Time spent in the current cycle
How's everyone navigating the current cycle and spending their time? I run a smaller shop and deals are extremely frustrating for the past few years as plenty of threads on here have discussed. I've been selling off properties at low cap rates/high $/sf that I can't say no to, but can't find anything remotely interesting to acquire/develop. Some competitors in my market are still buying or putting up spec, but have to be using really aggressive assumptions and thin yields, a game I'm not interested in. My asset management and property management duties are pretty light, so my days are becoming quite unfulfilling.
Keep grinding and turning over more rocks to hopefully find something? Explore other business opportunities or career changes? Enjoy the lack of activity by spending more time with family or on hobbies? There will no doubt be another great part of the cycle to deploy capital in, but this current market really makes me wonder if my time would be better spent elsewhere at the moment. Anyone else trying to figure out how to allocate their time and resources?
I'm in a slightly different situation because I'm essentially a LP in my remaining deals at this point, and as a result I have nothing to manage or sell off, but "can't find anything remotely interesting to acquire/develop" summarizes my time pretty well right now.
I've been doing your options #2 and #3 far more than your #1, personally. I helped a non-profit I'm involved in get 501(c)(3) status, did some contract/consulting work for people who needed help, flirted with a career change before realizing I was just bored and decided the solution to that wasn't to be an employee again, and am doing a lot of reading and writing in my abundant spare time.
Weird time to be out on your own, as I'm sure you know even better than I do.
Sounds like we're in a similar boat, appreciate the comments. Turning over more rocks is obviously more likely to find one of the few deals out there, I'm just growing tired of talking to brokers, owners, etc when I know the deals don't work. I also did a little consulting work and a couple brokerage deals, which were at least productive work and brought in a little extra dough. I have toyed with the idea of acquiring a business, but keep coming back to: operations is my least enjoyable part of this business - acquisitions and development is what interests me, so I'm not sure running an operating business would really fill the void or bring enjoyment, but maybe. I have been spending time on my public markets portfolio to somewhat scratch the intellectual, investment, etc itch. It's always been an interest of mine, so having some extra time to devote to it is nice. I also considered just punching the clock again and managing my portfolio on the side until things pick back up. It's appealing to have something meaningful to do each day, but not sure I want to give up my freedom and be on someone else's schedule when I don't need to. I've been trying to allow myself to tend to personal matters and projects more, but can't help feel like I need to be working on my business during typical business hours, not personal projects or family time. No doubt a weird time right now.
Hah, I wish my personal projects had more profit potential. I have a lovely habit of finding or being good at things that are either almost unprofitable or that I would never want to do professionally because of the lifestyle. Real estate was supposed to be the profit center...
The most productive thing you can be doing with your time is laying the groundwork for when the market recalibrates (whatever that means). So, just general meetups with brokers not tied to any deal (people generally like beer and golfing), introductions to banks/credit unions, meetings with possible investors, getting systems built and ready to go, etc. It's mundane stuff, but it'll probably pay off handsomely down the road.
Other than that, "enjoy" the freedom you have right now. Focus on your health, your family, friends, hobbies. Real estate is a cyclical industry...it's never up and to the right forever. There are peaks and valleys. We are in a valley right now.
Glad to see I'm not the only one grappling with this. When you talk to colleagues / counterparts in your day-job business, there's so much boosterism, puffery and so-busy-right-now BS (when volume stats clearly show the opposite). At the same time, I get their posturing. If a broker/lender/investor is talking about how slow it is, they're not top of mind when something DOES materialize, so people need to put up these facades.
Regarding use of time, I just remember periods when there wasn't enough time and it there was crazy anxiety and I just wished things could be slow. Well, many of us got what we wished for and it has its own drawbacks (as described above). So yes more focus now on family time, coming into office an hour late, 2-hour lunhces, reading the WSJ cover to cover, Linkedin scrolling (lowering my IQ by the hour), etc etc.
But I'm sticking to my knitting with this philosophy: staying committed to your niche/role through the downcycles is (paradoxically) where you actually earn your money, because when it does come back (and it always does, eventually), you were the guy who was always there, always available, and that will give a huge leg up over the guys who cycled out, cycled in, cycled back chasing something else. When someone's looking at my resume in 5 years they'll say 'wow this guy's a survivor, a persistent, tough-it-out SOB who held his role during terrible cycle.' If I talk to someone in my niche who pivots, I (fairly or unfairly) think to myself wow this guy's a desperate weak quitter.
