Jumping from passive RRE to active CRE

[Raj Vora]

Cut my teeth on some SFR/ small multi deals in Florida over the last 6 years. Scaled a STR arbitrage biz to 7 rentals and then folded it. Always part time on the side of jobs/ businesses.

Now ready to jump into CRE - looking to invest my own funds and also partner with folks. Syndication probably best way for me to scale. Interested in multifamily, strip malls, self storage. Value add.

Just moved to Austin TX - Florida was getting expensive on residential side (tax reassessments, insurance hikes and mandatory flood insurance coming soon). Looking to invest in the triangle anywhere. 

Challenge is: I want to invest but also work on this full time. Do I go the CRE brokerage route to learn the markets, players and underwriting or try to add value to an existing syndicator in some way?

I have about a decade of proptech experience (selling into CRE and RRE), a year of residential leasing for EQR and 6 years of resi buy and hold invvesting.

Looking to connect with anyone in the CRE space in Austin, San Antonio or Houston.

[Ronald Rohde]

I wouldn't be a broker, you're already too broad in terms of asset classes. Just start underwriting deals within one asset class and make offers.

Multi and retail are wildly different, but what price point?

[Raj Vora]

@Ronald Rohde thanks for the response! Multifamily is just what I know but strip malls interest me as my uncle owns a couple and I got to see him operate them. I enjoyed talking to various business owners. 

I am looking at deals up to $1m right now. I can invest my own funds and can secure a small amount of extra funding through friends and family.

You're right, I'll just start underwriting the deals and making offers to learn. Occam's razor and all. 

I've gone broad because I want to learn about things outside of multifamily and I have experience as a consumer in strip malls and storage. Doesn't provide much advantage I grant you but for instance land and industrial are harder to wrap my head around. Is your advice to find a niche and stick to it as an investor or simply that by trying to do multiple asset types, brokerage wouldn't make sense since they're more focused. 

Appreciate the post!

[Paul Azad]

aren't apartment rents down 8% yr over yr in Austin? and with record new class A multi-family coming online now and 2025 in Austin/Dallas/Houston, perhaps focusing on multi-family would be most lucrative for you, which you already have personal experience in, over next few years then you can acquire really good value deals as prices will likely come down quite a bit, ie more supply/higher 10 yr etc. 

    I know folks who bought strip malls and multi-tenant retail in 90s for 5-10 cents on the dollar at auction from Resolution Trust Corp after Savings and Loan crises in Texas, We are now going through similar deleveraging event after super frothy period in Multi-Family due to 0% fed funds x 20 yrs and many properties bought at 3-3.5 cap rates, especially in austin/dallas/H-town. 

PS Henry of Occam died a penniless monk in the 1300s, he should have bought the Nunnery next to the Monastery and converted it to condos :)

[Raj Vora]

This is a really great point and explanation @Paul Azad thanks for commenting! You're right, lots of depressed rental rates right now and I see cranes everywhere so that supply will likely hit in the next 12-18 months. I think getting my ducks (management/ financing) in a row and seeking out a discounted MF deal makes a lot of sense. Do you have any thoughts on the office market? I read your other posts on BP and your analysis always seems very well thought out and informed so just curious. 

Haha didn't know that about Henry of Occam!

[Paul Azad]

Quote from @Raj Vora:

This is a really great point and explanation @Paul Azad thanks for commenting! You're right, lots of depressed rental rates right now and I see cranes everywhere so that supply will likely hit in the next 12-18 months. I think getting my ducks (management/ financing) in a row and seeking out a discounted MF deal makes a lot of sense. Do you have any thoughts on the office market? I read your other posts on BP and your analysis always seems very well thought out and informed so just curious. 

Haha didn't know that about Henry of Occam!

don't know much about office other than from a Macro-perspective, i've never invested in office CRE, but seems like the panic from "work from home" may be a touch overblown. Office in CBD, central business districts, are getting hammered, while office in sub-urbs not so much. Yet all office seems under price pressure, especially with rising 10yr and cap rates. I think REITs that specialize in non-CBD office are being tarnished w same brush so good deals to be had at good values. I like ARE, alexandria real estate equities, they focus on sub-urban office for life sciences labs/medical, which is something that has to be staffed in person, not from home in your underwear :), they are down 50% in 2 yrs like all the other office REITs, and by valuation have not been this cheap since 2008, but once the panic about "work from home" subsides, their value should rise back up to its historic rate. An even better option is WPC - WP Carey, which is a diversified REIt, they have been aggressively divesting all their office properties and will soon be a principally Retail REIT, but they are still priced low with other Office ones.

I usually focus on syndicated ownership of multi-tenant triple net retail, 'Cause people be Shoppin!, and screw Amazon. There has been under construction in this space since GFC in 2008-09, so now big lack of supply, and we have multiple offers on spaces and able to increase rental rates 10-11% on new leases, plus we write in CPI step-ups to hedge inflation. 

