A WORD FROM OUR FOUNDER

ORIGINS OF SOPHUS

Think back to when you first set out on your career path. Back then, simply earning money seemed difficult. But over the years, as career success was achieved, your savings grew and so did your “investible surplus.” Suddenly, a new reality presented itself:
Earning money is not that difficult; instead, the real challenge is to PRESERVE and GROW your savings.

There are a variety of investment options available to grow your wealth. Stock market investments can earn handsome returns, but not consistently and not without constant management. The stock market is too volatile and too bloated with absurd P/E ratios. Too many companies that have never earned a penny are valued at billions of dollars!

Earning consistent returns with mutual funds is similarly difficult and beyond the reach of the average investor. During the DotCom bust of the early 2000s, many families’ savings were wiped out due to their large investments in mutual funds.

In today’s ultra-low interest era, bank savings accounts will do nothing to grow your savings. The inflation rate is normally higher than what banks offer and erode whatever return you may actually earn. And while some percentage of your portfolio might be in the perennially safe inflation hedge of gold, this investment yields no current income and has extremely sporadic appreciation.

Many have turned to real estate as a way to grow their wealth. During the market collapse of 2007, many investors profited by snatching up condos, single family homes and warehouse/office buildings at bargain pricing. While the prospect of earning steady rents and nice appreciation is appealing, renting to single unit tenants and managing those properties can be painful, to say the least. Balancing a portfolio of investments is really stressful.

A few years ago, I myself had reached an investment crossroads, so to say. Our company’s retirement fund had grown substantially. As Trustee, I struggled to evolve an investment strategy that would continue to grow the fund while protecting the principal for our employees.

We had some blue-chip stocks and annuities, and some real estate investments in single family homes. “Hard money” lending based on solid real estate collaterals also earned some attractive interest rates for the fund. But we needed more options. Commercial real estate and Triple Net renting looked too risky in light of Amazon’s devastation of the retail industry. And although trendy in appearance, the “We Work” model of subleasing office space offered no substance.

This is when I discovered the power of commercial multifamily real estate investing through companies like 37th Parallel Properties Investment Group, an unparalleled leader in the acquisition and management of multifamily properties in growing US markets. Over its 10+ year history, 37th Parallel has successfully completed over $635M in multifamily transactions, and currently has more than 4K units under management.

Their business model is based on a solid, stable hard asset class with perennial demand. There is no new technology on the horizon that will shift humanity away from this basic need for safe shelter. They promised attractive cash-on-cash returns PLUS a pro rata share of the appreciation upon investment liquidation. Beyond these appealing terms, there are quite a few tax advantages of a commercial multifamily real estate investment.

After making a few passive investments in such projects and earning consistent returns, I, along with Sophus Investments’ co-founders, embarked on an exhaustive course in multifamily investments conducted by 37th Parallel. The intent of the course aligns with our goal: to become active investors in this space.

Sophus Investments LLC came into being with the sincere intent to make wiser and more financially rewarding investments for not only ourselves and our families, but also to help our friends and business associates optimize their investible surplus in this stable hard asset that offers many tax advantages. Furthermore, we at Sophus look forward to the opportunity to meaningfully serve our rental clients through our investment decisions. In the properties owned and operated by Sophus, we can provide technologically “smart communities,” ecologically “green” environments, and socially well-connected and supported neighborhood networks. In short, we can help to build thriving communities in which our rental clients can live and raise families.

After many years of navigating the Investment Jungle, I have finally landed upon what I feel is the proverbial needle in the haystack. With the myriad of financial benefits and intergenerational wealth creation opportunities it offers the investor, and the ability to serve and contribute to the lives of rental clients, the commercial multifamily business offers a true “win-win-win”. This is the key rationale for the existence of Sophus Investments LLC.