Talk to any older senior guy who's made it and they talk about these periods ("oh banks red-lined the entire state of TX from '90 to '94" .... "banks couldn't give the stuff away for years" etc etc), so I'm hoping to set myself up with that same tale.
Godspeed to all.
But yes I am bored to tears. What are some hobbies that can be pursued sitting behind a computer during the work day?
Read. Lots of good books out there.
I hate the so-busy-right-now BS. It's like, hey, I work closely with this person or that person, I know they don't have jack shit going on, but when talking to others in the industry, they say they're swamped. I guess it's part of the game, I just don't get why we have to lie. I say I'm looking and not finding anything interesting...
A mix of pursuing deals (mostly unsuccessfully), networking, talking to investors, and trying to get consulting work. Kind of depressing how slow things still are, but it will get better eventually
I'd rather be bored than force a bad deal just to stay busy. Every investor I know who stayed disciplined during overheated markets was glad they had dry powder when things finally turned and everyone else was stuck defending thin-margin acquisitions.
I agree on better-bored-than-doing-bad-deals, but take the guys doing sunbelt multifamily. If they declined to do objectively bad deals, they will have done absolutely nothing for what five years at this point? That's fine if you can survive that long, but for the vast majority, you can't survive that long. If you're in the fund business, you can't sit on dry powder for that long, because those LP's will reallocate to the guys who are making deals (even if they're objectively bad).
It's a perverse incentive structure but it exists and I feel like I have the good/bad angels over each shoulder fighting over which path to take; I suppose a moderate middle-ground makes sense.
Not being combative but genuinely curious where my argument falls apart, so hopefully someone enlightens me.
Family office life has been busy throughout the cycle.
-Completing assemblages from guys who typically don’t sell.
-Buying long-term value add/covered land plays. Stuck with a below market lease for ~10+ years but current rents are ~50% of market. We can wait longer than anyone with a 4-7 year fund life cycle.
-Occasional 1031 exchanges to diversify geographic exposure when we get a good price to sell. These purchases are usually trophy deals with term and credit that would create a negative leverage situation if we brought on financing. But fuck it, we’d rather own a generational trophy asset with depreciation benefits and rent escalations than have money parked in treasuries. If rates go down we will borrow.
-Getting more involved in asset management activities than I normally would. There are some pockets of distress and repositioning within the portfolio so I have been supervising more lease ups than I typically have in the past.
You don’t need a pro forma with an 18%+ IRR when your options are sitting on cash and you need depreciation benefits.
We've been busy with a mixed bag similar to yours, plus some niche plays that aren't driven by cycles (affordable housing, etc.) and some fee developments. Helps to be able to play different games than other people in the market. I don't take that for granted.
I certainly consider myself fortunate to be at a family office that also owns recession proof operating companies and has a long-term investment horizon.
The one knock on my career path is I really have no concept of how difficult it is to raise institutional caliber equity checks and am unfamiliar with the process. I’ve been here over a decade, absolutely killed it for them, and have the Patriarch of family convinced I am his own personal reincarnation of Richard Rainwater. I can raise institutional caliber equity checks after a 15 minute meeting and some napkin math. (Obviously more analysis goes into it than that but that aspect of the job has largely been delegated to falling under my purview). I have friends out there working 80-100 hour weeks desperately trying to get LP equity together before their DD period expires and their deposit goes hard. That being said, my friends out there raising money to do their own deals stand to make significantly more than I do if those deals go well.
Sometimes I wonder what my future looks like if my string of success here ever comes to an end. I am an absolute shark when it comes to sourcing, structuring, and executing deals but my fundraising skills and network are weak compared to others with more traditional career paths.
First step: don’t describe yourself as “an absolute shark” or anything that abysmally corny.
learning the niche fragrance industry. much more fun than RE
Ut dignissimos voluptatibus voluptatem vero praesentium possimus quis. Unde quia ratione veniam temporibus repellat. Excepturi aspernatur sed eligendi voluptatum. Et minima ea qui molestiae. Assumenda hic sunt iure deleniti nemo mollitia. Doloribus sed autem natus. Itaque quam repudiandae excepturi neque similique cupiditate aliquid.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...