The Real Estate Wealth Podcast with Edward Aloe

A Market in Transition

June 06, 2023 Ed Aloe Season 2 Episode 1
The Real Estate Wealth Podcast with Edward Aloe
A Market in Transition
Show Notes Transcript

Host Ed Aloe is back for season 2 as he sits down with Trevor Koskovich, President of NorthMarq Multifamily. Listen as they take a deep dive into the transitioning apartment market and what we will see moving forward. 

For more information about the host, Ed Aloe, please visit

For more information about CALCAP Advisors, visit us at

Follow us on Twitter @CALCAPAdvisors

For more information about the host, Ed Aloe, please visit

For more information about CALCAP Advisors, visit us at

Follow us on Twitter @CALCAPAdvisors

Ed Aloe (00:02):

Welcome to the Real Estate Wealth Podcast, the show about how you can build wealth by investing in real estate. I'm your host, Ed Aloe, founder and CEO of CALCAP Advisors. I'll dive deep into multi-family investing and today's current market. I'll also help you acquire the knowledge and tools necessary to generate passive income for life through discussions with friends and experts in the industry.


I am pleased to have on the show today Trevor Koskovich. Trevor is the president of North Mark Multifamily, where he leads the investment sales group throughout the United States. Trevor is a former top broker at Colliers International and has a thorough understanding of all things multi-family, including acquisitions, dispositions, banking, and capital markets. And I will also point out that Trevor was involved in the very first deal that CALCAP ever did. I'll never forget, Trevor, we were in the room with you and your partners at the time and I told you guys, yeah, we're a new company. We're going to buy a thousand units in Phoenix distressed because it was an extremely distressed market at the time, as you remember. And you guys kind of looked at each other and rolled your eyes. We're like, here's another group from California thinking they're going to take over the world. But we did and we ended up buying about 2000 units in Phoenix. And we thank you guys and you especially very much for giving us that first opportunity. And so Trevor, welcome to the Real Estate Wealth podcast today.

Trevor Koskovich (01:31):

Well, thanks Ed. I really appreciate the opportunity to be on here and share some thoughts about what's going on in the marketplace today and to really get into a deep dive on where things are going. And yes, you're right. Our relationship, it's amazing to think is beyond 13 years, it makes me actually feel pretty old. I was a young guy at that time and we really have had quite a fun run, which has been extremely successful for both of us. And it's something I've really enjoyed. And I think that's one thing about this business which I really, really love, is that it is a relationship business and you get an opportunity to learn from each other and you get to meet really, really neat people along the way that share some really fascinating travels and get an opportunity to learn what people do, how they do it, how they're successful, and how they develop a business plan. And the success that you guys have had over this run been, it's been fantastic to watch.

Ed Aloe (02:26):

Great. Trevor, before we get started, why don't we kind of jump in and if you wouldn't mind giving a little background about yourself and how you got started in this industry?

Trevor Koskovich (02:36):

Yeah, I'm happy to do so. I actually started in this business around 2005. I was doing some private real estate investment on the side and then in 2007 decided to really focus my efforts on the brokerage side of the business and that's when I joined the business with my partners and the partners that we transacted with at the time when you guys came in 2010, during that time, I had exclusively focused my efforts on multi-family, really mostly in the Phoenix marketplace along with Tucson and the surrounding areas like Flagstaff. But over the course of my time in the business, we really dramatically expanded our footprint across the southwest to include New Mexico and Nevada on a pretty large scale in building out our team. We did that, as you mentioned, while I was at Colliers. And then five years ago I was brought on to North Mark to develop, build out and deploy an investment sale vertical for them that would be vertically integrated into their existing debt and equity platform.


And when we did, we came over with our original footprint, which was our Las Vegas, Phoenix and Albuquerque office, which generally covered the Southwest and have subsequently spent the last five years building that platform out nationally. It's kind of funny when the growth starts to happen, you know, almost start to lose track. But offices 26 and 27 over the course of the next 30 days that are all mostly for the most part multi-family focused along with our manufactured housing business, which is run out of our Los Angeles and Phoenix offices. And that really is part of our original buildout and our ability to deploy on a national level, a multi-family platform that will deliver clients like yourself the opportunity to transact in various markets. And we were honored to see in our most recent rating, so end of 2022, we're the seventh largest seller of apartments in the United States. We continue to be very active in the value add space all the way through brand new construction here and our various kind of three markets that we're covering from brokerage side. Been a very busy guy over the last few years and we're excited about what lies ahead as we continue to build out what we set forth to do here at North Mar.

