← The Rent Roll with Jay Parsons
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- [00:00]
Andrew Kadish
Foreign.
- [00:03]
Jay Parsons
Welcome. It's episode number 63 of the Rent Roll, your podcast on all things rental housing, apartments, single family rentals and build to rent, lots to cover. Today we're going to start off talking about some possible green shoots of recovery in the multifamily market. And when I say green shoots, you're hear me say a few times I mean it in a very literal sense. I don't want anybody to think I'm talking about some big rebound. I'm talking about it not as a full blown recovery, but early signs of improvement, like the first signs of green grass in a yard after winter. That's what we're talking about. Still a ways to go, but we do have some of that. So I'll talk about some green shoots, including highlighting one major Sun Belt market that might be leading the pack in the recovery. Still might, but it's regained more momentum than any other major market these last six months, in part because supplies dropped off here faster than than elsewhere in the country. And I don't want to get too far ahead of ourselves yet because again, in places like this, you know, rents are still falling, falling a bit. But given all the uncertainty right now, I think it's okay to pull out the magnifying glass and look for some green shoots like this one. So we'll unveil what that market is in a moment. And then later in today's program, we are what we will welcome in the CEO of Cap reit, Andrew Kadish. He is, by the way, not the Canadian REIT, but but the U.S. department and Investor and manager by the same name, which operates affordable and market rate apartments across the east coast and Midwest. I'll ask Andrew about the naming confusion for his company that was started by his father and how it almost went public as a reit, hence the name Cap reit, but has happily charted a path in the private market instead. And we'll talk to Andrew a little bit about what's happening and what he's seeing in the affordable housing LI tech market as well as in the conventional space. But Cap Freed has definitely been an active player in the affordable market as well. Also, before I move along, I want to give a big shout out and thank you. A very sincere thank you to all of you who've tuned into the podcast this year. We've just gotten our 2025 wrapped report from Spotify. So many of you have seen this from music artists and podcasters. Maybe get your own report from what you consume. So we got ours and what it shows is it's been a fun year. So thanks to you, the Rent roll ranked on Spotify's top 2% of podcasts for most time listened, with 1 million minutes spent just on Spotify, which by the way is our number two platform behind Apple Podcasts and also on Spotify, the Rent and Roll ranked in the top 1% for most shared shows. You also tuned in from 43 different countries this year, which is kind of crazy because I only talk about the US Market, but I guess that either reflects international investment appeal of the US Rental housing market, which is what I want to think, or maybe it's just a lot of you travel to a bunch of countries and listen while on vacation. But here's what I think might be the most interesting and fun stat from Spotify's report. It shows what musical artists y' all listen to when you choose to listen to music instead of a podcast. And you've got some eclectic tastes. Top five artists were Morgan Wallen, Taylor Swift, Zach Bryan Drake, and Bad Bunny. So anyway, big thank you to all of you who've tuned into the podcast this year and made the podcast part of your routine. That's a huge honor for me. It's not something I ever aspired to or even thought about, but certainly humbling to think about and to see the great data from Spotify and elsewhere.
- [03:38]
Interviewer
So also I gotta give a big.
- [03:40]
Jay Parsons
Shout out to the producer of the Rent and Roll podcast, Tyler Lambert, for making all that happen, handling the production behind the scenes. And also a big thank you all the companies who helped support the show this year, starting with jpi, Madera and Funnel, as well as many others. And so let's do that right now.
- [03:56]
Interviewer
Big shout out.
- [03:57]
Jay Parsons
Thank you to jpi, leading apartment developer, the state of purpose to transform, building, enhance communities and improve lives. Thank you to Madera Residential, a leading apartment operator and owner in Texas. Check them out@maderaresidential.com and also thank you to Funnel, you the AI and CRM platform that sponsors the interview segment of the podcast.
- [04:16]
Interviewer
All right, so let's kick it off.
- [04:18]
Jay Parsons
Here's a chart. And before we dive into the chart, I want to talk about today's theme, which is are we seeing early signs of green shoots of recovery in multifamily? And again, I got. I'm gonna. I told you I'd say this multiple times. I'm gonna say it cause I know someone's gonna say, you know Jay, you're getting ahead of yourself. So I'm gonna just reemphasize, double down what I said earlier, a green shoot is just that, it's not a rebound. It means an early sign of one, maybe the, the beginning of a rebound. You starting to jump a little bit, but you're not really up in the air. It's literally again referencing those first green blades of grass coming out of the of the lawn after the cold winter or the first spring leaves coming off the coming out of the tree following the fall of winter. So that's what we're talking about here, green shoots. Yardy's most recent monthly report noted occupancy improvement in key markets. And they said, quote, several high supply markets led by Atlanta, Charlotte, Phoenix, Nashville and Orlando posted occupancy gains due to strong annual absorption. Even Austin and Denver, which were flat year over year, managed to avoid declines. So that's progress, right? And then over the last round of REIT earnings calls, I've already covered this one a bunch in the, in the REIT recap, but if you missed it, it was the same message. And one market in particular that earned a lot of shout outs in those calls is one that we see in the data as well, which is Atlanta. And so again, there's still a lot, a lot of ground to make up. But across Atlanta and some of those other markets, we are starting to see some, some green shoots.
- [05:43]
Interviewer
So let's look at this one.
