For those of you in multi-family
why did you choose this asset class? I am currently in school and heavily considering pursuing opportunities in the sector upon graduation, curious to hear what people in the industry like/dislike about it.
thanks for your time.
Fell ass backwards into it, so pure dumb luck... Turns out I really love the space. At your age, I would still encourage you to pursue roles where you touch all asset classes before you settle on multifamily.
Thinks I enjoy: love the people in the industry, fits my interests (history and finance), it is really the story of where people live and why/how they make that decision and I find that really interesting. It is still an incredibly fragmented industry (consolidation is happening but slowly) with lots of room to be entrepreneurial, tons of debt and equity capital available, cheap government debt. Great secular tailwinds a well.
Dislike: not a whole lot. The property management folks I deal with can be idiots but are by and large good and decent people. Space is now very crowded and cap rate compression is definitely occurring, but I plan on being in the space for 30+ more years so I'm ok playing the long game on it as I'm sure it'll fall out of favor at some point.
I chose multifamily for a few reasons:
I would strongly consider the space as a career. There are so many old people in the industry which means growth opportunities will continue to exist, demand fundamentals continue to improve, and it's not terribly difficult to break into.
- Second to best performance along with Industrial - whether compared on IRR or TWR 1,3,5,7,10 Year, whatever, these 2 asset classes consistently outperform the others.
- Meaning more institutional LP (pension funds, SWF, endowment) money flowing into the sector
- Meaning more jobs, more fees, more opportunities for money for people like us who work as fiduciaries for these money sources
- Job is not as annoying when you don't have to use ARGUS. We only use ARGUS for the retail portion of the deals. I hate that stupid software and prefer to own every tab in my model in excel.
Those are the quantitative reasons. Other qualitative reasonings are:
- In multifamily, you can also better relate to the asset. If you're a renter, (which pretty much half of Americans, and for millenials probably 60-70%) you get to apply what you think a typical renter would behave in certain situations, whereas that's harder to do when buying office/industrial products.
- Touring core/CBD class A multifamily is a lot more fun than seeing a suburban 200K sf industrial office park or industrial warehouse (applies to my shop I guess, not everyone buys core CBD deals)
- You get to apply your industry knowledge to get better rent deals. For example, I NEVER begin lease in the summer. You always get leases 2-3% cheaper during winter non leasing season due to LRO algorithms functioning that way...
- Kinda fun to know what every apartment building in your market rents on a psf basis or which apartment is stick built vs concrete and how all that affects YOU as a tenant.
Those are just my rants, feel free to make up your own mind!