Ed Aloe (04:58):

Yeah, that's amazing that you guys are number four right now, and that's really a testament I think, to you and what you've brought to the firm. How many people have you hired since you started there?

Trevor Koskovich (05:09):

I think when you look at total broker count, along with our administrative folks on the multi-family side, somewhere around 170 people. And then recently here at Mark, I was part of the team that was part of the acquisition team for the Stan Johnson acquisition, and that brought on another, call it 200 folks. So it's been busy and that transaction with the Stan Johnson folks closed in October of last year. So that was actually taking us beyond multi-family and creating a deeper level of client offering through single tenant, triple net, multi-tenant retail, self-storage, and all the other various kind of food groups that are associated with commercial real estate investment. So a sale focus platform. So I guess to answer that question, somewhere around almost 500 people over the course of the last four years,

Ed Aloe (06:06):

And I know North Mark is still a family owned company, correct?

Trevor Koskovich (06:09):

Yeah, we are a wholly owned company. Our parent company is the Pollad family operation, which is a Minneapolis base high net worth family that owns a conglomerate of businesses across the US and a well diversified group of folks that have some really fascinating businesses. And North Mark is one of their great businesses internally and they just can't speak highly enough of the family and our lead shareholder as they've done a great job fostering growth and community and culture. And that really transcends inside all their organizations in including ours. And it's been fantastic to have such a supportive shareholder that sees the vision, the growth, and allows us to be entrepreneurial and to support what they're trying to accomplish. Been fantastic.

Ed Aloe (06:59):

And I think one thing that kind of differentiates you guys at Mark is the diversity of the platform. As we look at brokerage obviously is slowing these days compared to where the market was a few years ago, but I think you guys have staying power advantage with that servicing portfolio that you've built up over the years being capital markets lending business, which kind of gives you much more stability than just a pure brokerage play, right?

Trevor Koskovich (07:27):

Yeah, I think today in order to be competitive inside our industry, it's absolutely paramount that your integration is through capital markets. So it's investment sales, it's debt equity, procurement, and then servicing of the loan environment. Those three kind of pillars of our organization will ultimately create a diversified business vertical that allows us to maintain and grow revenue even in more challenging times.

Ed Aloe (07:56):

And that's kind of how I set up Calcap obviously on a much smaller scale. But as you know, we also have a debt lending company, we have a property management platform, we now do preferred equity in addition to our owning and asset management of the apartments. So I think it's critical and smart to have multiple paths or pillars as you navigate through different markets. So let's shift gears here and talk a little bit about the current state of the apartment market. I started the company 15 years ago and we've been very fortunate, like you pointed out, we've been in a low interest rate market, almost zero interest rate market at some points rising values over those last 15 years. And now things are shifting, right? It's like we went into Covid and I'll remember going into covid going, oh god, what's going to happen? Can tenants pay their rent?


Values are going to decline, is what I thought. And what we saw was really just the opposite. We saw values just skyrocket during that two year covid period and in some markets that were in a Phoenix values almost nearly doubled. So it was kind of a crazy time. And now that interest rates are rising again, of course in the last few days they're not rising. But the way I look at it is it was kind of like I looked at a trajectory of just where multi-family values were, call it seventeen, eighteen, nineteen, kind of a nice swoop upwards, and then 2021 hit and just went crazy spike, and now it's back down. So I'm just kind of curious to get your take on what I said and how we got here and where you know, think the market is today.