- [05:44]
Jay Parsons
This is our Atlanta is an interesting one and particularly because it's ironic, some of you Atlanta folks will remember the infamous Wall Street Journal article a few months ago that announced Atlanta was basically dead and everyone was leaving. And of course, that was never actually true. Atlanta certainly isn't growing like it was in the 1990s. But that's been true. That's been the a long time. That's not a new thing. And it's still a growth market, particularly in the more desirable submarkets. So here's the Atlanta data point that really jumps out. And so for those who can see this chart in the screen, we're showing rent growth in Atlanta year over year. Effective rent change, it's still negative, but the pace of decline has moderated faster than anywhere. It's moderated from nearly negative 5% rent cuts back in the summer of 2024. Then earlier this year it was negative three and a half. Six months or so ago is two and a half in the negative. Now we're about negative 1%. And in terms of momentum of these last six months, that's improvement of 170bps in rent change. And that's the best improvement or best Momentum improvement among all the top 50 largest metro areas, even San Francisco. And obviously San Francisco is seeing a lot more actual rent growth. But again, I'm talking about momentum here. The change in the change and that momentum correlates with a big drop off in new supply across Atlanta. Still work to go here, still some still supply to work through, yes, but we're past the peak and coming down fast and maybe that becomes the pattern that we see in other Sunbelt markets before too long as well. So the drop off in supply is part of the story, as is demand. We're seeing units in Atlanta start to lease a little bit faster. Nothing like 21, 22, of course, but the number of average vacant days between leases has improved in the last couple of months each of the past couple of months compared to the same time a year ago. Another market nearby that saw similar improvement was Charlotte, by the way, although not quite the same degree yet of improvement on the rent side. So again, that's an early sign of the pattern that everybody's looking for lesser supply, lesser availability and then some leasing momentum and then finally concession burn off and rent growth. So maybe again, it's a green shoot. I don't want to oversell it, but maybe we're starting to see that in Atlanta and, and, and elsewhere.
- [08:00]
Interviewer
So still ways to go.
- [08:01]
Jay Parsons
But the incremental improvement appears to be helping support the gradual pullback in the depth of rent cuts there. Other markets seeing some improvement in rents, again, still mostly negative rents, but it's in. But the depth of rent cuts has moderated in places like West Palm Beach, Memphis, Jacksonville, Fort Lauderdale, Orlando, Virginia Beach, a bit in Dallas, Fort Worth and Nashville too, more recently as well as, of course, you know, that's outside of Sunbelt. We have to talk about the two momentum in places like San Francisco and San Jose, which are by the way, the only big coastal markets with accelerating rent growth levels over these last six months. So in most of the rest of the country outside the Sun Belt, we've seen rent growth levels have either cool off a little bit, particularly in places like D.C. and Boston, which talked about previously, or they've started to try to level off. But San Francisco continues to be in. San Jose continues to be the exception given the late recovery and the continued momentum there. So but that is kind of overall though, a big plot change here. You know, the coastal and Midwest markets, they're still outperforming on rent growth. Of course, a lot less supply to wrestle with. But as supply comes down, the momentum, the, not the rent growth leaderboard but the momentum is now shifting in favor of these higher supplied Sunbelt and Mountain markets. So again, I'm going to emphasize this once again. In a lot of these Sunbelt and Mountain markets, rents are still falling, but to a lesser degree we still see big rent cuts in places like Austin, Denver, Phoenix. So it's not like that's magically gone away. But again, the pace of cuts has moderated a bit even in those spots that have particularly been particularly hard hit. No one's out of the woods, even Atlanta. A lot of new products still to absorb, long lease up processes given all the supply competition, the 50 year high in supply. But hey, we're looking for green shoots, right? And you know that, and that's okay.
- [09:51]
Interviewer
It's, it's.
- [09:54]
Jay Parsons
That'S saying that, you know, there's a lot going on right now, a lot of uncertainty in the market, but there's also been a lot of supply, a lot of nervousness about both the economy, but also just wrestling through all the supply. And so, you know, we're looking for kind of direction where's the market going good or bad. And so it's okay to again pull out the magnifying glass and look for some of these signs. But I want to reemphasize the path to recovery and actual rebound. You know, it's going to be bumpy and it's going to be uneven. So even though we're seeing this improvement momentum in Atlanta, it wouldn't be surprising to see a little bit of loss momentum and then regain momentum. So that two step forward, one step back process, it's going to be different across markets, different across markets, even in the same states. You know, it could be different from one place to the next. The same market, different submarkets will be going, different patterns. I highlighted some of the markets I highlighted earlier were showing some signs of improved momentum. A lot of them were in Florida, but it's not universal. So Tampa is one that's actually lost some momentum on pricing in recent months. And that's a little bit surprising because six months ago Tampa was one that had rebounded to slightly positive territory on rents. So it looked for a moment like it could be an earlier recovery market, but that pattern has reversed these last few months especially. So maybe that's a case of two step forward, one step back. We'll see where that one goes. But again I just doubling down on that point. Green shoots, looking for signs of momentum. That momentum is shifting more in favor of the Sun Belt and the mountain markets. Ultimately though, we need to see at least moderate economic growth to sustain that pattern. And so we'll see how that plays out. Stay tuned. We'll give our 2026 predictions here in the next couple of weeks.
- [11:34]
Next up, rental housing trivia.
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So today's trivia is presented by Foxen, which provides a suite of value add solutions designed to improve operations compliance and property performance. Rethink renters insurance compliance, rent reporting and pet management with Foxen and check them out@foxen.com that's f o x e-n.com all right, so today's question is, according to both CoStar and RealPage, what is the only market in the south region of the country seeing rent growth of more than 1 1/2% year over year? Currently this is for apartments. So what is the one and only south market, south region market seeing more than 1 1/2% rent growth? Is it Greensboro, Memphis, Miami or Virginia Beach, Norfolk? So give that some thought and we'll come back in a bit with the answer. But next in the news.
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All right, in the news, of course, when we highlight headlines that touch on topics impacting apartments, single family rentals. And today's in the News segment is sponsored by Authentic. If you've got a property that's underperforming and you can't quite figure out why, check out their multifamily leasing and marketing audit. They'll dig into your pipeline leasing funnel and comps and tell you exactly where things are breaking down plus strategy and how to fix it. Listeners of the pod get 50% off. So head to authenticff.com and click on the banner to learn more and claim the offer. All right, so we got three headlines this week. The first one comes from BizNow. It says FTC plans to make rental housing fee disclosure rule following Greystar settlement.
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Okay, so fees have obviously been a big topic in the industry. Last week the FTC announced a settlement with graystar over fee disclosure. Notably, that agreement does not include any admission of wrongdoing, but what it does provide is clarity where there's not been clarity, pushing toward all in pricing with mandatory fees included as opposed to just advertising the base rent and then having to see maybe the many times those fees may have been disclosed. But further down the details or elsewhere, they're asking to show what's being applied. Here is all in pricing up front and you can see how this can have broad implications on apartments, single family rentals across the country.
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Interviewer
So the FTC actually put up a.
