Curious - does ever monkey here believe that RE is a "numbers game?" Meaning, you need to thoroughly look at 100 deals in order to convert 1.
I'm more of a believer that if you can work smarter and more tactfully; your conversion percentages improve, but all I ever hear from the grey hairs is that it is a "numbers game."
Curious to get some other opinions.
Hi,Senior undergrad here who has 1 yr intern exp.in Acq so don't listen to me, but I think it depends on your investment strategy/thesis.If you are a more thematic investor such as BX that seeks to identify a culmination of macro tailwinds behind a sector before investing, then you may find buying opportunities at a much higher rate than 1% of deal flow. This is because if you believe that a sector is going to experience very rapid growth over the coming years (10%+ YoY), there will inherently be widespread mispricing opportunities for alpha generation as the buyer pool you are competing against will almost never UW above 5% regardless of how strong they think growth will be. Since DCF valuation is the bread and butter of RE investment, those assets will trade at a discount to intrinsic value and therefore provide a lot of buying opportunities above 1/100 deals.On the other hand, if your group has a relative value approach to investing (buying assets at a relative discount based on similar trades in a specific market or submarket), which most funds do, you will likely find buying opportunities closer to the 1% level. Just some thoughts though, curious what others may have to add...
It depends really. If you're a fund that needs to deploy capital, then yes, it's a numbers game. If you're a value add or development shop, then it's all about creativity. How can you extract value from an asset that others may not see? How well can you sell? How can you turn shit into gold?
That's what real estate is really about. Otherwise it's no different than fixed-income investing.
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