How would you rate this Miami opportunity? Pros and Cons?

I have an offer to move back home to Miami to work with a small acquisitions shop (4 partners - each covering a different skill-set/area of expertise from finance/acquisitions, management, renovation, etc.) which was formed almost 11 months ago and has acquired +$35MM in multi-family rental assets (they seem to be focusing on the Little Havana area).

The catch is that the position is no pay and is a catch-as-catch-can opportunity. Essentially, I would be calling brokers and owners all day, and researching residential property to locate acquisitions that meet their criteria. Once one meets their criteria I would have their platform (equity/debt capital/Asset Management) to go after it. I was a licensed salesperson in Florida before I left, and could renew that under my old company to obtain a broker's fee on each deal as well as an acquisitions fee. I would not be an employee of this acquisitions firm though. I have been doing commercial leasing here in the nyc for the past 11 months but really want to get into the acquisition side of the business (with the longer term goal of having my own small shop or being a partner in a thriving one).

How would you guys rate this opportunity? Pros and Cons? Guidance tips in taking this opportunity (better way to structure the relationship; potential pitfalls; obstacles you have encountered in such an arrangement).

Thanks!

 

I'd be a little worried ... - you're currently in leasing, not acquisitions - you currently do commercial, not multifamily - you are currently in a different market hundreds of miles away - you are quitting your current gig less than a year in? and before that, you were a licensed salesperson in Florida? why'd you leave that gig? - last but definitely not least, the multifamily market has been hot for a while now. you'd be like the umpteenth person to "get in" to that business when it has already been recovering for years and cap rates are already low. i'm not saying i can predict a peak, but there's a saying on wall street (and i know i'm getting the wording wrong, but...) that goes something like, "First the smart guys get in and do well, then a bunch of copycats follow, and finally the real idiots get into it."

also, you say assets with an "s" when referring to the $35mn. how many properties is that? how sophisticated are these guys? if they aren't and the space they compete in is not, then you won't have the same skillset, relationships, etc to fall back on during a slowdown.

I get that you want to get into acquisitions and then own your own company, but i mean, who doesn't?

Not to be a negative nancy, but if I were a broker, I'd be constantly thinking about the next downturn. Timing is everything in this business.

 
Best Response

I wouldn't touch that. I lived in Miami for a few years and raised a multi-family fund there (buying depressed assets in the depths of 08-10). There are so many shitballs involved in RE in Miami it's amazing. And buying multi-family around Calle Ocho means you're doing B-/C and that's where a lot of the bottom feeders lurk.

Hold out and look for a real firm to join. You'd basically just be another broker out there bringing them deals and they have no interest in you. My opinion overall on no-pay/very low pay positions (unless it's pure brokerage, you're senior and bringing a book of business in from day one, and have made money in the past) is that the employer has no interest in teaching you anything and if you were in brokerage before in both FL and NYC you don't really know RE from the principal side and have a lot to learn.

There are plenty of decent firms in South Florida. Find another one.

 

Btw, I know of a multifamily developer in Florida who started out in commercial leasing. He's big. He lives in a Scarface-style mansion just steps from the water. But he wouldn't have gotten to the principal side - regardless of product type - without being good at commercial brokerage back when he was doing that. And that took many years.

It takes years to get to a point where you can to pull together a decent-sized deal on the principal side, and you don't necessarily have to be an 'acquisitions professional' to become one of those people. Figure out what you're good at, what you enjoy, etc., and play the right cards properly and you can do very well, but you can't just keep jumping from one market to another and one product type to another.

 

When I first got into real estate almost 20 years ago a large number of developers/investors started in brokerage. It was partially because RE wasn't as institutional and was a much more local game (there just weren't too many national investors and REPE was nowhere near what it is today) but also because a good brokers knows his market better than anyone. And they know how to do deals. People shit on brokers way too much (and yes there are shitty brokers who give them all a bad name). And a decent broker can make a lot of money. But like you're saying prospie, you have to stay in one market, get to know it like the back of your hand and know the players.

 
Dingdong08:

When I first got into real estate almost 20 years ago a large number of developers/investors started in brokerage. It was partially because RE wasn't as institutional and was a much more local game (there just weren't too many national investors and REPE was nowhere near what it is today)

Hm, this is a good point - I wasn't around then. And yes, the successful guys I'm talking about often did come up in the 80s. An old debt placement guy was lamenting to me that the business just isn't like it used to be; now, he doesn't see his clients at church or at the country club, because they are (often) across the country managing money for pension funds and endowments. So, I wonder if future 'players' will come less often from brokerage than they used to. But I'm still thinking no. There will always be stupid institutional money that has a mandate to place equity; guys with significant base salaries sitting behind their desks checking off boxes and reviewing complicated pro formas. But they will never have the advantage in finding deals that the broker has, because finding deals requires a full-time dedication to the local forces that are at work. It's not complicated: if other people have found out about it, then it's not as good a deal anymore. And that will never change. Because of that simple rule of thumb, I can't ever see the broker losing his grasp on the power that he has in the acquisition or development business. So, that's my 2 cents, but I'm curious if anyone disagrees.
 

For the OP, how respectable are the partners? If the group has clout (i.e., people would return your phone calls) then you can build your network.

I respect that you are trying to get back home but this is position is structured so they could let you go at the drop of a hat. It would make sense if you were looking for something else Day 1, but even then I don't recommend it.

Jump on LinkedIn and find other contacts at local groups. There are a lot of companies hiring right now

Fill the unforgiving minute with 60 seconds of run. - Kipling
 

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