- [14:07]
Jay Parsons
Blog this week and it's something of a warning to property managers and owners and pretty explicit about that. So let me read part of it and I'm going to.
- [14:16]
Interviewer
This is a quote, it says, quote.
- [14:17]
Jay Parsons
If you're a property manager, a property management software provider, owner rental property or advertise rental properties, know that advertising a rental price that excludes mandatory charges is a violation of the law. So advertise the total cost of renting your unit up front and then it goes on. Tell industry players to, quote, do a thorough compliance check, review your website and advertisements to confirm they honestly advertise a rental's price, including a man, including any mandatory fees at the property. That includes working with your third party vendors to make sure they're accurately advertising the rental price on their all their platforms. And it goes on to say that the FTC is quote, reviewing harmful practices in the rental housing market and will not hesitate to take action against landlords taking advantage of Americans housing needs by hiding mandatory fees. All right, so there you go. So we may be in a new era here. Ultimately it's a good thing for everybody. You know, again we need clarity. You know, there's not been clarity in this space and ultimately clarity and transparency are good. Transparency is good. Transparency of rent as well as transparency of the rules. So transparency is benefiting property managers, owners as well as renters. This brings clarity to all sides. And it works best when everybody is adopting all in pricing because that becomes the standard. So that way renters could compare Apple's for apples. You know, it's harder, I know a lot of people, there's probably harder for them to want to share all in pricing when their competitors are not because it makes it look like the competitor is cheaper even if they're not factoring in all the fees. And so it creates a misleading comparison point. So if everyone's doing the same thing, that's a win win for everybody. By the way, some of you may remember we had Joanna Zabinsky from BH Management on the podcast a few weeks ago, actually a few months ago now, talking about this very topic. BH switched to all in Pricing and saw great results from it. In Joanna's view, fewer leads, but actually a higher conversion rate. And so the net impact was positive. More qualified leads coming into the funnel the leasing team could focus on. And so occupancy was not negatively impacted, she told us. So anyway, if you're a manager or owner and haven't been up to speed on this, you probably should take a look. All right, our next headline comes from NBC News and it says senator launches Probe of investment groups buying up trailer parks. The, the letters seek information about evictions, rent increases and profits at firms acquiring the properties. All right, so now we've seen some focus of the spotlight shifting to trailer parks more broadly, manufactured housing. You know, if only there could be a probe into how to make it more feasible to build more manufactured housing. Again, that'd be great, but that would unlikely get us a big headline from NBC News. Obviously a probe into investment groups sounds a lot cooler, I'm sure, but, but I do think it's one thing to, for the groups that are looking in this space, I think it's one risk to consider. While the renter demand has certainly been there, we've seen more and more, I think pressures on the policy front or at least rumblings of pressures on these types of communities, on manufacturing housing more broadly. So certainly some potential to see a more intensified regulatory spotlight on this sector of the market. And our last headline comes from the Wall Street Journal. It says California's teacher village model spreads as housing costs soar. More schools are offering company housing to prevent educators from fleeing the cheaper locales. They go to Idaho, they go to Texas, end quote. So this is a pretty interesting story. What it's talking about is there's some California school districts that are actually buying apartment properties and then using them to house teachers who may not otherwise be able to afford to live nearby. And that's obviously a huge benefit to teachers, helps keep teachers in place who might otherwise not afford, not be able to afford to stay put. So that's a, that's a win, win. And it's a good reminder too that you know, a lot of these high cost cities, places like California, they've tried to use inclusionary zoning to mandate affordable housing construction. But when you, when you mandate it, you actually get less of it. And that's what the, the science continues to show us. And so you can't inclusionary your zoning. You can't inclusionary zoning your way to get enough affordable and workforce housing for the essential workers you need to run your cities and to run your schools. You need to put your money where your mouth is in one way or the other. Whether it's property tax abatements and partnering in the private sector or an outright acquisition development for a property to house essential workers like what we see in this article.
- [18:40]
Interviewer
So anyway, regardless, you got to put.
- [18:42]
Jay Parsons
Your money route this, that's a priority. Make it happen. So kudos for those who are doing it. All right, next up, new digs.
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All right, this is a segment we've not done in a while. Way too long in fact. This is where we like to highlight a cool or unique project underway or recently built across the country. This segment is presented by Lee Consulting Group, a strategic marketing and communications partner to the real estate and construction industries. LCG helps companies elevate their brand, strengthen client relationships, build stronger teams and win more work through clear messaging, industry focused strategy and high impact marketing tools. Learn more@think lcg.com all right, so today's new digs is Waterworks Village in Atlanta. Just had its grand opening last week. It provides 100 units of permanently above sorry permanent housing for previously homeless individuals as well as others who are struggling to find safe housing. And it also provides job training to get folks into the workforce, plus medical and mental health care for those who need it. And according to Axios, the article in Axios, it is the first modular multifamily development to open in the city of Atlanta. Which is pretty cool. Always like seeing different types of construction get done and good to see that happen. So the apartments are 250 square feet each with a bathroom. They are built in an average cost of $170,000 per unit, which again it's a small unit but that's a pretty good price for city backed affordable housing. You know, in LA it probably cost five or ten times more to get that built. And these modular units were built in South Carolina and transported down to Atlanta. So encouraging project and certainly hope it's a big success. All right, let's get back to today's rental housing trivia question. The question again was, according to Both CoStar and RealPage, what is the only market in the south region of the country seeing apart and rent growth of more than 1 1/2% currently? Was it Greensboro, Memphis, Miami or Virginia Beach, Norfolk? And the correct answer is D Virginia beach. The Tidewater area. It actually COSTAR has the Tidewater area at 3.3% rent growth which they have as number four in the country. Real page shows it at 3% even, which is number five in the country in their data. Either way, that makes the Virginia Beach Norfolk area the first market in the south region to crack the top five for rent growth in quite some time. That list has been dominated by Midwest and coastal markets for it seems like at least two years now. So. So there you have it, Virginia beach on the up and up and it's.
- [21:27]
Interviewer
A beautiful spot by the way.
