“My first venture was in real estate limited partnerships,” recalled Hameetman. “I didn’t start out in real estate, but once I started, I soon realized that income properties are the ideal asset, by far.”

Hameetman has a diverse academic background, with a Bachelor of Arts degree from Occidental College, a Bachelor of Science degree from Caltech, and a Master of Science in Engineering degree from the University of Southern California. While attending USC, he worked at Douglas Aircraft, where he ran their hyper velocity impulse tunnel. “We conducted testing on antimissile defense missiles and atmosphere re-entry vehicles,” he said. “They were the predecessors to our space shuttles.”

After five years at Douglas, Hameetman realized aerospace engineering “wasn’t for me.”  He began investing in stocks, developing a particular fondness for convertible bonds because of the flexibility they offered investors. Ultimately, Hameetman joined a real estate firm and discovered that income property was, in his words, “a great idea”. Sometime later, in his first private equity deal, Hameetman acquired an estate planning firm, which eventually became the start of his family office, which now operates under the name American Group.

“It was my first deal, and I’m still very proud of it,” he said. “I have gotten just under 30 percent internal rate of return (IRR) on that acquisition over the past 48 years.”

Eyes on the Prize: The IDEAL Benefits of Real Estate

Although he has acquired and managed just about every type of real estate project under the sun since American Group was founded in 1971, Hameetman has always maintained laser focus on his favorite type of real estate: the kind that is producing income.

“My favorite asset class is the asset class that is producing the greatest income for my investors,” he explained. “There is more to real estate than just physical property. The sector includes apartments, shopping centers, office buildings, industrial properties – the list goes on and on.”

At American Group, real estate is targeted and evaluated based on Hameetman’s IDEAL Investment™, an acronym that stands for Income, Deductions/Depreciation, Equity Build, Appreciation, all enhanced with Leverage.

“Over time and through experience, my favorite assets have become apartments, and, until recently, shopping centers,” Hameetman said, adding that online retailers like Amazon and relatively recent developments like physical distancing requirements in response to the coronavirus pandemic have largely “killed” the traditional shopping center model. For years, he has avoided office buildings, unless they offered exceptional value, calling them increasingly unnecessary.

“Even before COVID-19, office buildings were no longer absolutely necessary. So many people operate out of their basements these days, and when someone builds a new building down the block from your office building, the tenants tend to gravitate to the newer model,” he explained. “Then you have to refurbish, pour in more capital, and lease it all over again.”

The company has relatively small industrial property holdings as well because although these properties typically bring triple-net leases, “rents may be flat for five, 10, or even 15 years, which is not necessarily good for the ‘income’ side of the IDEAL Investment equation for growth,” Hameetman said.

On the other hand, Hameetman finds apartment buildings far more “IDEAL” and one of the most attractive asset classes in the real estate sector. “Everyone needs a place to live, and apartments offer one of the best opportunities for an investor to keep pace with the market, because between 20 and 50 percent of all tenants will move in any given year no matter what, giving the landlord an opportunity to pace rental rates with the rest of the market,” he said.

He noted multifamily buildings also meet the rest of his requirements since they come with many opportunities for savvy investors to use tax deductions and depreciation to their advantage, tend to offer significant appreciation and equity through mortgage reduction along with or in excess of inflation, and, of course, benefit from the use of leverage.

“I’m essentially an evangelist for income property, particularly apartments,” he concluded.

Trust, Taxes, and Emerging Opportunities in 2020

While 2020 has been a year of incredible turmoil and uncertainty for the entire U.S. population, including real estate investors, American Group is poised to bring desperately needed stability and security to investors and to local communities most susceptible to economic swings, thanks to its focus on development projects in qualified opportunity zones (QOZs) and on acquiring multifamily developments in certain target markets poised to resist and recover from economic turmoil more effectively and expeditiously.

Greg Horton, CEO of American Group, noted that, from the perspective of investors in American Group’s funds, “This is opportunity!” One major reason for Horton’s relatively optimistic outlook in a sea of pessimism is something that Hameetman and his companies had already started working on before the COVID-19 pandemic: leveraging projects eligible for opportunity zone funds.

“The Opportunity Zone Program is legislation that will never be replicated and probably will not be diminished by changes [because it was bipartisan in nature],” Hameetman said. “It is a once-in-a-lifetime opportunity for investors to defer, reduce, and finally eliminate capital gains taxes, while leveraging the gains to create significant returns in real estate rather than losing them to taxes. It is a win-win for both investors and communities!”

Hameetman first encountered the Opportunity Zone Program when he sold a property in San Pedro, California, after the Tax Cuts and Jobs Act (TCJA) passed in December 2017. “A developer bought the property from us for several times more than we had expected to get from it and then flipped it to a large opportunity zone fund. I knew then I had to participate in this program, and we did with an exciting development project in Florida,” he said. Hameetman noted that the relatively small size of his qualified opportunity fund (QOF) gives him the agility to move quickly and be “very, very selective” about the assets in which the fund invests.

The Florida project, dubbed “Palm Beach Riverstone,” is located in West Palm Beach. The project’s momentum has not slowed even with the COVID-19 pandemic. “We have been working through the entitlement process, including getting our designs approved by the city while everyone is working from home,” Horton reported. “There is documented need for this development project, which includes a 374-unit multifamily community, which is well underway.  A second project on the same property is a 150-key hotel.  These projects will bring over $250,000,000 in economic impact to the area during construction and the first year of operation.”