Out of the Box
Alternative investments offer another route to diversification
When Stephen Vecchitto sold his CPA firm in 1996, he knew he wanted something vastly different. He looked around Connecticut, where he was born and raised, and saw a sluggish recovery from the 1990-91 recession, a run of bank failures, and weather that was “cold, dreary and gray. So I literally took out a map and looked for good job growth and a place I could live for the rest of my life,” he says. “Miami was the wild west. I loved the energy and diversity. It was not about the Fortune 500—there was a lot of entrepreneurialism.” In 1996, Vecchitto founded Advenir, which owns and operates multifamily rental communities of 200 to 600 units across the United States (his brother David, also a former CPA, serves as CEO of Advenir Living, the company’s management arm). SFBW sat down with Vecchitto—along with his acquisitions associates Matt Zaverucha and Winston Wood—and picked their brains about Advenir as they surveyed the landscape of alternative investments in real estate.
Why should an investor opt for Advenir’s alternative investments rather than traditional investments?
It’s all about diversification. I wouldn’t tell you not to own stocks and bonds. I would say that you should have an allocation of real estate, whether 10 percent, 20 percent. I think if you look at the long haul, the average return of equities yields somewhere between 8 and 9 percent annually. Real estate is usually in the low- to mid-teens. Securities are liquid; real estate is not, so you have to hold the latter for a longer period of time.
In terms of real estate investments, where
would you locate Advenir’s risk profile?
Multifamily is the best commercial asset class with the least amount of risk. Maybe there’s a more moderate return, but the risk profile is so much lower than hotels, retail or offices. Unlike other types of real estate holdings, when you invest with Advenir, your financial risk is limited to the amount of your investment.
Tell me about the demographics of the renters.
This is a rent-by-necessity demographic. It’s not a luxury market, but middle class. It’s blue-collar, gray-collar, white-collar—and everything from millennials to retirees.
How has COVID-19 affected this market?
Investment value is still strong because of all the capital coming into the sector, so we don’t envision the distress that retail or hotels are seeing. With all the wealth moving into affluent places like Palm Beach from the Northeast due to the pandemic, more workers are coming in to these areas to service those homeowners. When someone with high net worth is moving in, they’re actually creating work for four additional people.
And in terms of operating your business during the pandemic?
We follow all CDC precautions in the office and well as in our leasing center. We have digital conference calls on both the acquisitions and investment sides.
What are the nuts and bolts about investing with Advenir?
Typically, when someone invests in real estate, they’re buying one property personally. Instead, you could be diversifying within your real estate holdings with us, over a number of assets. Our minimum investment is $100,000, so if you had $1 million to allocate over time, you’ve got 10 different investments with us.
How do you find—and keep—your investors?
We have close to 600 investors, and they’ve all come through word of mouth. We get five to 10 referrals a month. We’ve been around for 25 years, and over time we continue to deliver results. It’s all about trust, performance and transparency. You can review all your investments right on our portal—your cash flow, your capital returns. And you have no worries about the management side. Every month your income is disbursed by electronic transfer, that’s it That’s the great thing about a passive investment. ♦