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Jay Parsons
If not been there, beautiful, beautiful area. Nice. You have some parts that are very historic and of course you have the beautiful beach of Virginia beach and elsewhere hasn't seen a ton of job growth, but also hasn't had much supply growth at all in recent years. So it is one that tends to fly below the radar. All right, next up, it's time for today's interview sponsored by funnel, the AI and CRM software trusted by four of the six major REITs and many more leading operators like BH and Cortland. To learn how Funnel can help your property centralize operations and automate everyday tasks, visit funnelle leasing.com and our guest today is the CEO of Capri, based in Maryland, operating as an owner, developer and third party property manager of affordable and market rate apartments. Andrew and his sister Jennifer took over leadership of the company from their father, Dick Kadish, who formed caprite back in 1993 and grew it to a portfolio of about 15,000 units. And today Capride has a presence across the east coast and the Midwest, heavy in the Mid Atlantic in particular, but also down into Florida. So here's my conversation with Andrew.
- [22:51]
Interviewer
All right, welcome to the interview portion of today's podcast and I am honored to welcome in the head of Capri, Andrew Kadish. So Andrew, thank you so much for being here.
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Andrew Kadish
Jay, you're a longtime friend of mine. I really appreciate the opportunity. So thank you and long term, long time listener too. So thank you.
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Interviewer
Well, I'm excited to talk shop with you. So. But before we get into it, tell us some of the background of Capri. Obviously family business, been around now for.
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Jay Parsons
A bit, but tell us some of the story.
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Andrew Kadish
Yeah, sure. So Capreit was started back in 1993 by my dad, Dick Kadish. It was a wannabe public REIT. And my dad was trying to acquire about 20 apartment communities really focused on the three regions where we're situated today. That's in the mid Atlantic Southeast and northern Midwest, really as far west as the Mississippi river, was going out to the market, wanted to raise funds to acquire this portfolio and needed to raise about 250 million in equity, but only raised about 175. So a failure. And my dad always said it was the greatest failure he ever had, but he kind of didn't know it at the time, like he was freaking out legitimately. Started talking with a couple of the big names at the time, Sam Zell, who he had gotten from friendly with when my dad was approached by Apollo. So Bill Mack and Richard Mack, Lee Nybart, you know, true New York City real estate titans. And what they said to my dad is like, you Know, my dad went by the moniker Dick. They're like, dick, you just came out at the wrong time. You know, we'll hold you for a year, we'll provide you seed funding to start the company, and then you'll just take us out next year in the second ypo, you know, the more the successful one. So my dad got seed funding from Apollo. I got debt from CS First Boston, acquired those 20 apartment communities, started operating. Well, about three months later, he sends the first quarterly distribution check. It was a 23%, 24% cash on cash. And Bill Mack calls up my dad and said, respectfully, I think I'm allowed to say this. Screw the ipo. You're our baby. Jay. The only problem is, and this is a problem that still affects me to this day, is everyone kind of knew my dad is cap REIT by that time. We are not a reit. But every Tuesday, I still get a call like, andrew, what do you think of that new REIT regulation? I'm like, I don't know what the heck you're talking about, man. So we are just a privately held family company, but we're probably going to change the name of the company tomorrow to, like, Andrew Inc. You know, or something like that. But for now, we'll stick with Capri.
- [25:34]
Interviewer
All right, so a related question that I'm sure anybody who Googles Capri, they realize there's another cap rate, a Canadian apartment reit. So how much confusion and headaches does that cause for you?
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Andrew Kadish
None at all. I don't know what you're talking about.
- [25:48]
Jay Parsons
Yeah.
- [25:51]
Andrew Kadish
So it turns out I get many Google reviews about how Andrew Kadish owns an apartment community in Montreal. And I didn't fix the toilet, the sink. And I'm like, I swear to God, number one, I wish I spoke French. I do not speak French, but. But I go through Google Translate and I find out, like, I'm kind of like, you know, a terrible landlord up there in some of these apartment communities. It's not us, I swear to God. And they are the biggest reit, you know, up in the multifamily landscape up in Canada. We have nothing to do with those guys. So it probably. It lends more credence to probably changing the name to Andrew Inc. Or something like that. But no, nothing to do with us. Yeah.
- [26:31]
Interviewer
Yeah. So do they come later?
- [26:34]
Andrew Kadish
I think, honestly, I think it was like, around same time. But you know what it brings, it brings to mind, you know, maybe they. They owe us like a hundred bucks or something like that. They. They. They Definitely stole, stole off on our name. So.
- [26:47]
Interviewer
Well, I know you kind of joke about Andrew Co. Or something, but would you ever change the name or is just you're sticking with company? Your dad started with that name.
- [26:56]
Andrew Kadish
It's, you know, you know, we are true family company. So I'm second generation, you know, family leader. I have, my president is my sister Jen Cassell, who is incredible, incredible leader. And we have spoken about it like, do we change the name? Because you know, there, there is some confusion in the marketplace. Sometimes I do get asked at conferences, you know, are, you know, are you based in Toronto? And for us, I think, you know, we have always leant upon, you know, we have 32 years of history, you know, led by my dad, you know, for the first, you know, 20, 20 some odd years in the company and then with myself at the Helm since 2015, I think we have such cachet and reputation in the marketplace that we want to stick with the name. So we'll, we'll be Capri forever.
- [27:47]
Interviewer
All right, so Andrew, you talked about this a little bit earlier, but just tell us a little about the portfolio in terms of asset types and geographies.
- [27:53]
Andrew Kadish
Oh, sure, my pleasure. You know, so right now we stand at about 12,000 units. 50, 50 in terms of, you know, we are vertically integrated, but 50% we own and operate and then 50% we manage apartment communities for third party clients. You know, we have operated in mid Atlantic Southeast, you know, really, you know, Southeast, you know, through Florida and then also northern Midwest, operating, you know, really from the secondary cities. You know, where we have our largest concentration are those secondary cities. St. Louis, Missouri, Minneapolis, Minnesota, Indianapolis, Indiana, Richmond, Virginia. And to be frank, we've had boots on the ground there since our inception, you know, 32 years ago. And still a lot of legacy employees, you know, from when Caffrey was first founded. We really feel like we know those markets and you're never going to see us in New York, la, Miami. It's just while we love vacationing in those spots, it's, you know, number one, there's some great operators there already. Number two, we have always been a yield driven investor and feel that, you know, with the installation of that boots on the ground that we've had for over three decades, we know these markets well. We think we can deliver superior returns in what traditionally Wall street might. It will never be on the front page of a Wall Street Journal, but it's been delivering solid cash on cash forever for us. And we're not subject to.