Find a narrow area, then focus on improving your expertise/knowledge and you will have an informational edge that will pay huge dividends long term because unlike most people you will know what the true value of an asset is and can calmly pull the trigger when others are scared and can calmly not pull the trigger when others blinded by greed. Good luck

[Jordan Moorhead]

@Raj Vora I'm in Austin and would be open to connect. I invest in CRE

[Raj Vora]

Quote from @Paul Azad:

Quote from @Raj Vora:

This is a really great point and explanation @Paul Azad thanks for commenting! You're right, lots of depressed rental rates right now and I see cranes everywhere so that supply will likely hit in the next 12-18 months. I think getting my ducks (management/ financing) in a row and seeking out a discounted MF deal makes a lot of sense. Do you have any thoughts on the office market? I read your other posts on BP and your analysis always seems very well thought out and informed so just curious. 

Haha didn't know that about Henry of Occam!

don't know much about office other than from a Macro-perspective, i've never invested in office CRE, but seems like the panic from "work from home" may be a touch overblown. Office in CBD, central business districts, are getting hammered, while office in sub-urbs not so much. Yet all office seems under price pressure, especially with rising 10yr and cap rates. I think REITs that specialize in non-CBD office are being tarnished w same brush so good deals to be had at good values. I like ARE, alexandria real estate equities, they focus on sub-urban office for life sciences labs/medical, which is something that has to be staffed in person, not from home in your underwear :), they are down 50% in 2 yrs like all the other office REITs, and by valuation have not been this cheap since 2008, but once the panic about "work from home" subsides, their value should rise back up to its historic rate. An even better option is WPC - WP Carey, which is a diversified REIt, they have been aggressively divesting all their office properties and will soon be a principally Retail REIT, but they are still priced low with other Office ones.

I usually focus on syndicated ownership of multi-tenant triple net retail, 'Cause people be Shoppin!, and screw Amazon. There has been under construction in this space since GFC in 2008-09, so now big lack of supply, and we have multiple offers on spaces and able to increase rental rates 10-11% on new leases, plus we write in CPI step-ups to hedge inflation. 

Find a narrow area, then focus on improving your expertise/knowledge and you will have an informational edge that will pay huge dividends long term because unlike most people you will know what the true value of an asset is and can calmly pull the trigger when others are scared and can calmly not pull the trigger when others blinded by greed. Good luck

 Hi @Paul Azad thanks again for another great response! I wholeheartedly agree that office woes are being broad brushed and therefore overblown. I'm bullish long term as I know a lot of folks my age who are excited to be back in office, even in the tech startup space. Good call on CBD vs non CBD as well. 

Agreed, definitely want to narrow my focus and become a subject matter expert. It's tricky in the beginning to get exposure to different asset types and therefore strategies, except in the academic sense via YT, BP, books & courses. 

The informational edge + patience before timing the trigger pull are sage pieces of advice as I'll admit to having ants in my pants since relocating to TX from FL recently... I'm going to take my time, learn the geography, the players and to your point hone my skills in one niche before pulling the trigger. 

Will keep posting my progress and I welcome your continued input sir.

[Raj Vora]

Quote from @Jordan Moorhead:

@Raj Vora I'm in Austin and would be open to connect. I invest in CRE

 Sounds good, sent you a text and looking forward to connecting @Jordan Moorhead

[Paul Azad]

Quote from @Raj Vora:

Quote from @Paul Azad:

Quote from @Raj Vora:

This is a really great point and explanation @Paul Azad thanks for commenting! You're right, lots of depressed rental rates right now and I see cranes everywhere so that supply will likely hit in the next 12-18 months. I think getting my ducks (management/ financing) in a row and seeking out a discounted MF deal makes a lot of sense. Do you have any thoughts on the office market? I read your other posts on BP and your analysis always seems very well thought out and informed so just curious. 

Haha didn't know that about Henry of Occam!

don't know much about office other than from a Macro-perspective, i've never invested in office CRE, but seems like the panic from "work from home" may be a touch overblown. Office in CBD, central business districts, are getting hammered, while office in sub-urbs not so much. Yet all office seems under price pressure, especially with rising 10yr and cap rates. I think REITs that specialize in non-CBD office are being tarnished w same brush so good deals to be had at good values. I like ARE, alexandria real estate equities, they focus on sub-urban office for life sciences labs/medical, which is something that has to be staffed in person, not from home in your underwear :), they are down 50% in 2 yrs like all the other office REITs, and by valuation have not been this cheap since 2008, but once the panic about "work from home" subsides, their value should rise back up to its historic rate. An even better option is WPC - WP Carey, which is a diversified REIt, they have been aggressively divesting all their office properties and will soon be a principally Retail REIT, but they are still priced low with other Office ones.

