Taking the real estate industry by storm

How alumnus and Covenant Capital founder Rick Scarola’s confidence through industry hardships led him to unprecedented success.

If Florida State University had an engineering school at the time Frederic “Rick” Scarola was a student there, his story could have ended up very different. Luckily for the West Palm Beach-native, FSU’s engineering school wouldn’t open until the year he would ultimately graduate from the University of Florida, changing the Seminole to a Gator forever.

While Scarola (BSBA ’82) did start out studying engineering after transferring to UF, another subject would catch his eye. At the time, students in the engineering program had to take some business courses, he explained. After his first finance class, he was hooked and wanted to know more about a career in the field.

“For me, school was about learning something you didn’t know rather than increasing something you did know,” he said. “So, I went to Dr. [Andy] McCullough, and asked if you could make money and have a career in finance.”

Dr. McCullough’s answer was, of course, yes, and Scarola set off to change his direction. Even though he was already three years into his engineering coursework, after speaking with Warrington College of Business administration Scarola was able to finish his bachelor’s degree in business in two years.

Combining his engineering background with his passion for business and finance, Scarola found his career path in real estate.

After his first real estate job as a Right of Way Specialist with the Department of Transportation, finding and buying the land to finish the stretch of I-95 from Fort Pierce to Palm Beach Gardens, Scarola briefly returned to UF for his master’s degree in real estate. While he would end up getting a job before graduating, his graduate studies were exactly what he was looking for to advance his career.

“I started the [master’s degree in real estate] to learn more about the industry – about the capital and about the people,” he said.

His new role at Insignia Capital Advisors would take him outside of his home state to Nashville, Tennessee, where he still is today. Over 13 years, Scarola’s real estate work in apartment communities amounted to the disposition of over 15,000 multifamily units at 250 apartment communities with a value of over $2 billion.

With plenty of experience under his belt, Scarola decided it was time to step out on his own. In 1998, he launched Covenant Capital Group with his business partner. The focus of Covenant Capital Group is much like what he did in his early career, just more extensive, Scarola explained.

“We’ve been doing the same thing for the past 35-36 years, buying and selling apartments, it’s just a larger scale than what I did when I was 25 years old,” he said.

While Scarola’s business can be explained simply as ‘buying and selling’ apartment communities, it’s what happens between the buying and selling that makes it unique. Scarola’s niche is in buying older apartment communities in great locations, heavily renovating the units and selling them for a profit on behalf of his investors.

“What we do is buy the ugly and not-as-attractive apartments that need some work in order to bring them up to the standards of the rest of the neighborhood,” he said. “We’re like psychologists. Our job is bringing something back to the best it can be.”

With $1.5 billion in capital and properties across 16 states and 26 cities, it’s safe to say the 2016 Bergstrom Center Alumnus of the Year has found his sweet spot and doesn’t foresee his plan changing. 

“I don’t understand new construction,” he said. “There’s a lot of product to do what we do. It’s not easy, but it’s fun, and we get to make things better. There’s a lot of pride in making something better.”

In addition to his unique business, Scarola said he believes his success comes from being confident through the many storms he’s faced in the real estate industry – from the 1986 Tax Reform Act to the 2008 Financial Crisis to today’s COVID-19 pandemic – and lives by the words of Proverbs 24:3, Through skillful and godly wisdom a house is built, and by understanding it is established; by knowledge the rooms are filled with all precious and pleasant riches.

“You can’t let the storm determine your future,” he said. “We always kept moving through the storm; we didn’t run away from it. And at each stage of surviving, it has elevated our business.”

Scarola’s three decades in the field have led him to this wisdom, which he regularly passes on to current students in the Nathan S. Collier Master of Science in Real Estate program as a UF Real Estate Advisory Board member. In addition to his work as a board member, Scarola has facilitated learning through presentations and an experiential learning capstone project where students get to decide whether to sell or hold a community Covenant Capital owns.

“Florida was good to me, they didn’t have to let me into the business school,” he said. “[UF] gave me all the aspects of college that I needed. So, now, it’s important for me to give back.”