- [29:30]
The extreme lengths of where a Miami Or a Phoenix or an LA might go to a St. Louis is a perfect example. It's never going to go that high. You're never going to see an explosion of. Explosion of St. Louis, but it's also never going to be down in the doldrums. It delivers solid, steady returns, and that's what our investors like to see.
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Interviewer
Absolutely. And speaking of the Midwest and also the Mid Atlantic, the story for the industry has been those have been the steadier, better markets these last few years. Is that still the case? You still seeing that? Are you seeing any softening in the Mid Atlantic lately due to Doge and federal layoffs, et cetera?
- [30:11]
Andrew Kadish
That's, you know, when Trump initially came in, when we were talking about Doge and, you know, with, with Elon in the fold, there was significant worry, you know, in the marketplace. You know, we have, you know, a strong Northern Virginia portfolio. We also have heavy presence. You know, we are headquartered, I run things from Philly, but our headquarters is down in Bethesda, Maryland, with a lot of the team down there as well, too. A lot of apartment communities down in Maryland. Doge, though, you know, while it raised the ire of many multifamily investors, it hasn't raised much concern. We saw very little softening if, if anything, you know, from the Doge impact. And it seems like, you know, lately that Doge has really gone the way, you know, of the dodo bird, so to speak. We're not seeing, you know, mass terminations, mass layoffs. You know, it's the Fannie and Freddie, you know, potential privatization is concerning. But really, I think what has affected us in the Mid Atlantic is investor sentiment, investor interests due to the regulatory landscape, you know, Montgomery County, Maryland, where I grew up in Rockville, has some of the most onerous, you know, regulations. Um, you know, you've spoken about it on your podcast many times, and it is quite concerning where, you know, I think in practice, you know, you're definitely seeing, you know, some limitations. It's not, you know, the rental industry is not going to disappear overnight, you know, by these, by this legislation. But what's concerning to me is that once you've opened that gauntlet, you know, it could go further and further and further. Like, it's, honestly, it's like what we talked about in law school, that slippery slope, like, where is it going to end, number one. And number two, in practice, rent control has never increased supply. Rather, what it's done is dampen investor interests, not only in just, you know, new starts and whatnot. And new supply, but also in existing acquisitions by investors, where investors are just like, look, I'm, I'm too concerned, you know, and we have a big red X on Maryland right now, especially in Montgomery County. So that has really hurt us. Doge has not.
- [32:31]
Interviewer
Yeah, yeah, Certainly a slippery slope effect. There's plenty of consequences of that in New York City these days. So 100 years of rent control and it only further accelerates.
- [32:43]
Jay Parsons
Couldn't agree more.
- [32:45]
Interviewer
So, Capry, you guys operate affordable as well as market rate at a high level. What differences are you seeing in the trends between, you know, true uppercase a affordable housing and market rate housing?
- [32:59]
Andrew Kadish
Yeah, I mean, I think it's what has been surprising to me and this I think occurred with going through Covid and then especially now, while we've seen a little bit of softening, you know, in the market rate communities that we have, you know, we're about 50% market rate, 50% capital A affordable, and specifically LIHTC, we have a true specialty. There's, we haven't seen so much of a softening in the LIHTC landscape. There's certainly some jitters, but no true softening of what we've seen, you know, in the market rate landscape. So, you know, little, little to no impact. Rather, you know, our residents, you know, have been paying rent. What we have seen is definitely that consumer confidence, you know, with that going down, retention has gone up across our portfolio. Whether it's capital A affordable, whether it is market rates, people are staying, you know, and they want to stay. And I think you said it many times and I've heard it from many others, but Jay, I'd love to quote you too, but it's, you know, in times when consumer confidence is low, you know, what does that lead to? And it's essentially it's to stay idle. You know, you want, you crave that comfort. And so people are not moving nowadays. Like our number of applications at both sectors, both market rate, both capital A affordable, you're not seeing as many new customers coming on in, however, your occupancies. We haven't seen a real true softening whatsoever. People are staying. That retention number is quite high.
- [34:38]
Interviewer
That's good. So you mentioned rent collections. And I want to ask you about this because I recently shared from the actual rates, the publicly traded ones, the. The not, not the companies inevitably not the fake ones.
- [34:50]
Andrew Kadish
Like the fake.
- [34:50]
Interviewer
Yeah, yeah, yeah, yeah. The real REITs that their rent collection numbers, renter health was still really high. And I actually, I got some on social media, some cynicism about that. It's like, well, you know, it's because those guys are top of the market, you know, upper income. Like there's, there's a lot more challenges among, you know, lower income renters or foil renters.
- [35:08]
Jay Parsons
And so you're in that space.
- [35:10]
Interviewer
And so I want to ask you, do you see challenges among current renters, any kind of signs of financial trauma among renters in affordable housing right now?
- [35:19]
Andrew Kadish
We have not seen much, you know, and when we're focused on, you know, the capitally affordable renter, you know, we operate in about 18 states right now and about, you know, more than half of those, you know, we operate, you know, capital A affordable. We're not seeing, you know, a dramatic softening. We're not seeing, you know, initially, you know, during the initial Covid impact, you know, during those first few months when you know, unfortunately, you know, so many people, especially in the lower income sector, you know, lost, lost their jobs, you know, fast food workers and whatnot. You know, we definitely saw that, but you know, we have not seen that lately.
- [36:04]
Interviewer
And you're talking about during the COVID time frame.
- [36:07]
Andrew Kadish
Yeah, during the COVID time frame, you know, we, we definitely saw some softening, you know, people just unable to pay their rents. Yeah, we're not seeing that nowadays. You know, people are paying their rent. There is definitely concern from a lot of our residents about when's the next shoe going to drop. Is this economy headed into a downward spiral? You know, God forbid, but is it headed downward? In a downward spiral. And I think it's that uncertainty, that volatility, it's not just affecting, you know, investor interest in on the multifamily landscape, but rather it's those renters as well too, where it's just like, okay, like I have my job for now, I have some comfort for for now. Have some stability for now. What's going to happen next month? What's going to happen in early 2026? It's that volatility that is very concerning.
