The Engineer Who Traded Rockets for Real Estate with Chris Lento

Chris Lento spent 17 years as an aerospace engineer before deciding the defense industry wasn't the right runway. He spent that same 17 years buying small multifamily in Boston as a side project. In 2017 he flipped which one was the side project. Today Chris and EM Capital run more than 800 multifamily units across the Southeast: Charlotte, Raleigh, Columbia, and Atlanta, with 420 units already in Atlanta and another property under contract there. Acquisition price band is $10M to $50M. He targets markets with 250,000-plus population, real job diversity, and meaningful population growth. He caps it at four markets because deal flow has to be balanced against actually knowing the neighborhoods. What landed in this conversation: The two-bedroom test as a quality signal. Chris will look at a 1985 build if it has two bedrooms and two baths. A two-bedroom one-bath from the same vintage tells him the original developer was cutting cost everywhere else too: cheaper wiring, cheaper plumbing, cheaper everything behind the walls. The unit mix is a tell. Atlanta's insurance problem isn't hurricanes. It's the state's high liability cap. One resident hitting another in the parking lot can expose the owner to seven figures in liability. Premiums reflect it. The mistake is finding that out after closing instead of underwriting it in upfront. Preferred equity to 85% LTV. Chris stacks institutional or family-office preferred equity between the senior debt and the LP equity, holding the senior LTV at 62 to 65 percent. That keeps the structure conservative while raising less LP equity per deal. The Monarch deal almost broke. Last fall the 10-year treasury spiked during election week, capital tightened, and Chris had already gone hard on earnest money before the raise was fully closed. Seller extensions plus a pref-equity gap fill saved it. The lesson he ran back to: have an A plan, a B plan, and a C plan locked in with your partners before you go hard. The line that wraps it: a mentor told Chris, "If you can't make a deal pencil at 6.5 to 7 percent, that might be a you problem, not a building problem." Reach Chris at emcapitalgroup.com or on LinkedIn. Real Estate Underground with Ed Mathews. Find us wherever you get your podcasts, at clarkst.com/podcast or elevista.com/podcast 🎧 Subscribe to Real Estate Underground for weekly insights on building wealth through real estate, without sacrificing your sanity.Additional Resources:Clark St Capital -> Passive real estate investments for busy business owners and executivesElevista -> AI SaaS for real estate investorsClark St Academy on YouTube -> Learn how to invest in real estateSocial Media:LinkedIn -> Ed Mathews (President at Clark St and Elevista)Heads up: If you find this week's book intriguing and you buy using our link, we receive a small commission that helps support the show. Thank you!