How to Invest Like the Pros


Brian D. Milovich

Managing Principal, Calvera Partners

The best apartment investors are people you’ve likely never heard of. They’re successful in every market across the country. They don’t raise outside money and often self-manage their properties. But don’t get the impression that they’re small. They own thousands of apartment units and generate gobs of cash flow. Their business model is different…better.

These under-the-radar individuals are our inspiration. They focus on the long-term, use modest leverage, and minimize their tax exposure. They take calculated risks and have a rock-solid balance sheet. Cash flow drives their portfolio and provides them with total flexibility—personally and professionally. We created the Calvera Income and Growth Fund (CIGF) to invest like these pros.

Why aren’t more real estate investments structured like this? It’s simple. The setup costs are high, the burden on the company (Calvera) is high, and the fees are lower. Investors can also cash out at various times and invest even more. It’s simply better for investors. This is kryptonite for 99% of syndicators.

So why did we choose this path and create CIGF? Simply, it’s how we would invest our own money. We’re on a mission to find investors who want to build a portfolio with us. To intimately know what we are buying together. To generate cash flow with tax efficiencies. To get that big sale and buy newer, better, and bigger properties. To pass this privilege down to the next generation. And to kick back in retirement as the cash flow continues to come in.

However, not everyone is a believer of this method. We were once told that you can’t make money in apartments. That’s what a capital provider said in 2010 when we formed Calvera. He thought the low cap rates, relative to other property types, meant low returns. He was wrong. Apartments still provide the best risk-adjusted return1 among all major property types. And the cash flow it generates provides some downside protection.

Building an apartment portfolio with the long-term in mind doesn’t mean we’re going to “set it and forget it.” Nor does it imply there won’t be big wins. Calvera remains committed to adding value through physical improvements. Instead of focusing on heavy interior and exterior improvements, we seek to futureproof the properties. This entails technological and sustainability enhancements. Tenants demand the latest tech and value environmentally conscious behavior. Both make good business sense, too. These are some of the higher ROI (return on investment) changes an owner can make. We’ll also do unit renovations, amenity upgrades, and hotel-like branding. This program will increase revenue and reduce expenses.

Since another goal is to make CIGF’s balance sheet bulletproof, we’ll use modest leverage. How many long-term apartment owners are in the news with distressed debt? None that we can think of. The owners under distress emerged in the past 10 years. Their mistake was using high-leverage, floating-rate bridge debt. Had they used traditional bank or agency financing, their assets might not be troubled. Those purchases also would not have made sense. Using debt is good up to a point. It provides the ability to buy larger properties. And it can also improve cash flow yields. But not fully understanding the risks involved or impact to cash flow can prove fatal.

Taxes play a big role in decision making for most owners and investors. Because of that, CIGF will own apartment properties under a REIT subsidiary. This allows us to make tax efficient distributions. We will also use 1031 exchanges at sale to purchase new properties and defer capital gains. CIGF investors will also be spared the inconvenience of filing tax returns in multiple states. This is the most efficient way we know to maximize cash flow and minimize hassle. Your money keeps working over the long-term.

We recently went into contract to buy the first property for the Calvera Income and Growth Fund. It’s located in a high growth market and business-friendly state. The property is also less than 10 years old. This makes it perfect to implement high ROI, technology-based improvements. With modest leverage of only 57% of the purchase price, cash flow is enhanced. This is the ideal purchase for a long-term fund, and we’re excited to tell you more about it.

Click here for more information on the Calvera Income and Growth Fund.

Or to find out more directly from a member of our Investor Relations team, click here.

1 Bloomberg, NCREIF, Federal Reserve Economic Data

Click here for more information on the Calvera Income and Growth Fund.

Or to find out more directly from a member of our Investor Relations team, click here.

2 Embarcadero Center, 8th Floor
San Francisco, CA 94111

729 Washington Ave N, Suite 600
Minneapolis, MN 55401




Performance data listed in this website or is otherwise provided by Calvera Partners, LLC, or its affiliates (“Calvera”) with respect to a particular property or project represents past performance calculated for the relevant project and does not purport to reflect the overall performance of any private funds managed by Calvera, which may include other projects, as well as charge additional fees or carried interest, or have additional expenses, which would reduce the overall performance of the project from the perspective of a fund investor. Past performance does not guarantee future results; Current performance may be lower or higher than performance data presented. Calvera is not required by law to follow any standard methodology when calculating and representing performance data; the performance of any of Calvera’s projects may not be directly comparable to the performance of other investment vehicles or funds; and qualified potential investors can contact Calvera Partners for more current performance data of any private funds managed by Calvera. 

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