- [37:06]
Interviewer
Yeah, yeah, that's legitimate concern and hopefully we work our way out of that and confidence goes back up. We'll see. Andrew, you mentioned that you're seeing still good steadiness in your LI Tech portfolio, Low income housing tax credit, the capital A affordable housing in some of these Sunbelt markets. In fact, I was recently with a group in Florida and they're talking about this quite at length. What's happened is there's been so much supply that the, you know, the, the class C rent, the upper income class C renters now moving up to the Bs, the B renters moving up to the A's and the lease ups as all they're all chasing concessions and the.
- [37:42]
Jay Parsons
Ones who are in good shape are.
- [37:43]
Interviewer
Able to make that move at the same time. And that's causing rents to fall down. Only in these high supplied markets by the way. And the, the whole filtering effect. And then so the litech operators, some of them are saying, you know, we're having a hard time because now we're.
- [37:56]
Jay Parsons
Competing with market rate properties because the.
- [37:58]
Interviewer
Incomes are going up, amis have gone up. So the, the, you know, 80% of my, 100% of my is now higher.
- [38:03]
Jay Parsons
But now they're competing with market rate.
- [38:05]
Interviewer
And that's creating some challenges and the LIHTC side. So I'm curious, are, are you seeing anything like that? And, and what do you think is, is, you know, kind of driving that issue?
- [38:16]
Andrew Kadish
I think, you know, if you had asked me about a year ago, you know, we, we were all talking about it probably in November, December 2024, absorption is going to be happening. It's going to be happening at a rapid clip because the starts are going down and we're going to be done with the absorption issue, you know, probably late 2025 and you know, it's survive through, survive until 25 and then 2026, we're going to skyrocket. I think what is just really surprising to me is how slow the absorption has been taking place. We expected a absorption to be occurring at a much more rapid pace. It hasn't. And I think it's because of what, you know, we mentioned, what we were referencing just, you know, a couple minutes ago in our conversation is rather, is that it's just that steadiness. The, the renters, you know, kind of renters and buyers just staying in place. And I think we've seen a lot of that, you know, to be frank right now, you know, in terms of, you know, Jay, going back to your original question, in terms of, you know, that competition with amis, you know, skyrocketing up, you know, that, you know, traditionally low income, that litec renter, so to speak, being able to move up to a class C plus, class B minus, you know, community as well too. Haven't seen too much of that. Rather what we've seen is just I'm happy in my community now. I understand there's opportunities out there, but I want to stay put for now. So we're not seeing too much competition, at least in our sectors.
- [39:56]
Interviewer
Yeah, that's good. Yeah. And I think even the spots where it's happening, and I know you know this, I'm just saying this more for the, for the broader audience here is that, you know, I recently saw an article, I talked about this in the podcast once about in Seattle and they're saying, hey, that, you know, rents are our LI Tech. Rents are comparable to market rate rents in some cases for the lower part of the market. And so therefore we don't need as much LI tech or we need to be at 40% AMI for LIHTC. And I think a lot of people don't understand, obviously you do, is that this is a temporary phenomenon. As soon as these markets are covered, those rents are going to rebound back up. And so I really hope that in these higher supplied markets the policymakers don't make some bad decisions based on a very temporary, you know, permanently bad decisions based on a temporary phenomenon, if that makes sense.
- [40:41]
Andrew Kadish
It sounds like the two of us don't have full faith and trust in our policymakers to come up with great affordable housing policy.
- [40:48]
Jay Parsons
The hell.
- [40:49]
Andrew Kadish
The hell you say. So.
- [40:52]
Yes, it is, it is quite a concern of mine and probably yours, Jay. I would assume that often what is happening is that the latest, you know, social media trend or whatnot, you know, in terms of, and you're hearing about it more and more and more, you know, that buzzword of affordability. And affordability is an incredibly important concept, but there needs to be research and guidance behind that in terms of implementing good research backed policy rather than just simply hearing, okay, well if we institute rent control, supply is going to go on up. People can afford to pay their rents. It's just, it's not, it has never happened in practice. We just had the experience in St. Paul several years ago and we have a very strong Minneapolis presence, Minneapolis St. Paul presence. But you saw, literally it was kind of like the day after that those rent control regulations were imposed. All the development permits were immediately pulled.
- [41:53]
Despite what we've seen over and over again, rent control has been proven to be just an ultimate weapon against affordability.
- [42:03]
Interviewer
Oh yeah, no, I find so ironic about the St. Paul and Montgomery county examples is like developers are like, hey, if you do this like during the, before the vote, it's like development's going to go away and the advocates are in control. Like they're bluffing. They're bluffing, they want to be. And then they pull out and they're like, they're like, well, this is, I can't believe they're doing this. It's like, well, they told you they'd do. Oh my God.
- [42:23]
Andrew Kadish
Like, hey, honestly, they should have asked, you know, Andrew and Jay there if I can speak about myself in the third person. But yeah, they should have asked us. That would have been nice.
- [42:31]
Interviewer
So, so let me ask you. Obviously you're intimately familiar with Litec and so one thing is I get asked a lot about and they'll say, okay, Jay, I get it, rent control is bad, but like what do we need to do? And so, so if you had, you.
- [42:40]
Jay Parsons
Know, a magic wand, like what can.
- [42:42]
Interviewer
At a high level, what, what can we do to, to properly, you know, reform and expand programs like Lytec that would really create a better solution for, for the, for, for renters and for cities, et cetera.