Trevor Koskovich (09:37):

Yeah, I mean I think your summation of the market is really spot on. I mean obviously there was a lot of confusion during covid and where the ultimate outcome was going to really land for various tenants, the marketplace really as it related to capital markets and operations and all the various components that go into multi-family investing. What we really saw out of that candidly was places in the Sunbelt where regulations surrounding the management of Covid that were much less really accelerated at a breakneck speed. And that was because we had an environment where tenants were able to work, where tenants were able to pay rent, where there weren't laws that were punitive for apartment owners. And so being strategically located and low regulation markets really prevailed. And that's where we saw the largest run up in values. Where we saw and continue to see today are highly regulated markets where there are still policies in place that are a relic of what the federal and state administrations were deploying during the Covid 19 pandemic.


And so it's been fascinating to see that. I think that was a clear delineation. I mean Arizona was different than California and Washington was different than Texas and New York was different than Florida. And you saw that both operationally from an investment standpoint, from a tenant management standpoint, from a standpoint of every component of really our business. And so that probably continues on in some capacity. I mean, as probably recognize part of that growth was rooted around migration of population. I don't think that it's a challenge to understand today's environment when you have historically low or no interest rate environment and the government's printing money at the rate of speed that they have, you know you're going to enter into a hyperinflationary environment. And I think the messaging early was that it was transitory. Clearly that was incorrect. I think most of the smart money knew it wasn't transitory.


At some point we would be in this en environment where you're going to continue to see rates rise. And so what that's done is it has materially impacted the volume of transactions in the marketplace. So depending on what market you're in, I think operations are still holding up pretty well at apartment buildings. I mean, people are still paying the rent, they are renewing their leases. You might see some pullback and some areas and we can get into that, but I think we continue to see positive market fundamentals. Rent growth is dramatically, but as far as occupancy and your ability to keep the building full at let's say previous rental levels, that that's still holding up pretty well. And so I think you can look at the market in a number of different ways. I mean, there's one that's operational. I mean what's going on in an operational level and that impacts your value and then what's going on in the capital markets, which allows you to either sell or purchase an apartment building today.


And those factors are constantly moving. I was on a panel a couple of weeks back and someone said something that I thought was incredibly simple but is incredibly accurate, which is if you're not a little confused right now, then you're just not an active participant in the marketplace because there are so many factors that are moving and evolving so quickly. I mean, interest rates are up and they're down bank seizures, that was a new one. I mean, I don't think anybody was really predicting that. And so when you feel like you've got the tiger by the tail, it turns around and bites you a little bit. So this is an interesting time and there are going to be opportunities. They might not be so immediate, but there will be opportunities on the forefront. And I think smart money, people that are well informed are being diligent and thoughtful and pragmatic about where they're deploying capital in today's marketplace and looking for opportunities which either could or could not happen short term midterm. So it's really a fascinating time in the marketplace. Yeah,

Ed Aloe (13:44):

I agree. And I like your pointing out that really there are the two components, the operational aspect and then sort of the debt ability financing aspect. And when I look at apartments operationally, things have been fairly steady because really it's all about your residents and their ability to pay rent vis-a-vis working and having jobs. And so that's the big component there. On the debt side, obviously when rates go up, it impacts the ability to make deals pencil. And so a lot of buyers have been in the we're just going to wait in sea mode. But now interestingly enough, at least in the last week with the S V B bank failure and signature, we're seeing the bond markets adjusting again. I mean, I think we're all a little confused because it's unchartered territory. People always ask me, God, do you think it's 2008? Again? I'm like, Nope, I started this coming in 2008 and this time is different. There'll be a correction because there always is. There has to be cycles and adjustments. That's just part of the laws of nature and the laws of real estate, but each one of 'em is definitely unique. So along that topic, seeing distress per se in the market right now, do you think there'll be any distressed opportunities and where would that be in the multi-family sector?

Trevor Koskovich (15:05):

It's a great question. We get this question every day, where are we in strategic opportunities from a distress standpoint? Obviously, you know, and I spent a lot of time post GFC dealing in distress and selling. I think probably at one point 70 or 80% of my sales were on behalf of a lender who had foreclosed on a building or a receiver or a note or something that was distressed in nature. So a market that I think is fair to say, we're both pretty familiar with near term, very, very immediate and near term, there really is no distress in the marketplace. And what I mean by that is, again, going back to this operations component. I mean operationally these buildings are holding up fairly well. There might be a little bit more bad debt, there might be a little bit of a concession, there might be a little bit of an impactful item that people are working through fundamentally.


