Ken Carpenter, President and Chief Investment Officer for Madison Capital Group Holdings, joined Julie Cooling, Founder and CEO of RIA Channel, at the GTE Wealth Forum to discuss the benefits of being a vertically integrated real estate investor and developer.
Madison Capital Group Holdings is a vertically integrated owner, operator, and developer specializing in multi-family, self-storage, and triple net lease properties. The firm identifies building sites and employs general contractors to construct each property. Carpenter notes that managing the properties protects and creates value for investors, as issues can be quickly addressed by the owner of the property.
Scale is important in property management. Madison Capital owns and operates 30 multi-family properties, 150 stores, and is the 15th largest owner of self-storage facilities. RIAs appreciate working with Madison Capital, as the firm can be flexible, nimble, and creative with custom real estate solutions for clients, such as identifying properties for 1031 exchanges. Tax alpha can be created in real estate, such as the bonus depreciation offered in the new US tax law, opportunity zones, and Roth conversions for development.
Carpenter notes that, after developing $3.5 billion in multi-family properties, Madison Capital is still bullish on residential real estate. The firm operates in markets with rapid population and job growth, such as in Florida, North Carolina, and South Carolina. While the last two years have been tough with strong multi-family supply growth, but supply growth is likely to slow substantially, as housing starts in 2024 and 2025 were the slowest since the 1970s. The tight supply situation is likely to persist, making it unlikely for housing to become more affordable any time soon. Demand for multi-family is likely to continue, as the average age of a first-time home buyer has increased from 29 to 40, while mortgage rates remain high. As the renting demographic ages, Madison Capital sees a growing preference for townhomes over apartments.
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