I usually focus on syndicated ownership of multi-tenant triple net retail, 'Cause people be Shoppin!, and screw Amazon. There has been under construction in this space since GFC in 2008-09, so now big lack of supply, and we have multiple offers on spaces and able to increase rental rates 10-11% on new leases, plus we write in CPI step-ups to hedge inflation. 

Find a narrow area, then focus on improving your expertise/knowledge and you will have an informational edge that will pay huge dividends long term because unlike most people you will know what the true value of an asset is and can calmly pull the trigger when others are scared and can calmly not pull the trigger when others blinded by greed. Good luck

 Hi @Paul Azad thanks again for another great response! I wholeheartedly agree that office woes are being broad brushed and therefore overblown. I'm bullish long term as I know a lot of folks my age who are excited to be back in office, even in the tech startup space. Good call on CBD vs non CBD as well. 

Agreed, definitely want to narrow my focus and become a subject matter expert. It's tricky in the beginning to get exposure to different asset types and therefore strategies, except in the academic sense via YT, BP, books & courses. 

The informational edge + patience before timing the trigger pull are sage pieces of advice as I'll admit to having ants in my pants since relocating to TX from FL recently... I'm going to take my time, learn the geography, the players and to your point hone my skills in one niche before pulling the trigger. 

Will keep posting my progress and I welcome your continued input sir.

Raj from your interest alone, I have a strong feeling you can be very successful as a RE investor. You said you live in Austin, no better way to learn than directly so, there is a syndication group Viking Capital LLC, that is buying/raising for a 252 unit property in NewBraunfels, about 45 min south of Austin, watch their webinar at their website below and they have an 82 pg slide show as well, then take a 3 hour trip to go see it, walk the property, go into office ask about the units available/leasing how the market is from the office staff, look around for quality of property/deferred maintenace needed then drive the area for other competitor properties. I think they are making a risky bet w this property, buying at a 5 cap rate, loan is fixed at 5.7% and 2 new properties about to open very nearby and who knows how many in construction phase

Villas at Sundance | Investment Opportunity (vikingcapllc.com)

You are very lucky to live in Austin, fastest growing big city in country, and a micro-cosm of the global economy, this too gives you an educational edge

[Ronald Rohde]

Quote from @Raj Vora:

Quote from @Paul Azad:

Quote from @Raj Vora:

This is a really great point and explanation @Paul Azad thanks for commenting! You're right, lots of depressed rental rates right now and I see cranes everywhere so that supply will likely hit in the next 12-18 months. I think getting my ducks (management/ financing) in a row and seeking out a discounted MF deal makes a lot of sense. Do you have any thoughts on the office market? I read your other posts on BP and your analysis always seems very well thought out and informed so just curious. 

Haha didn't know that about Henry of Occam!

don't know much about office other than from a Macro-perspective, i've never invested in office CRE, but seems like the panic from "work from home" may be a touch overblown. Office in CBD, central business districts, are getting hammered, while office in sub-urbs not so much. Yet all office seems under price pressure, especially with rising 10yr and cap rates. I think REITs that specialize in non-CBD office are being tarnished w same brush so good deals to be had at good values. I like ARE, alexandria real estate equities, they focus on sub-urban office for life sciences labs/medical, which is something that has to be staffed in person, not from home in your underwear :), they are down 50% in 2 yrs like all the other office REITs, and by valuation have not been this cheap since 2008, but once the panic about "work from home" subsides, their value should rise back up to its historic rate. An even better option is WPC - WP Carey, which is a diversified REIt, they have been aggressively divesting all their office properties and will soon be a principally Retail REIT, but they are still priced low with other Office ones.

I usually focus on syndicated ownership of multi-tenant triple net retail, 'Cause people be Shoppin!, and screw Amazon. There has been under construction in this space since GFC in 2008-09, so now big lack of supply, and we have multiple offers on spaces and able to increase rental rates 10-11% on new leases, plus we write in CPI step-ups to hedge inflation. 

Find a narrow area, then focus on improving your expertise/knowledge and you will have an informational edge that will pay huge dividends long term because unlike most people you will know what the true value of an asset is and can calmly pull the trigger when others are scared and can calmly not pull the trigger when others blinded by greed. Good luck

 Hi @Paul Azad thanks again for another great response! I wholeheartedly agree that office woes are being broad brushed and therefore overblown. I'm bullish long term as I know a lot of folks my age who are excited to be back in office, even in the tech startup space. Good call on CBD vs non CBD as well. 

Agreed, definitely want to narrow my focus and become a subject matter expert. It's tricky in the beginning to get exposure to different asset types and therefore strategies, except in the academic sense via YT, BP, books & courses. 

The informational edge + patience before timing the trigger pull are sage pieces of advice as I'll admit to having ants in my pants since relocating to TX from FL recently... I'm going to take my time, learn the geography, the players and to your point hone my skills in one niche before pulling the trigger. 

Will keep posting my progress and I welcome your continued input sir.

 Just pick one asset class and focus on it.