But generally speaking operationally, these buildings are holding up fundamentally different than what we experienced from let's say 2008 to 2013 when you had a tremendous phantom supply of single family homes that were in the rental market. You had in some markets, you had legislative issues like Phoenix, which drove a migrant population out of the market unless 250,000 undocumented workers, which effectively were tenants as well. And so we operationally in this cycle do not have that acute specific pain. Now could it start to develop it at some point? The answer is yes, to your point, it's where are we going to go from a recession standpoint if jobs are starting to get lost, then operationally there, there's going to be a pretty big pullback operationally if jobs are lost. The other component of it is we are in a supply pipeline. There are in the US about a half a million residential rental units that are delivered into the United States this year.


That's historically a pretty large number, but what I do believe is originations that started in 2021 with a floating rate bridge product, those start to come due right in 2024. And fundamentally, if they haven't seen material rent growth, those were traditionally high leverage loans, those could see some problems in 2025, even have a larger window there of three 11 loans that will come due. And those were purchased at even higher prices and still same high leverage. So I think is there potential for distress? I think unequivocally the answer to that is yes, it remains to be seen on where the operations go and where that ultimately shakes out on that side. And then on the new development side, in markets where there's a tremendous amount of supply, I mean, think about markets that are developing 15, 20,000 units in supply. A lot of those folks are on construction loans where they might convert to a mini per meaning, but a lot of those folks are going to have to look inside and decide what they want to do, whether they want to recapitalize a loan or refinance a loan or they want to sell it.


And that could be, I don't want to say distressed, but it could be forced, right? Meaning I don't really have any options by rents. Were lower than I thought they were, and it's going to have to bring cash in to refinance the asset. So I think you can see where there could be distress opportunities. I think those are very visible in nature. I think people know what they are, but whether we get to that point or not, remains to be remains to be seen. I mean, I think we're just, we're a little early in the cycle for that as anybody knows. I mean 2008 it was just kind of stagnant. And then 2009 it was like, okay, well things are starting to happen. And then by 2010 it was like, okay, well the cat's out of the bag and get on watch out.

Ed Aloe (19:01):

And it ran till 2015. Arguably we were still buying distress deals in Vegas and Phoenix.

Trevor Koskovich (19:07):

That's right. And I think in what is parallel to 2008 is that 2023 is going to look like 2008. Everybody's kind of paralyzed. There's really not going to be much in the way of transaction. I mean, just anecdotally, I think Phoenix had 25 transactions, 25 multi-family transactions in January of 2022. January, 2023, we had two. Okay. Wow. Wow.

Ed Aloe (19:30):


Trevor Koskovich (19:30):

That just gives you a little window in Phoenix is not different than Charlotte or Tampa or Austin or whatever. I mean, when volumes decrease like that, it's hard to point to market fundamentals and then you know, just start to get in your head space of, well, am I buying too early? Am I buying too late that that's what oh eight looked like there were transactions, but they were few far in between 2009, we finally got some legs on it. I feel like this looks a little bit like that from a sales cycle standpoint,

Ed Aloe (20:02):

But so back to the fundamentals, when we were buying in the 2010 era 11, I mean there were properties we were purchasing in Phoenix and Vegas that were 70% occupied, and then within that probably another 20% weren't paying. So the economic occupancy was maybe 50%, which that was true distress. And you're right, we're not seeing anything near that today, which is the good news. But I guess brought up the only sort of question mark is to my earlier point about values, just that artificial spike that happened during Covid and people that bought at the spike and then double down by putting high leverage, short-term bridge debt on that, there could be some trouble there because when they go to refinance in another year or so, they're not going to be able to get the loan dollars to take out that over-leverage bridge loan.

