Sarah Sullivan is the Founder and CEO of SuGo Capital.
I’m an investor in multifamily real estate properties—that is, apartment buildings. My talent is in rooting out apartment buildings ripe for improvement in up-and-coming areas. Hundreds of opportunities cross my desk. When I find a needle in the haystack—the perfect investment property—my company works with investors to pool funding to buy the building. After purchase, we work to improve property management, upgrade apartment interiors, add amenities and upgrade common areas for safety. Then, after a few years, my company may sell the property for a higher price.
Yes, I am a real estate investor. But I’m also an activist. And there’s a glaring problem in my industry that needs to be addressed, fast.
The Multifamily Boom And The Housing Shortage
The multifamily real estate industry is booming. The number of capital investment companies is growing rapidly, as new technologies and crowdfunding sites make investing in multifamily real estate accessible for everyone. This industry has been good to me and to my investors. For many of my clients, the income generated from investing in multifamily homes has changed their lives for the better. These are hardworking people who want to increase their own financial stability and security.
Multifamily real estate is a hot investment across the nation. And that’s a problem for renters.
The housing shortage is hitting the rental community particularly hard. A lack of housing due to supply chain and labor shortages combined with the uptick in multifamily investing in apartments is proving to be a brutal one-two punch in many communities. Residents are now facing double-digit rent increases in many cities, as well as inflation. When I read firsthand accounts of how service workers or single moms cannot afford rent in their cities, my commitment to my core value of social responsibility kicks in.
There’s a bit of gold fever in multifamily investing right now, but as we grow wealth, we also need to set a standard for giving back to the communities in which we investors improve properties.
Social Responsibility At Investment Companies
I want to encourage investment companies like mine to start asking how we can be profitable for our investors and still incorporate social responsibility into each project. We are a new generation of investors. How can we accomplish our goals and at the same time protect our most vulnerable residents? How can we help those displaced to rise up?
My company hopes to lead the way by adhering to best practices for social responsibility as we see it. These include:
• Hiring property management companies that have relationships with and knowledge of how to navigate rental assistance programs. (If that does not exist in your community, provide that education.)
• Reviewing standard operating procedures for late-paying renters to ensure that systems are in place if the unexpected happens—loss of a job, family emergency, etc.—so that being a few days late on a single payment does not mean an eviction notice.
• Demonstrating to investors exactly how you will give back to the community where you are acquiring properties.
Capitalist societies are not perfect. However, as an industry, multifamily real estate developers must be proactive in implementing systems that protect the communities they invest in. Yes, we are making the apartment communities themselves better places to live. But that needs to go hand in hand with improving education and donating to entities that help people during tough economic times. Let’s work as an industry to make sure that “Socially Responsible Commercial Developer” is not an oxymoron.
Even though many of us are private companies, we should think of ourselves as having three stakeholders: We serve our investors, our renters and the communities in which they live. In thinking of ways to be mindful of all three, we work toward heading off hopelessness and despair, which inevitably hurt us all.