We seek to follow the investing philosophy taught by legendary value + growth investors Warren Buffett, Benjamin Graham, Philip Fisher, Charlie Munger and others, by applying their theories to real estate investing. We seek to identify properties with a margin of safety, such as those that can be purchased below their intrinsic value. For the growth component we focus on properties where we can unlock additional long-term income by pursuing properties with excellent locations that will improve over time with increasing market fundamentals including population growth, diverse employment base, and highly educated work force, locating new tenants for vacancy, improving the physical condition and visibility of the property, and/or by managing the property’s income and expenses more efficiently.
Our investment strategy includes:
- Focusing on buildings in high-quality secondary and tertiary markets (e., markets like Phoenix, AZ, Columbus, OH, Huntsville, AL, Boise, ID, and many others across the U.S.) that will have favorable long-term demographic and economic trends with a lower amount of volatility than the primary U.S. cities;
- Investing in buildings associated with recession-resistant businesses, such as medical and service oriented retail;
- Focusing on long-term ownership of assets thereby lowering investment drag from transaction costs and taxes paid;
- Diversifying our portfolio of properties by location to reduce single event risks; and
- Through the structure of our leases we will look to maximize the pass-through of most property maintenance, utilities, real estate taxes, and property insurance costs to tenants, helping to insulate us from future cost increases brought on by inflation.
Our investment strategy is based on a “contrarian” or “value” investment thesis, meaning we typically invest counter to the common market sentiment to achieve maximum value. Similar to Warren Buffett’s “Be fearful when others are greedy and greedy when others are fearful”, we focus on finding those real estate properties that are “out of favor” and therefore have high relative current returns with strong long-term growth possibilities.
In the current market cycle, we believe retail and medical office sectors, but this will not always be the case. Berkshire Hathaway has set itself up for success by staying completely flexible in relation to the industries it will invest in. It invests in any area,“…limiting ourselves always to investment alternatives we think we understand.” -Warren E. Buffett from the 1987 Letter to Shareholders. With the types of assets it selects be it whole companies, partial interest, and in different industry investment selection criteria in terms of asset that allows it to purchase those assets that are most likely to maximize investor returns over the long-term and we follow a similar approach when selecting real estate product types.
Real estate is an extremely illiquid investment, and as in most other types of investing the long-term holder always wins out over those who try to time the market buying and selling more frequently. We have seen both from Berkshire Hathaway and from the family offices we work with that true wealth is built over time by patient investors, not by short-term speculators. This is true of the real estate family offices we work with, they invest for generations and this is also true of the most successful investment companies. Accordingly, we have adopted a long-term investment horizon. The major benefits of long-term investment come from many things including beneficial tax treatment to long-term investments and significantly lower transaction costs when compared to a short-term or flipping strategy, to name a few.
“Even 10 years is too short a time period for outstanding businesses.” – Warren Buffett
We plan to hold each property we acquire for at least 10 years, although in many cases we may hold a property for a longer or shorter time depending on a variety of factors affecting the particular local market of the property. Our investment’s depreciation benefit should also allow a larger portion of cash distributions to Investors to be tax deferred. We purchase properties that have strong long-term growth prospects, coupled with excellent short-term income opportunities relative to the amount of risk involved (aka risk adjusted returns).
Consistent with this focus, we utilize long-term leases in connection with the properties we acquire. When possible, we intend to structure most leases as net leases, with built in contractual rent increases, helping to protect the portfolio against inflation and providing opportunities for growth in cash flow and valuation. In a net lease, the tenant pays rent to the landlord, while also assuming most or all obligations for common area maintenance (CAM), general property maintenance, property taxes, insurance, etc. Such leases can be structured for a variety of industries, including retail, specialty office, medical, industrial, and warehouse. The building and/or location are usually integral to the tenants’ operations, and thus cannot easily be moved or replicated. Net leases tend to have long terms – typically 5 to 10 years – with options for the tenant to extend the lease beyond the initial term. The length of lease term and ability to achieve a net lease structure will depend on prevailing real estate market conditions.
We offer monthly returns paid directly to your bank account via ACH. We listen to our investors and are always seeking to improve our ability to serve you.
I founded Mascia Development over 11 years ago with the intent to buy and hold real estate for the long-term.
“It would be hard to find a better group to sit in the Berkshire Hathaway shareholder “seats” than those already occupying them. So we hope to continue to have a very low turnover among our owners, reflecting a constituency that understands our operation, approves of our policies, and shares our expectations. And we hope to deliver on those expectations.” -Warren Buffet Shareholder Letter 1979
Not only do I have the vast majority of my personal wealth invested in this company but my father, uncle and grandfather have meaningful amounts of money invested with us as well. This is not technically a family company but it is very much an investment family we have created. We look forward to having you join our investment family.
Mark Mascia, President & CEO