Trevor Koskovich (21:00):

And to that point, I mean think about not only do they have to do it, but I mean a lot of these folks are buying kind of mid three caps, and one could argue that today a cap rate is somewhere between five and a half and six. I mean, in order to, you have to grow revenue mean certainly can't cut operational expenses that much. So you're going to have to grow the revenue, and in order to do that, you're going to have to pick up 300 basis points of value. I mean, that's a herculean type effort in some cases. I mean, that's a tough to do in a good market, let alone an operations market. That could be a little tricky from a job loss standpoint. Rate cap is what is prolonging the cycle near term because they have the rate cap in place. If you did a three year fixed rate product, you probably have a rate cap that is three years.


Now there were some exceptions to that, but generally speaking that was a three year rate cap. But what I would tell you is a lot of these bridge lenders have been so happy with these outsized returns at this point that I don't know that they're in a hurry to get that off book. If you think about it, you you're loaning money, well, not at 3%, now you're making seven or 8%. I mean, that's a good quality loan if it's paid current. I don't see the technical default components starting yet. I'm not saying that it's not out there a little bit, I'm just not seeing it at any kind of real meaningful level. There are some rumblings in the market from sponsors that are saying some of these are willing to give them a little reprieve on the set aside. So there's a lot of information out there. It all needs to be taken with a grain of salt and further investigated. Again, it, it's all confusing. I mean, there are opportunities out there probably for people and there are people that are coming up with strategies that are new to market. I mean, it's very, very fascinating to see how people are handling this,

Ed Aloe (22:52):

But from what you guys are seeing today, high level, it doesn't sound like the lenders are in any hurry to foreclose. They were back in 2008, 2009, and are more willing to kick the can down the road just because operationally things are performing better at the properties.

Trevor Koskovich (23:09):

Yes. I mean, the short answer is yes, there is no real technical default. Now with that being said, in the highly regulated markets where the tenants in fact own the building, not the actual building owner, we are seeing a serious movement there. So think about markets like for example, Portland, think about San Francisco, think about Los Angeles downtown

Ed Aloe (23:36):

La, right?

Trevor Koskovich (23:37):

Downtown LA is a perfect example where, and I won't get into specifics, but there, there's a building there I'm aware of that is 60% physically occupied, 20% economically occupied. Wow. Meaning 20% of the people are actually paying the rent. That's not a sustainable system. They're already in Portland, very, very nice brand new buildings where people have just said, here, here's the keys. You have 80% occupancy. Physically, you might be collecting 80% of that. So 60% economic vacancy. There's really no path forward there. The tenants are running the building, and again, it's a function of legislation and regulation which ultimately can stifle business, and that's proving to be very impactful and not uncommon to see those on the front end of the market. So it's more

Ed Aloe (24:28):

Yeah, no, that's absolutely true. And in places like City of Los Angeles where I believe we don't own here, but you still cannot evict, which is crazy just based on covid, right? And so to your point, unfortunately many, many tenants have kind of gamed the system and have lived virtually rent free for two and a half years now, and unfortunately, the owner still has to make his mortgage payment. So let's shift gears for a minute. You touched upon cap rates. So let's talk a little bit about cap rates. Maybe give a definition for some of our listeners who aren't as familiar, and where are cap rates going, where have they been? I mean, we got to basically ultimate low, low cap rates on apartment billings in the three handle in a lot of markets, and now they've arguably moved what 100, 200 basis points upward maybe? So do you want to talk a little bit about the cap rate and what you guys are seeing in the marketplace?

Trevor Koskovich (25:24):

I mean, it's a cash on cash unlevered, cash on cash return. I mean, for lack of better terminology. I mean, that's really what it is. So cap rates, which were an indicative measure of value in today's marketplace. So what was your risk adjusted return? What were you willing to return in a zero interest rate environment if you're able to buy an apartment building with a 3% return? People felt really good about that. And so we did see cap rates that were migrating down into the low threes. I mean, it wasn't really even uncommon to see even high twos if you had something that was particularly unique or insulated. I guess this comes back to another point. At one point the market was inherently the same. Albuquerque, Las Vegas, Kansas City, TUPE below Mississippi, all the cap rates were virtually the same across the us. I mean, really the market was evenly priced on a macro level that you could generate the same return on a deal in Los Angeles as you could in Miami, as you could in Tampa, as you could in Atlanta. The market really had manifested itself as this kind of three to 4% return on investment. You buy an apartment building, you generate a three or 4% unlevered return or cap rate,