- [42:59]
Andrew Kadish
I didn't realize this was going to be a 36 hour podcast because I can talk about this for a long time and I level, yeah, yeah, I, I never shut the hell up either. So I'm, I'm glad to take part in it. But I can think of just several different things on an immediate, on an immediate level. Number one, what you've seen so far is, you know, regardless of, you know, if AMIs are sky. Skyrocketing in certain areas or AMIs are potentially going down in certain levels, you know, expenses have skyrocketed and it's the insurance market, you know, has been an absolute killer. Property taxes have been an absolute killer. And so, you know, that initial pro forma that any developer is going to go through, you know, to establish new li tech Supply supply, if they're not going to be able to devise or engineer a good pro forma that's delivering solid returns to themselves and to their investors, they're not going to bother. So at the very least there needs to be some assistance, whether on a federal, state, municipal level to help with those, those concerns. On the insurance, Florida has always been a nightmare, but you know, across the country, but you know, insurance and property tax, number two, I think the regulatory landscape, I think, you know, you are seeing some new entrants into the affordable housing industry. You know, my friend, you know, Bob Hart of True America just launched a new platform. You're seeing Bridge and Evanif Darrell Carter, another friend of mine and just an incredible leader in the affordable housing industry. But I think what is preventing many from moving forward into the industry and providing more housing to the LIHTC sector is the sheer fact is it is incredibly burdensome on the owner and steward of affordable housing in terms of regulation, compliance and whatnot. And so it's almost become.
- [45:03]
Mountains of red tape, so to speak, that prevent others from moving forward into the industry. Yeah, it's often, you know, you sometimes remove those barriers, you allow more entrants, more participants into that industry. That's probably number two. Number three really on the federal level is there needs to be more decision makers with a very good, you know, very good, frankly, research backed background into affordable housing and how can we make the LI Tech, you know, LI Tech industry or LI Tech regulations more developer friendly. I think right now it is incredibly difficult to secure multiple sources of funding. Especially during this time when you see great volatility in the market. Where to be frank, a lot of our institutional capital partners have spoken to us and just said it's too volatile right now. I'd rather wait, see how things play out for the next six months and then I'll get back into the, then I'll get back to the investment mode right now. I think what we're seeing right now is just guys who would rather say, you know what, I'd rather not do the deal than potentially do a deal and have it blow up. So I think you need to not listen to what's going on in the marketplace and create, and create a program, a LI Tech program that can work in times of economic scarcity and one in times where you have a booming economy.
- [46:38]
Jay Parsons
Yeah, well.
- [46:40]
Interviewer
And quick follow up and obviously for hud, you know, they've made a point about saying that we want to cut some red tape and whatnot and brought in people for the LI Tech background like Frank Cassidy and others. So are you seeing any signs of it getting better yet or at least.
- [46:59]
Jay Parsons
Trending in the right direction? Hopefully.
- [47:01]
Andrew Kadish
I mean, I'm a generally optimistic guy, but I, I think it's going to take a little bit of time. I don't think you're going to see what Trump and Elon promise with Doge, you know, where, hey, we're going to make all these cuts and everything's going to be great, you know, on Tuesday. This is multiple. You know, I hate to say this, but is it, is this a generational issue? It's. Yeah, it could put, you know, Jay, it could quite possibly be, but now is a good time to start because the issue of several million, you know, needing households, you know, it's not going to go away. You know, there's no amount of legislation that can get us out of that hole. But we need to make a start.
- [47:46]
Interviewer
Yeah, yeah, that's a good point. I think also too, when you Think about like housing policy. It's been such a, you know, band aided approach for decades right across, across presidential administrations and parties and everything else. Like it's, everybody's wants to like blame one thing, but it's, it's complicated. Right. So to your point, it's probably going to take some time.
- [48:03]
Andrew Kadish
It's incredibly obtuse. There is no black and white. It's opaque and it will take a tremendous amount of time. And I think that the policies that will be instituted now, you know, rent control is a perfect example. There's good heart behind it. There's not good thought process behind it. It's. You are appealing to, you know, a social media or what you hear on television rather than good research backed science, you know.
- [48:29]
Interviewer
Oh yeah.
- [48:30]
Andrew Kadish
So.
- [48:31]
Jay Parsons
Oh yeah.
- [48:31]
Interviewer
I mean you've heard me say this all the time but I just, I just think that it's the least compassionate thing you can do for people in need is, is peddle them, disproven science and say this time it'll be different.
- [48:41]
Andrew Kadish
And, and I feel like it's, it's the days of the snake oil salesman and that is incredibly frustrating being, you know, a participant in the industry right now when you have methods that have been shown and proven to not be effective and to keep on pedaling them out there. That's why I use that phrase, the snake oil salesman once again.
- [49:01]
Interviewer
And it gets, I think it's, it's uncompassionate because you're, you're telling people it's going to be better when obviously it's not. So it's not going to solve anything.
- [49:10]
Andrew Kadish
Yeah, I think you're, you're solving for a headline and that's it.
- [49:13]
Interviewer
Yeah, we have some political points.
- [49:15]
Andrew Kadish
Yeah, it's a wonderful headline. But does it do anything in practice? No, in fact it, it destroys, makes things worse.
- [49:23]
Interviewer
All right, so Andrew, you mentioned, I want to double down something you just mentioned earlier. You mentioned there's some new, some, some consolidation in affordable housing, some big names coming into the space as well. And you know, we're seeing this across property management as a whole. Like ownership still fragmented but you know, property management seeing more consolidation and especially in affordable. And so you know, you guys are you know, very much kind of the, a mid sized player. You're not small by any means, but you're not the behemoths either. The 100,000 plus. And so how to, what's your, how do you compete as a mid sized company in this new era where there's.
- [49:59]
Jay Parsons
You know, more consolidation yeah, it's, I.
- [50:02]
Andrew Kadish
Think it's, you know, it's starting with, you'll have some named industry players, the ones that everyone knows, the gray stars of the world. Morgan Properties. I'm based up here in Philadelphia. John Morgan's a friend of mine. He's an awesome individual, just a great, great guy. But I think what you're seeing now is.
- [50:25]
Also private equity moving forward and acquiring property management companies and doing it as more of a roll up play. You know, hey, if we operate 100,000 units, a million units, you know, we're going to scale up and you know, frankly we have the budget to afford every single proptech innovation and our employees are going to be that much better. We kind of see things in a different, different landscape. You know, is there truly space for the 10,000 unit to 25,000 unit owner? I would argue, and our thesis is there absolutely is, to be frank, you know, we're 12,000 units now. We would love to double in size to about, you know, 24, 25,000 units. And you know, our thought process, you know, why we don't want to be 100,000 units is we believe that we can create bespoke, individually tailored, customer oriented experiences not just for our residents, not just for our employees, but also for our investors as well. We can give that time and attention to all of them. You talk about the proptech budgets of the gray stars of the world and yes, they have their own zillion dollar departments of technological innovation and believe me, it's pretty cool some of the stuff that they're doing. What we have found though is that if you overwhelm that employee with so many prop tech and especially in the dawning of the age of AI, so many AI tools. I spoke about this before at another conference. It's AI is promised to revolutionize every single experience of your life where AI can.
