Breneman Capital Makes Phoenix Debut
Chicago investor talks Phoenix, what’s next.
Drew Breneman made his Phoenix debut with an all-cash purchase of his first apartment community here. His Chicago-based company, Breneman Capital (formerly Rise Invest), paid $5.57 million for a 24-unit apartment community at 1014 S. Farmer Ave., Tempe. Breneman, 35, started investing in real estate when he was 19, focusing on smaller properties like the one he bought near Arizona State University. With a portfolio of about 300 units valued at $180 million in Illinois and Minnesota, this is his first purchase outside the Midwest.
What attracted you to Phoenix?
We evaluated markets across the country and were drawn to the rent growth and property tax certainty. Property tax assessed values do not change in excess of the 5% year-over-year limit, even when a property transacts, which gives us a lot of certainty.
How are your deals financed?
It depends on the business plan, but typically we are doing a debt fund and raising equity from individuals. It’s not total crowdfunding; just people we know. Some of them can write pretty big checks. One guy put in $10 million.
What was occupancy when the deal closed?
22 out of 24 were occupied. We’re happy to have a couple of empty units. We’re going to add laundry to each unit. That will be a nice execution for us. It gives us a lot of room to lift rents.
What will rents be upon renovation completion?
Rents are averaging $1,250 a month and the market with laundry is around $1,600. There is huge room in there. What are your future acquisition plans for metro Phoenix? Realistically, for us, we would like to buy $50 million of property next year.
What attracts you to these smaller properties?
There are just less buyers in that space. It’s too big for an individual and the larger companies want to be $25 million plus. Our average size is $6 million.
“It’s a reckoning for employers to look at…wages and benefits. job seekers are in the driver’s seat.” - Drew Breneman, Managing Principal, Breneman Capital