Ed Aloe (26:43):

Right? In the old days, a tertiary market, people would want a higher cap rate, a higher return for the risk they perceived, for example, to buy in Tupelo, Mississippi versus Manhattan. So what you're saying is they all sort of leveled out as multifamily became a darling of investors for sure, and people were doing everything they could to find more product and buy more deals and go to different markets. And that's probably partially your fault as you expanded out your team that brought buyers like us to markets like Kansas City as an example, where we're like, shoot, we can get a 50 basis point cap rate improvement here in Kansas City, and then next thing you know 10 other buyers come in and it's back to the same cap rate as you get paid.

Trevor Koskovich (27:28):

Well, and that's right. I think what happened was people stopped following fundamental investment strategy. What they just said was an apartment buildings and apartment buildings and apartment building. And so as a ramification of that, the market became singular in pricing. What we're seeing now from a cap rate expansion standpoint is that we're returning to market fundamentals. And what I mean by that is a brand new building should have a different cap rate than an old building. A market like Phoenix should be priced differently than Amarillo, Texas, and now we're seeing this clear migration to pricing that was more consistent with what we saw from let's say 2015 to 2020 leading up to the global pandemic. I think it's fair to say that you really do need positive leverage in today's marketplace to complete a transaction. I think it really is fundamentally part of what will get something done.


We are seeing even leverage, meaning you're getting a cap rate this commensurate with the borrowing rate. Those are very specific and unique situations where you do see a little bit of negative leverages and the negative leverage is pretty thin, and it might be someone who feels like the opportunity is just too good to pass up. It might be something that's extremely well located in a location type situation where they feel like they're buying it below replacement costs or there might be some kind of unique angle. So yes, negative leverage still gets done, it gets done a lot less or virtually a much smaller window of opportunity there. Even leverage is still working for solid assets for anything that could be questionable.

Ed Aloe (29:03):

So basically someone is buying a cap rate that's equivalent to their rate on their loan.

Trevor Koskovich (29:09):

Yep, that's correct. And that's a big part of it.

Ed Aloe (29:12):

So can you talk a little bit about the bid ask in the marketplace, what you guys are seeing in that regard, and what do you think it'll take to tighten that bid as spread where we start seeing flow again?

Trevor Koskovich (29:23):

Yeah, I actually don't think that the bid as spread is really that wide right now. I mean, candidly, I think people know what the market value is of something. It's more of a fundamental question of whether you are just a seller in today's marketplace. So I'll give you an example. I mean, if I were to call you and tell you today, Hey, if in order to sell this building, you know would need to put a six cap on the price or on the rep on your NOI to generate a determining value, I mean, most of the time the answer is just no. It's not a function of, oh, we just can't get to where we want to go. I think the market has finally educated itself on where the market is. I mean, I think six months ago that was a different statement. I think today and every day that is passing the seller is starting to realize where market fundamentals, I think we're just not in a situation where anybody's forced to do anything yet. And that kind of comes back to our earlier comment, which was, if no one's forced to do anything, this is where you get no transactions. And this is really fundamentally where we're at. I mean, people know what the market is. I don't think there's really this huge discrepancy. I mean, there might be a little bit of a bit ask issue out there. It's just a function. Nobody wants to be a seller in today's part,

Ed Aloe (30:43):

So, so it's a question of seller motivation then. And so anyone who bought in the last several years that put fixed rate debt on it for 10 years at three and a half percent isn't motivated, right? Doesn't have to sell right, isn't going to sell right at these new valuations.

Trevor Koskovich (31:01):

That's right, but there are people that do have the equity. I mean, we listed a building for a really, really long-standing client of ours and we sold it in December. They had owned that building since 2018. The value at one point in time on that asset was probably two 50 a door and we transacted at one 60. Their basis was a hundred. It was a win for everyone involved. It was a win for the buyer. They got positive leverage. I think they got a 5 85 cap. We put a Fannie Mae loan on at five three, we were able to put that Fannie Mae loan on in 28 days and the seller still returned plus two x to their investors net net. So that's a perfect example. That's not a, there's no bid ask issue there. That's just a function of that seller had the equity that seller wanted to transact, they knew the market value and they transacted. I mean, it's just a function of whether someone wants to transact or not at today's marketplace.