- [52:04]
Create you a better toothbrush and you're going to have better dental health because of AI. What we have found though is that you often overwhelm your employee, you overwhelm your associates because you're just throwing the latest at them. We think we could operate more effectively with a more simplistic tech stack. You know, one where it's essentially, you know, five, maybe up to seven, you know, PropTech innovations, proptech software implementations, applications. In order for that employee to operate at their highest efficiency. If you overwhelm someone, it's just too much. And the natural inclination is just to just say, I can't handle this, this is just too much. So from that Mid tier player, that 10,000 unit to 25,000 unit. I think it's a couple things, you know, just summing up. Number one, it's providing that individual, bespoke, customer oriented solution to our investors, to our residents. Number two, it's really, it's being able to operate even more effective than those with zillion dollar tech budgets. Because providing that simplistic tech stack I think is just will make our employees and our engagement that much more effective moving on forward. So despite all the consolidation you're seeing, we're very happy with where we operate nowadays.
- [53:31]
Interviewer
Yeah, and obviously there's a lot of, a lot of groups like yours who've been successful in that category as well.
- [53:38]
So let me ask you another question. You guys have recently expanded into development and obviously industry wide, we've seen a big drop in starts. And so is now a good time.
- [53:50]
Jay Parsons
To ramp back up? If not, when is.
- [53:52]
Interviewer
And then for you guys, what product types and locations are the ideal first targets in this next cycle?
- [53:58]
Andrew Kadish
Yeah, thanks for asking, Jay. So I gotta go back in our history, you know, since 93, we have always been existing guys. Development, it's too much risk. I remember my dad was just saying like those, those people, they have, their risk tolerance is insane. I'll never get into that. Capri will never do that. Well, meanwhile, you know, I think it came about in 2020, 2021. You know, Covid, you had multifamily apartment community pricing just skyrocketing to just crazy levels. We have a lot of our institutional capital partners who are just saying, like, Andrew, look, you know, we love you, we love the company, you're incredibly good looking and thank you, I appreciate you saying that. But like, we're beating pro forma by 20, 25%. Like, this is crazy. We gotta take the chips off the table. So we sold out of, you know, several thousand of our units. But at the time, you know, every Monday morning we have our all hands on acquisition call. And our disposition section was about, you know, 55 minutes and our acquisition targets was about five minutes. So it's, hey guys, let's look at other sectors. Something that, you know, traditionally we haven't, you know, we haven't operated in before, but one where we can bring in, you know, our smarts, our knowledge of the submarkets, you know, our boots on the ground, so to speak, over these past three decades, where else can we operate? And we were able to form a joint venture with, you know, a very, very good friend of mine, Blake Gable over at Baron Collier Companies. And Aaron Collier Companies is really the namesake family of Collier County, Florida. So Naples, Florida being their county seat and what we've seen in southwest Florida is a traditional, just incredible, you know, burgeoning locale with class, not even just Class A, but class AAA apartment communities. But it's really priced out that renter. You know, whether it be, you know, your workforce, housing renter or even like, you know, just getting into the lower tiers of the white collar. And so we have a burgeoning development portfolio of about five apartment communities hoping to do more. All in Bonita Springs, Naples and Ave Maria, which is a large master plan community. It's about 6,000 single family homes. Baron Collier Companies, the master developer there, but they have no apartment communities. So we'll be building the first, hopefully second, hopefully third apartment community there in Ave Maria. And I think it is quite exciting because we're serving a renter populace that has not been served well there by existing developers nowadays.
- [56:45]
Interviewer
Great. And.
- [56:48]
I want to also ask you, I was just looking, I saw y' all are getting into some BTR as well. I saw one of your, one of.
- [56:53]
Jay Parsons
Your team members talking about this recently.
- [56:54]
Interviewer
Is that.
- [56:55]
Andrew Kadish
Yeah, so our, our build to rent. You know, we, we actually completed our first build to rent down in Greenville, South Carolina community called Baldwin Chase. About 120 units. What you, what was really interesting is and what I would encourage all of your listeners to never do is to start lease up the week of Christmas when it was, oh my God, just one of those mistakes where you look back and just say like never again will we do that. I'm glad to say, you know, we are trending 95 occupied now. It's been a fantastic success, thank God. But we're actually, you know, we're just about to sign on another 156 units in Spartansburg. Yeah, Greensville and Spartansburg. It's, you know, we had not operated there before and I think when we learned of the opportunity there, you know, flying in and you see this massive BMW production facility there, Boeing being there. So you get some good airport, you know, the great airport, Greensville, Spartanburg Airport. Also, you know, just with the import coming in.
- [58:13]
Coming in as know, coming up from Savannah, I think it's quite exciting locale. And that Greensville, Spartansburg area, it kind of fits Capri's mold where it is not a major city, but it is that secondary city where you know, you did see some, a lot of supply go on. But I would argue that the populace has just grown and grown and grown so we are quite comfortable operating in that locale. Can't wait to build some more BTR communities down there.
- [58:45]
Interviewer
Yeah, no, Greenville is one of my favorite secondary or tertiary markets and that's a, that's a good, vibrant area to be in for sure. Well, Andrew, this has been a lot of fun. Thanks for making some time today and best of luck heading to 2026 as well.
- [58:59]
Andrew Kadish
Jay, I really appreciate it. I look forward to seeing you down in Dallas and you promising me, you know, a couple PBRs and some barbecue. So thanks, man.
- [59:08]
Interviewer
Really do appreciate you. Got it. We'll get some good barbecue.
- [59:32]
Jay Parsons
And that's a wrap for episode number 63 of the Rent Roll. Big thank you to JPI, Madera, Funnel, Foxen Authentic and LCG Consulting Group for sponsoring today's episode. And thank you to all of you for spending part of your day with us. We'll see you next time.