Building a successful real estate investment business from the ground up is a true challenge. Not only do you need to know how to find and underwrite investments, you also need to handle or outsource construction, management, leasing, and beyond. When your organization is growing, add in the challenges of scaling, building a team, instituting effective workflows, and developing company culture. It's a lot to get your head around all at once.
This week, we’re catching up with CF Capital, a rapidly growing multifamily investment firm based in Louisville, Kentucky. CF has been using Bullpen talent for several projects now and understands very well that despite seeming like a numbers business, scaling a real estate company is really about the people.
CF Capital is currently making a name for itself as an opportunistic multifamily investor targeting somewhat hairy class C properties located in class A and B neighborhoods throughout major MSAs in Kentucky, Indiana, Tennessee and Ohio. After buying a building, CF goes to work optimizing operations, upgrading and re-finishing interiors and exteriors, making improvements, and bringing new or non-functional amenities into use again.
As an investor, CF is particularly process-driven, scale-minded, and community-oriented since its launch in 2020. With that in mind, what are the perspectives and priorities that the firm has used to help win business and improve communities over the last couple years?
CF Capital is led by co-founders Tyler Chesser and Bryan Flaherty, a pair of Louisville ex-brokers who would frequently talk real estate shop over a coffee or beer. Gradually, Tyler and Bryan’s growing personal real estate portfolios gave way to an alignment of interest in taking that investment to the next level.
Moving from brokerage to investment, Bryan says the young CF Capital team was able to leverage many of the lessons and relationships they had cultivated as transaction experts.
“Tyler and I were collectively involved in over a billion dollars in transactions on the broker side,” he says. “Investment is just a different seat at the table. We already had all the relationships in place.” According to Bryan, transitioning from brokerage to investment meant he and Tyler had to spend some time showing other area brokers that they were now clients, not competitors, but the benefits in terms of access to capital, deals, and service providers were enormous.
Not surprisingly, the first deals CF Capital closed were a pocket listing from another broker in CF’s network and a property that Bryan had previously repped himself as a broker. Advice for recent grads thinking about becoming investors - give brokerage a shot first.
Another critical lesson from brokerage was the value of making the right team decisions, in terms of the CF team itself as well as the vendors and partners Tyler and Bryan worked with. Bryan says he and Tyler had pre-vetted everyone they considered working with early on. “As a broker you have to eat what you kill, and you don’t want to bring in anyone that could make things go awry.”
As a nimble, growing real estate company, Bryan says elevating communities is a priority for CF Capital, and an opportunity to help not only the firm’s investors but the residents of the communities his company acquires.
CF Capital projects involve major improvements to property grounds as well as the buildings themselves, which means community residents will experience big improvements both in and around their homes. “It’s tough to get out and be successful in life when you come home and the parking lot is a mess, the roof is leaking, and no one is picking up maintenance calls,” Bryan says. “You’ll do better in work or school or for the community if you have a good home.”
While the real estate business is largely driven by numbers, Bryan is confident that there are harder to measure benefits to going above and beyond for the community, as well. For instance, showing that the property’s owners care about it and take care of it can help encourage renters to take better care of their own units as well. This means less maintenance and repair costs over time.
With a two-property portfolio, 500-unit acquisition in the Louisville area soon to close, Bryan says CF Capital is excited to bring its community-driven perspective to hundreds more renters. And again, it all comes down to the right people in the right positions. Bryan points to the Dan Sullivan book “Who Not How,” which suggests that for scaling entrepreneurs, acquiring additional know-how yourself is less ideal than finding talent that is already equipped to deploy that know-how at scale.
“We want to build a team that knows the how,” Bryan says. “There’s a world of 1099 contractors out there and we were able to develop a relationship with Bullpen, which does the talent heavy lifting and has the relationships on their end. That’s our talent bread and butter.”
This makes sense for real estate investors that are rapidly scaling. Staffing needs inevitably vary from project to project and throughout the life cycle of each property. Talent on demand can help expedite growth without bogging a firm down when there isn’t a project ready to crank on.
This is exactly what we as a company want to see: Agile real estate firms taking the talent we provide and running with the ball. Bryan says that his firm treats their 1099 Bullpen freelancers as a true part of the team, from sharing company values to emphasizing working together toward a common goal.
So there you have it: CF Capital’s blueprint for scaling success. It starts and ends with relationships: having the right connections in place to win deals, secure capital, and staff every project with the unique talent profile each one needs. Real estate time horizons are long, and for Bryan and CF Capital, relationships built today can last a lifetime.
Conversations and discussion of winning commercial real estate strategies.