Matthew Rosenthal of Eastham Capital: 5 Questions

As Eastham Capital builds its portfolio of middle-market apartments, co-founder Matthew Rosenthal sticks to some basic rules. 

One of his mantras: “We fix properties, not neighborhoods.”

“We’d rather have the worst property in a great neighborhood as opposed to the best property and a worse neighborhood,” said Rosenthal, Eastham Capital’s managing partner.

In 2025, the Boca Raton, Fla.-based company added 2,000 units to its portfolio, which now totals more than 15,000 units nationally.

The following interview has been edited for length and clarity.

Commercial Observer: What does Eastham Capital do?

Matthew Rosenthal: We’re mostly value-add guys. We want to clean up the kitchens, the bathrooms, the flooring, the doorknobs, and just make the property a bit prettier. Sometimes we’ll do full renovations. 

Across our portfolio, our average rent is $1,100 to $1,200 a month. It’s really workforce housing.

We’re a partner. Every guy starts out in real estate by buying an apartment and renting that out. Then they’ll buy a triple-decker or a quad. They go, “Oh, this is cool.” Then, they’ll get together family money and country club money, and they buy a property. When they get to the point that there’s no more family money, no more country club money, that’s where Eastham Capital comes in. Our goal is to take somebody from that level and get them to thousands of apartments. And we’ve done that with several partners.

We have 18 partners right now. Some of them owned multi-thousand apartments before we met them, but some of them we’ve taken literally from hundreds of apartments to thousands of apartments. 

And we like to stay with them. We have a series of funds, in fact, and we are in the middle of raising our seventh fund.

How did you settle on that approach?

When we first started Eastham, we said, “OK, we’re just going to buy property, and we’ll do that around the country.” Then we realized that the local guys get all the deals, because they’re friends with the brokers, they’re friends with the bankers, they know what’s trading and they know what’s going on. 

How do we get the local deals? Well, the answer is, we partner with the local guy. And now we’re getting local deals, we’re getting off-market deals, we’re doing all kinds of exciting things. 

So the idea is we partner with these guys, we help bring them up, we help advise them and, when we go into the best and final call with the brokers, we help our partner get the deal.

We have one partner out of Houston that we’ve done 60 transactions with. And so we’re a loyal partner; we’re a good partner. We have these rules that we use. One of them is, “All real estate is local.” So we want to deal with the local partner.

Aside from “all real estate is local,” what are your other rules?

We don’t love third-party management, so we like our partners to be really good managers. 

Another is that we fix the properties, not the neighborhood. We’re not speculating. We literally buy a property, and we look at a property as a business, as a small business, and our job is to improve the business. 

So we’re not saying, “We’re buying this now, and the market’s going to be much better in three years.” We don’t do that. We say, “We’re buying it now, rents are here, we’re going to bring rents up to here, and we’re going to make this a better business.” 

And if the market goes in our direction, great, but if it doesn’t, great, because we still made it into a better business. 

And then the last one is we want strong cash flow, and we want to make a two-times return on our investment.

What’s your geographic focus?

We were mostly concentrating in Texas in the early days of our business 18 years ago. Then we moved to Florida — the Panhandle, North Florida, one property in Fort Lauderdale. We started buying in the Midwest in 2019, and now we are concentrated more in the Midwest, because that’s been a great market for us. 

The only problem is everyone else has now discovered it. We’re buying stuff outside of Chicago in the suburbs that was constructed in the ’60s. But the buildings are solid, there’s stone, they’re amazing. And the only thing we have to do is upgrade the interiors, because the outsides are fine. I mean, they’re not pretty, but they’re fine. And there’s also no new construction there, so that’s a lovely thing.

In Indiana, Illinois, Minnesota, rent is still going up. We own a property in Austin, Texas. That rent has come down 10 percent, because Austin is the most oversupplied market in the country right now.

How is the housing affordability squeeze affecting your tenants?

We had this term called “renters by necessity,” and they just can’t afford a house. They don’t have a down payment, they don’t make enough money or whatever. But now we’re seeing renters for life. 

People are just saying, “Why do I need a house?” because they’re not seeing the value in homes like our grandparents. “Why should I put all this money into a house and all these services and all these appliances when I can pay one, two, three, four grand a month and enjoy my life, move when I want to, do whatever I want, not be weighed down. I think there’s something to be said for that. 

I mean, look at New York; people rent their whole lives there.

Jeff Ostrowski can be reached at jostrowski@commercialobserver.com.