The old witticism about investing in real estate — “buy land, they aren’t making any more” — might still be true. Yet what “they” are making is new ways to invest in property. And, more importantly for many individual investors, those new ways have lowered the barrier to entry. Christina Development offers such an opportunity.
More specifically, it’s the Christina 4 fund that is of interest here. Christina focuses on creating portfolios of multi-family properties in Los Angeles’ high-demand Westside neighborhood, an area that consistently sees demand outweigh supply.
Over the past 40-plus years, the Malibu, California-based firm has focused not on new-build projects but on real estate investment for clients as a sponsor and a manager. The firm co-invests with those clients and receives a portion of the resulting profits. In an investing environment where virtual assets — from cryptocurrencies to non-fungible tokens — consistently make headlines, an opportunity to own something tangible is refreshing.
As far as ‘not making any more land’ goes, Christina’s team looks for purchase opportunities in the LA market that arise from death, divorce, bankruptcy, fund closures and ownership disputes, among others, allowing the firm to acquire prime real estate at a discount to fair market value.
Christina 4 Owns Six Properties
The Christina 4 fund, which is accepting new investors through the end of June, is invested in six multi-family properties on the Westside, and continues to seek additional assets for its target $250 million portfolio.
To be clear, investors invest in a fund, not in a specific property. Despite the Covid-19 pandemic, demand for multifamily assets on the Westside has remained strong, as reported the Los Angeles Business Journal earlier this year:
“Overall capital formations, specifically equity, have increased every year over the last decade, so demand is very strong from a historical perspective,” Peter Yorck, a managing director at Jones Lang LaSalle told the business weekly.
He further noted that the Westside has performed better than many other submarkets due to its proximity to the beach, amenities and tight supply.
Post-Covid Resurgence Sees Stable Rental Market
While retail property on L.A.’s Westside has suffered during and coming out of the Covid-19 pandemic, apartment rentals have not been hit as hard. Developers are converting malls and retail centers into medical suites, offices, schools and multifamily buildings.
Rental vacancies are up on a year-over-year basis, but that’s only been a 2.5% increase. The resulting slippage in rental rates has been a minimal 0.4% according to local real estate surveys.
Renters early in the pandemic exited high cost-of-living areas to seize opportunities to work remotely. As a result, landlords had to drop rent prices in order to fill an increase in vacancies. The metro area recently showed 2.2 months worth of housing inventory compared to a national average of 1.6 months, according to data from Housing Tides.
With the general economy reopening and people returning to the office, housing vacancies are likely to soon decrease, boosting the demand for the properties in the Christina 4 portfolio.
Reduced Investment Threshold Opens Opportunities In Christina 4
Christina 4 originally opened with a $100,000 minimum investment. That threshold was set because the prime assets in the Westside LA marketplace are typically more expensive and require significant amounts of equity capital.
Following the 2012 passage of the JOBS Act, signed into law by President Barack Obama, companies like Christina were able to acquire funding online from investors and to advertise nationwide. That opened the investor audience far beyond those who had previously only found real estate investments like this through word of mouth and referrals because companies could not market exempt offerings.
The 2012 JOBS Act allowed for the mass marketing of private real estate offerings to accredited investors. The growth of online marketplaces opened these offering to accredited investors who are interested in real estate investing but have limited access to private investment-grade real estate, especially in Christina’s niche market.
“We are always focused on lowering the cost of capital so more dollars are invested directly in the real estate,” Lawrence “Larry” N. Taylor, Christina’s founder and president, told InvestorPlace in an e-mail.
Christina also accepts self-directed IRA funds and recently partnered with alternative-investment IRA platform Alto to accept retirement funds. By early June, Christina had attracted more than $2 million from IRA investors, Taylor said.
The investment is available through several online investment platforms. One is Verivest, which focuses on the private middle market real estate investment space. Another is Republic, which InvestorPlace readers may already be familiar with from previous Private Investing articles.
On the date of publication, Robert Lakin did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
InvestorPlace contributor Robert Lakin is a veteran financial writer and editor, including previous stints with Bloomberg News and as a buyside equity research editor. His Substack newsletter, TLV Strategist, covers the Israel business scene.