The founders of Inch & Co. are looking to raise $20 million from investors interested in backing the York-area company’s forays in multifamily housing.
For the last 15 years, the company has leaned on its own resources, buttressed by capital from friends and family, said Jeff Inch, a co-founder and co-owner of Inch & Co.
“Now it’s time for our growth strategy to use other investors that want to get into real estate,” Inch said in an interview with biznewsPA.
The new fund, called Cascade Capital Fund 1, officially launched April 18 and is open only to accredited investors with at least $100,000 to invest.
What’s the strategy: To build apartment complexes in Central Pennsylvania and the Carolinas, Inch said.
He described both regions as growing areas with high demand for rental apartments.
North Carolina, example, is set to host a new campus for tech giant Apple.
Inch & Co. will invest alongside the new fund as the company buys, develops and manages multifamily properties. Investors will earn returns from rental income but also if the properties are sold or refinanced, Inch said.
“High interest rates only make the rental market more robust,” Inch said, arguing that most young adults under 35 do not want to buy homes. “They’re looking only to renting right now.”
At the same time, high interest rates have prompted other developers to drop plans for new apartments, Inch said.
When rates fall and building resumes, Inch & Co. will have projects in the works, Inch said. “We feel like right now is a good time to catch the wave coming in.”
What are the projects: In North Carolina, the company is moving ahead with a 240-unit project in Catawba, Inch said.
Inch & Co. also has new projects on the drawing board for the York and Dillsburg areas.
At the same time, the company is looking to sell one of its larger York-area developments, Fallbrook Flats in Springettsbury Township. The 148-unit property at 3881-3889 E. Market St. is listed by real estate firm JLL, but the listing does not include a price.
The decision to sell came, in part, from investors in the property, Inch said.
“We’re excited to see where it lands,” he said, adding that there have been nearly 40 tours scheduled for the property. “The market is strong right now for multifamily sales.
Overall, Inch & Co. has 2,100 units in its pre-construction pipeline and more than 5,000 under management. The company also has property management, real estate and maintenance divisions, as well as plans to build a recreational sports center in North York.
What’s next: If it succeeds in filling up its first fund, Inch & Co. plans to start a second $20 million fund, Inch said.
He said he is not concerned about investors getting hung up on criticism of the company, such as the pushback over its controversial plans to build a warehouse along Pennsylvania Avenue, south of Route 30 in Manchester Township.
“If you’re a developer, you’re going to get negative press for developing properties,” he said, arguing the complaints come from a small minority.
“They may write something negative about us,” he said. “But overall, we’re good at what we do. We understand how to put people’s capital to work, and we protect people’s capital like it’s our own.”
Projects in North Carolina, where the land development process is overseen by county officials, have gone more smoothly, he said. “It’s just a lot easier to be a developer in the South.”
The trend: Multifamily investment funds are drawing a lot of interest, according to Jay Sammons, a private markets portfolio manager at Atlanta-based wealth management firm Gratus Capital.
Funds are both regionally and nationally focused, with some raising more than $1 billion.
“A lot of our clients see a lot of opportunities in this space,” Sammons said.
As with Inch & Co., fund sponsors see opportunities in the current housing shortage and the slowdown in new construction, which has been exacerbated by tight credit.
However, Sammons said, investors need to scrutinize the track record of fund sponsors, their plans for using debt and any fees they might be charging.
“One thing we preach to our clients that are looking at opportunities like this is, look beyond the glossy papers … and the computer-generated pictures of the apartment buildings,” Sammons said.
