Wheres the money at?
Background: Multifamily value add family office/ Development Lender
Where do you all see multifamily/RE as whole going long term? Everyone always needs a place to live, but jobs are what drive migration, AI looming on the horizon, a high interest rate environment, birth rates declining. Insurance premiums remaining elevated and likely increasing given the volume of disasters occurring, inflationary pressures on goods and services, property taxes rising in markets built up over the last 10 years (i.e. Austin).
Are the only people making money these days, those at megafunds chasing core investments?
Bored af.
Waiting for people to hit you with the "HAHAHA you dont make money as a W-2 employee! IDIOT!"
FWIW, this industry pays terribly. You need to have money going INTO real estate to make good money.
No, you just need to have some unique knowledge or insight and not do the same fucking thing as every goddamn moron.
Having money helps a lot, and it is a requirement if all you want to do is the same thing every other asshole is chasing. If you have an actual business plan or an actual moat, you can still make a ton of money in this industry.
Most people on WSO are extremely risk averse and extremely young. You all want to be guaranteed millions of dollars of comp without knowing anything about the industry and without wanting to take risk (e.g. putting money up). That's banking.
Have a little creativity. Be willing to take a little risk. Clearly you are unwilling or unable to do either, which is hardly surprising given your attitude, but don't spread this godawful advice. Or at least acknowledge the fact that your opinion is constrained by your lack of knowledge, lack of imagination, and lack of courage.
well said
You know, you always say this dumb shit. You just parroted what I said and you don't even realize it. I literally caricature'd you and then you go and do exactly what I made fun of you for lol.
I'll say it again: You need money to make money in real estate. It pays employees terribly. Idk what the fuck kinda "moat" real estate this fuckin guy is developing.
Only way to make money as a w2 is being a part of a transaction and raking in fees. Jumping ship isn’t likely. I see the more experienced members of my team with larger networks and even they have no real business plan/ outlook. It could always be worse but I joined in 2020 and since then just selling and AM. Need to nut up and make something happen in my life.
Then go to banking. No one is stopping you from working 90hrs a week.
Not sure this was the question - I think it’s more generic on what kind of strategies actually make money. Which can be applied to W2 or working in your own.
I don’t think we need to have another heated debate on general wages lol
Can still make good money if you source deals and share fees and promotes. Don't really need to have skin in the game. Lots of small to medium size firms do this with their employee .
Everyone and their mother is in real estate now. Its become so institutionalized even in smaller tertiary markets now where its hard to make alpha. Before, scale and knowledge would set you apart. Theres simply too much pent up capital for more than a decade now that its hard to take all that money out. Yes, theres so many significant head winds. Insurance, taxes, everything is increasing significantly whereas rents growth is underperforming. The issue is everyone is surviving by selling their assets to the next bagholder. Everyone has lucked out by getting bailed out. There was a time when insurance was cost $300 per unit for Class A stuff in coastal FL (yes im old). Now you're lucky to even get insured.
To answer your question, its becoming harder to generate alpha. Does that mean its impossible? Absolutely not. You just really have to develop expertise in a specific niche. But RE has becoming extremely difficult to navigate because its so saturated. I remember a time when people would laugh at Class B multifamily in the sunbelt. Nowadays, its becomes scaulding hot. Everybody is doing it.
If you look at every major PE fund, their capital allocations to CRE have been at the highest level ever compared to decades before. There is a theory/belief though that will revert back to the mean as the era of easy money is gone, but theres still no evidence to justify yet.
The money is all in 2011-2021.
Should have been doing ground up deals instead of going to prom, nerd.
Hahaha 😭
It is kind of wild though. If I was say 2-3 years older or got into development 2-3 years earlier, my net worth would probably be 2x-3x what it is.
Post GFC multifamily, pre 2022 industrial, pre deepseek data center
Multifamily is largely back to where it (and most industries) should be - you make money from scale or owning your niche, and then creating a moat around your business. That’s B school 101. Not saying it’s the most complicated asset class but buying, capitalizing, operating, & successfully selling multifamily shouldn’t be easy - it just happened to be easier than ever last cycle, especially fall ‘20-summer ‘22. I presume most WSO readers joined the industry or were in undergrad during that period so it’s their sense of “normal”. That kind of national rent growth plus virtually 0% interest rates likely never happens again. You should also be praying it doesn’t, because that means we likely had another GFC-like event and the vast majority of us will be out of jobs - potentially for years.
Amen. Every whiner on this site complains that it's "impossible" for them to become wealthy in real estate doing the same exact thing as everyone else, taking no risk, and having no specialized knowledge. As if they're owed nine figures of net worth by using someone else's money to buy a building, putting up no guarantees, and doing nothing except waiting for rents to go up so they can flip after 18 months
There's a lot of stuff going on in large private structured / direct credit. I am aware of a few bulge brackets that are spinning up new platforms for this purpose. Just take a look at how fast Blue Owls RE exploded.
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