, because we removed this dependency on third parties.”
With regards to the effects of the pandemic, Shamir and Rozin said that COVID-19 initially caused a decrease in real estate prices mainly due to deals coming to an almost complete halt and government interference in the market (including the eviction moratorium). However, low interest rates and an abundance of cash looking for investments served to increase demand.
“People also started to understand that they can work remotely,” Shamir said. “So they started looking for locations that are better suited to their lifestyle and offer a better way of living. As a result, states like Florida, Texas, the Carolinas and other warm-weather states saw real estate prices soar.”
“Not only did rental prices soar, but the value of properties also increased dramatically,” Rozin added.
During the first year of the pandemic, many construction projects were put on hold and not many broke ground. This created a backlog in new residential apartments being released into the market, and today in the United States, there is a shortage of rental properties driving up demand even more.
“Now, when you look at the post-COVID world, despite the new variants, prices have surpassed the pre-pandemic baseline, and demand for rentals is stable and only increasing,” they said.
As such, Shamir and Rozin remain very optimistic looking to the future: “We believe the future is going to be very bright for real estate investors.”
“Every investment has its risks, but we try to mitigate and manage these risks,” they added. “We truly believe that multifamily real estate is a solid investment, which is why we intend to continue doing what we do best, and investing alongside our partners for the future.”
For more information: Nathan Holdings
This article is taken from The Jerusalem Post Annual Executive Magazine 2021-2022. To read the entire magazine, click here.
This article was written in cooperation with Nathan Holdings