Ed Aloe (31:57):

Let's talk a little bit about markets. I mean, you guys have a national viewpoint. We kind of specialize Southwest, we're now the smile states out to Atlanta, but give me a look at what you're seeing, your point earlier where everything got valued the same and now you're seeing differences in values. Are you seeing opportunities in certain markets versus others? I know the old adage was when the coasts are doing well, sometimes the interior of the country is not and vice versa. And I think we're seeing a little bit, at least what I'm looking at, we're seeing a little bit of some of the sleep air markets like the Indianapolis is, Kansas cities are now coming more to the front of the line versus the sexier coastal markets where, so do you want to touch on that a little bit about what you guys are seeing high level from a market by market standpoint?

Trevor Koskovich (32:53):

Yeah, I mean, I think every market has its own kind of unique qualities about it. I will tell you that from a fundamental standpoint, one of the things that's really important in my mind is following where the job growth is going. That is from an apartment investment, from a residential rental housing perspective, there is no singular better metric in my mind if you're evaluating markets to understand where job growth is going, but more importantly, where it is immediately embedded and where it's going to have future deliveries. What I'm talking about is a market like Phoenix, Taiwan, semiconductor, largest semiconductor plant on planet earth. There's not a single person working there yet. It's under construction. That's a tremendous job driver in our market, and we don't even have those jobs online. Mayo Clinics expansion, core energy, LGS semiconductor plant, Intel's continue iteration of their plant down in Chandler.


All of those jobs I just mentioned, they're not even existing in today's marketplace that, but they are coming. You can't stop those jobs. And by the way, those are very, very technical skilled jobs that are maybe not already in the marketplace, definitively not in the marketplace. I mean, there's just not enough engineers to go work at Taiwan Semiconductor. I mean, they're going to be bringing people in literally from Taiwan. I love job growth. I think that that's a big, big pillar of successful investing. I mean, there are a lot of markets out there where there's good migration, good population growth, but it might not necessarily equate to good job growth. There's some markets in South Carolina which are really, really fantastic, but a lot of those are retirees. Those aren't jobs. Those folks are price sensitive. You got to be careful about where you see a tremendous amount of supply followed by lack of actual immediate job growth.


I think there's some interesting stuff going on relative to Covid with this boomerang effect. People are talking about markets like Boise, which is interesting. I mean, I love Boise. I think it's very dynamic. I think there's a lot of going on there. I think there's a lot of merit for investing in that market, but there could be some jobs that the people that went there maybe were coming out of a place like San Francisco, they're a remote worker. Do they have to go back to San Francisco? Does the employer take back the power to move those remote workers back? I think it's fair to say that that is coming to some degree. And how does that affect, let's just say a market like Boise wear, I'm pretty bullish on what's going on there, and I think it's a fantastic excellent investment opportunity, but how does that work?


Because they weren't necessarily growing jobs there locally. They were growing remote jobs. So every market, and I just point that out because every market does have some unique fundamentals, and that comes back to my, I think we've reiterated it many times in this conversation, which is that not every market is the same, and now we're seeing this deviation and pricing deviation, and I think some of these Midwest markets that were overlooked have really started to see more vision and more people putting their eyes on it and say, well, what are the opportunities there? And this has probably been viewed in our conversation, but I am pretty strongly against highly regulated markets where you have rent suppression through housing stock pullbacks. So think about Seattle or Portland or San Francisco or Los Angeles or New York where there are limits to how much you can grow the rent. The tenants have a higher level of control than they do in other markets. Look, business is hard when you make it harder by having legislative items behind it that could materially impact what you can and can't do. I just feel like I don't understand why someone would want to take that risk. Why make something more complicated? I

Ed Aloe (36:46):

Mean, yeah, I totally agree. All the risks we've talked about. The one risk that I think is one of the biggest in our industry is rent control, and we haven't even touched on that, but you're absolutely right, right? It's like landlords get sort of unfairly treated and punished in some of these jurisdictions and states and it just makes doing business that much tougher, and it's been proven as you know, that when you do rent control, all that happens essentially is landlords stop putting money into those buildings. And so it really long term doesn't have the effect that these politicians think it will have.

