Castle Lanterra Properties founder and CEO Elie Rieder just capped off a record-setting year for his eight-year-old firm, and he’s planning to achieve even more in 2017.
Rieder’s firm specializes in the multifamily sector, and has a portfolio of 8,300 units valued in excess of $1.5 billion across several states. He has found success repositioning rental properties in strong markets such as Austin, Texas, and, most recently, Denver and Atlanta.
In 2016, New York-based Castle Lanterra closed on eight separate transactions for 2,600 apartments that all together totaled $382 million. The company entered three new markets last year as well, with purchases in Corpus Christi, TX, Atlanta, and Denver.
Rieder said he got his start in real estate at “the very bottom,” purchasing his first building 19 years ago. He started out doing everything himself — leasing, property management, maintenance, renovations and construction.
He learned how to do everything from repair a leaking roof to dealing with a difficult tenant.
Eventually he didn’t have to do everything himself. His company grew from just him to a firm that now has 16 executives and 12 divisions, with satellite offices in several states.
Rieder grew up on the Upper West Side, visiting buildings his father and grandfather owned and operated.
“I learned a lot from their experiences and the good reputation they had,” he told Real Estate Weekly.
Many of the projects his father worked on were ground-up construction, but Rieder saw value in renovating, which he felt gave the upside of new development without a lot of risk.
“I found it very stimulating and exciting to create something, to reposition a property and take it from a B-minus to a B-plus,” said Rieder. “It’s thrilling, challenging, and exciting, and it’s a great feeling to give tenants a beautiful product at a better price than competitors.”
The experiences gave him a love for real estate and taught him the importance of a hands-on approach to his work, a philosophy he still lives by.
“I was always excited about bricks and mortar, I was excited to visit a building, touch and feel it,” he said.
For many years before founding Castle Lanterra, Rieder co-invested on multifamily deals with his father.
He sees multifamily as an asset class that is one of the strongest in the market, with millennials making up a huge chunk of the workforce and choosing to rent rather than buy.
“Our strategy is to try to be a price-efficient option in the market,” said Rieder. “If we buy older product and renovate it to have the same interiors as Class A, it’s substantially cheaper than new product. Small but significant changes increase value.”
After the company’s best year yet, Rieder has his sights set on surpassing those numbers in 2017, with a goal of ten to 12 deals, purchasing 4,000 to 5,000 apartment units, and breaking into the west coast multifamily market.
Rieder spends 70 percent of his time traveling around the country getting familiar with different markets and looking for opportunities. One where he doesn’t see as much opportunity however, is his hometown, New York City.
“We haven’t seen a lot of value in the New York markets,” he said. “Personally I think they are over-priced in many cases. Our focus is really on income growth, and we’re looking to be in markets we think attract job growth and income growth.”
Focusing on Austin, Denver, and Atlanta is a result of income growth and jobs attracting long-term talent there.
“I think in general on a national perspective, the markets are overheated, and there’s a lot of money chasing multifamily,” said Rieder. “It’s a stable asset class, relatively safe, which makes it harder to find deals that excite us.”
He added that they are looking to have a presence in the Seattle market, and in certain areas of Portland, Oregon.
One of the company’s biggest mantras is based on a quote by Confucius about how true wisdom lies in accepting what you don’t know.
“We take that to heart, and we sit around the table daily and weekly and discuss markets and opportunities,” said Rieder. “Knowing that we don’t know is important as well. We ask advice of co-workers, peers, competitors, and study data constantly and try to make intelligent decisions.”
