Investing In Recession Resistant Real Estate

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My good friend Ari Rastegar of Rastegar Capital recently did an interview with the Houston Chronicle on investing in Texas real estate. I invest with Ari, incidentally, as do some of my clients. If you are an accredited investor and would like to know more, please contact me.

Here is an excerpt from the article:

Ari Rastegar, founder and CEO of Rastegar Capital, is in spending mode. His Dallas-based company is looking to buy Houston real estate, particularly self-storage properties, land, shopping centers and distressed assets…

Q: What do you own in Houston?

A: We have a big focus on self-storage. We own 10 different self-storage facilities in Houston. We started buying those facilities in Houston about three years ago.

Q: Why do you like self-storage?

A: When you have the big house and the economy is booming and you buy the new couch, where do you put the old couch? In self-storage. That’s what Americans do. We love our stuff. What happens when the economy goes down and we have another 2008, when people start losing their houses and temporarily need to downsize into an apartment? Where do you put all your stuff that was filling up your big house? Our answer to that is self-storage. Self-storage is recession-resilient.

Q: Are there a lot of self-storage assets to invest in?

A: There’s actually a very high barrier to entry to self-storage. Why? It’s not just buying bricks and mortar. It’s also buying an operating business. For the most part, you also have to operate that business, take the rent, make sure things are going without a hitch. That’s one of the reasons why it’s interesting. Look at the public REITs. There are about 2,000-plus in all different asset classes of real estate. In self-storage, there are only four major publicly traded REITs. Four big companies really control the vast majority of the self-storage market. It creates a good opportunity if you are a good operator.

Q: Are you concerned about investing in Houston?

A: No. I believe Houston has so much value. The job growth is there. We’re going through a little bit of a correction. There’s a lot of fear in the marketplace. Where you see fear, you see irrational behavior. You see irrational dips in value.

You can view the entire article here.

Charles Sizemore is the principal of Sizemore Capital, a wealth management firm in Dallas, Texas.

Photo credit: Ron Kikuchi

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