Advice on what to do next
I started a real estate investment firm with a buddy of mine in NYC about a year ago and we had a successful run in acquiring a small deal (excellent returns) and advised on a $300MM hotel development in Time Square. Unfortunately, my partner is quitting to pursue his passion for trading stocks. However, my two capital partners, investment firms who were looking to JV on deals with us offered me roles in their companies. The only issue is that they're looking to make me a "partner" and only pay me $ if I bring in a deal and they close on it. Otherwise, I would get paid a meager salary ("what I need to live") in NYC. Honestly, I don't think I could handle living the next 12 months of my life sourcing multifamily deals that don't make sense or any deals for that matter. The opportunities sound interesting but if you think about how overvalued the market is right now, it's almost impossible to buy....
I was thinking of moving to SF where my family resides and trying to do real estate over there. I can live rent free in SF while looking for the right fit. I've been working in NYC for about 4 years now and have been involved in over $300MM in multifamily acquisitions/developments and asset managed nearly a $1BB in the asset class. What would you do in my shoes? Stick it out for another year in this overheated market or make the move to SF?
Well I took the "partner" position at my place, where I'd only make money on what we bought and would only make a very very very small salary otherwise. The Managing Partners were too scared to invest and didn't end up buy anything. Those properties are now worth double in the current market. Absurdity, I think, but that's what the market is taking now.
So I'm currently down in Miami doing private deals with some investors. A family member is a real estate broker, so between her commissions and my profits, we're not doing too bad!
If you have an advantage in the SF market, then by all means go make that money. NYC isn't going anywhere, but something is going to break in the price vs fundamentals war going on right now.
What were you guys investing in? How many years in the industry were you in before you were made a partner?
Just to touch on one point...if I was starting my own shop...I would absolutely avoid NYC (where I work). The barriers to entry have gotten so fucking high. Chances are you really won't be able to compete.
I agree. I had a very strong network of brokers and had opportunities to close some deals. Unfortunately, my JV partners were too slow to move and missed on some excellent opportunities. I think there's going to be a re-pricing in 2016/2017 and there will be a 12 month stall in acquisitions as buyers and sellers will experience a huge disconnect.
I'm investing in miami beach market within one of the lesser developed sub markets. So far, we've averaged around 25% IRR on simple renovation projects. I've been working in real estate since I was 16 when my mom "hired" me as her assistant with residential sales. It wasn't until college that I became more involved in the commercial side and have been working that sector ever since.
Yeah, I meant to write investing in stocks. He was honestly day trading all day while we were in the office. It was obnoxious and I didn't think I had to mention it.
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