Trevor Koskovich (37:22):

Well, not only that, but they stop developing because no longer then metrics work then, so there's no new supply and then correct. I mean, it's a basic economics class would eliminate that, but unfortunately, yeah, it's not a prerequisite to creating legislative acts in our country,

Ed Aloe (37:40):

Right? Because if you want to get reelected, it's not a popular position. Yeah. Goes back to politics.

Trevor Koskovich (37:46):

We can spend hours on that one, that's for sure.

Ed Aloe (37:48):

All right, Trevor, why don't you tell us what your outlook is for the multi-family market over the next, call it five years. I mean, we've had a tremendous run. We're in a little bit of a lull period. I'm still bullish on it. I'm just curious as to where you see the market playing out over the next five years

Trevor Koskovich (38:06):

Near term, cautiously optimistic. I think a lot of, if we can get the market to hold from an operations standpoint, that more optimism will start to shine in early. I think generally speaking long term than investing in residential rental, real estate in America is fantastic, and I think it will continue to be the most desirable commercial real estate investment vehicle in the US for the foreseeable future. We still have population growth, we still have job growth. People need places to live. It's getting harder and harder and harder to develop new projects. And so as those things continue to unfold, I think long-term absolutely should be bullish on it. I'm an owner of real estate. I'm an investor in real estate almost exclusively in apartments. And I think long term it would be almost hard to be the only hangup is when you're trying to do things on a short term basis.


So if you have a long vision for it, as I remind a lot of my clients, if I told you in 2007, which was the absolute peak of the gfc, you could come in and buy a new apartment building in Phoenix, brand new for $150,000 a unit. I mean, if you held on for 10 years, you didn't make a little bit of money, you made a lot of money, and that was buying at the absolute peak, peak, peak. I think that's the case going forward today. Even if you have staying power, if you're capitalized, if you're long term, if you have good investors, if your vision is thoughtful, your business is pragmatic over the long run, I almost feel like it's hard to lose. I really do. And so I'm a big fan of it and I think it's going to be great. I think near term there's, it's going to be a little tricky, but when we get on the other side of it, I think it'll be fantastic.

Ed Aloe (39:55):

Yeah, I mean, I always kind of tell people I agree. This comes down to time horizon, right? It's like it's really never a bad time to buy an apartment billing if you have a long enough time horizon, right? If you're going to own anything for 20 years, you'll be happy in 20 years no matter where you purchased it, in which cycle. I can almost guarantee you that.

Trevor Koskovich (40:14):

Yeah, I couldn't agree more. I mean, if you have a 20 year horizon, that's it would take something very strange for it to not work out.

Ed Aloe (40:21):

Yep. Well, Trevor, I guess we can wrap up here. I want to thank you very much for joining me today on the Real Estate Wealth Podcast. I think it was a robust and interesting conversation about the market and what we're seeing. And I know you and I could talk about this for hours and hours, but we unfortunately don't have that much time.

Trevor Koskovich (40:38):

Hey, thanks, ed. I really appreciate it's an honored, have the conversation with you and I mean, it's hard to imagine. Here we are 13 years later having this conversation, but it's been a fantastic run. You guys have built a phenomenal organization.

Ed Aloe (40:54):

I hope today's show inspired you just a little bit and would like to thank my guests again. I'm excited to bring you more episodes with interesting and informative experts to help you navigate your way to wealth and real estate investing.

Credits (41:13):

Thanks for listening to the Real Estate Wealth Podcast. The Real Estate Wealth Podcast is produced by Gusto, a Matter company. Our producer and audio engineer is Jeanette Harris-Courts, with support from Gabe Gerzon and Susan Rangel. Maia Laperle is our writer. For show notes and more information about this podcast, visit And for more information about CALCAP Advisors, visit or follow us on Twitter at CALCAP Advisors.

Ed Aloe (41:49):

I'm your host, Ed Aloe, and thank you for listening