Michigan company organizing Springfield Multifamily Investor Club
By David Blanchette
Its not unusual to have out-of-town investors purchase property in Springfield, but one of those investors is going about it in an unusual way.
Destination Peak Partners from Detroit, Michigan, held an invitation-only event recently in Springfield that was designed to form the Springfield Multifamily Investor Club. According to the invitation, the club is for those seeking to make a lasting impact in their local community through multifamily investments.
The goal of the April 25 event was to talk about the importance of investing locally in the community, said Brian Davis, managing partner for Destination Peak Partners and Davis Global. We have a property under contract here that we are going to be purchasing, and we are inviting investors to join us in our project.
Potential investors were treated to an evening of food, drink, networking and a presentation about Destination Peak Partners philosophy and previous investment successes. But what those potential investors did not learn was the specific Springfield property in which they were being asked to invest. Davis said his company is treading carefully regarding the existing multifamily property in question.
We want to do our due diligence. We dont want to announce a property and then not deliver on that property, Davis said. We have an option on a property in Springfield, and if everything works out, we will close on it by late June. But I dont want to announce what that is until we are certain its going to be the one.
He said, We refrained from promoting our project during the event, as our primary objective has been to cultivate a sense of community and build trust within Springfield. In line with this, we made several contributions to local organizations, such as Springfields Habitat for Humanity, a homeless shelter and the Girl Scouts.
Davis said that his firms chief investment officer was encouraged to look at the Springfield property by a broker in Chicago, and that the property is a sort of a prestigious asset; it is in the perfect part of town, and could attract investors from across the United States.
Destination Peak Partners approach is new to Springfield, but has been gaining traction for several years in larger metropolitan areas. According to an article in thebalancemoney.com, joining a real estate investment club can help to ease investment anxiety and allow investors to benefit from the wisdom of a group. In addition, much of the real estate investing work can be spread out, which makes it easier to enjoy the investment returns without the stress.
Greg Zessin, a local real estate agent and president of the Springfield Landlords Association, attended the April 25 event. He was intrigued, but skeptical. Im going to wait and see how it works out, Zessin said. I think they are trying to get people interested or excited, but by not going into much detail for the people who were interested, Im not sure about that exact approach.
However, Zessin is encouraged that out-of-town investors are interested in Springfield.
I think in general, people investing in the area is always good, and there is a shortage of housing, Zessin said. Based on what they have done previously, they buy existing multifamily properties and improve them; I cant see how that would be a bad thing.
Seth Morrison, the owner of Springfield Rentals, was also an event guest.
More money flowing into the Springfield market helps Springfield values, Morrison said. Youre going to see more remodeled units and I think it drives up more value per door.
Still, the Destination Peak Partners approach has raised a lot of questions for Morrison.
I cant imagine that they would be relying solely on local investment to close their deal, Morrison said. If I was going to go about it, Id take a more personal approach. But maybe theyre going with a formula that has worked for them in other communities.
Destination Peak Partners has provided $130 million in capital for projects in Michigan and Ohio and is involved in 60 to 80 Department of Housing and Urban Development projects per year. Davis characterizes the HUD projects as like Extreme Makeover Home Edition for low-to-moderate income families in Michigan right now.
Davis is optimistic that once the Springfield community realizes his firm is committed to the city, investors will respond.
We are committed to supporting Springfields ongoing growth and will likely organize another event there in the future, Davis said. In the coming weeks, we plan to publicly reveal our project and extend invitations to select, qualified local investors, enabling them to redirect their investment funds from other projects to the local economy.