All Forum Posts by: Brian Burke

I sold a few thousand units of Multifamily.  All large apartment complexes and all syndicated.  My sell discipline is to get out if I get a big pop and get out if I think values will decline.  In this case both were in play.  I bought stuff that doubled in value in two years (big pop) and I thought prices were about to fall.  And fall they did. My broker called me after doing a BOV on two properties I sold. 18 months after selling they aren’t even worth the buyer’s loan amount.  I suspect that’s the case for all that I sold. I think those values will fall a bit further. We’ve only seen the tip of the iceberg thus far.

But they will rebound.  I’ll try to get in before that happens, or shortly after it turns, and ride the wave up again.

@Jay Hinrichs yeah my CSIP was trying to get me to go to the CPPP but I’m going to be in Maui—there’s no pulling me from there. Come on out, we’ll play Kapalua!

@Jon Q., I did a lot of deals in 2021 and early 2022, but they were all selling (sold 3/4 of my portfolio and couldn’t be happier).  Haven’t bought anything in a year and a half.  Fortunately I don’t have to buy deals to keep the lights on, so no big deal.  I’ll start buying again when my gut tells me the time is right.  Not happening yet so I’ll work on my golf game instead.

No disagreement here, Bill…that was really my point—rent growth, interest rates and exit caps are “unknowable.”

You can be the best pilot in the world, but there is still some weather that you don’t fly in, and some weather that you can fly in without dying but the passengers will be really uncomfortable. You can operate the hell out of an asset and have little to show for it if the macro conditions are inhospitable. 

@Gino Barbaro this is a great question.  What is "causing concern" for me is the lack of clarity of the direction and trend of three variables, all of which are crucially important to proper deal analysis:

1. Interest rates

2. Rent growth (going forward, not historical)

3. Exit cap rates

The markets are moving, and until we get more clarity, the assumptions, the supporting data, and the theses in which that data is based are all in a state of flux.  

The market went crazy for almost a decade.  It was a great ride.  I spent 2021 and early 2022 selling.  To your question about "what's holding us back from taking action", it's important to understand what action looks like.  For me, taking action was selling, not buying.  

Right now, for me, taking action is buying real estate debt, not real estate.  Even after acquiring over 750 properties in my 34 years in this business, I still have a thirst for real estate.  But I've learned that you don't always have to buy.  Instead, you have to adjust your tactics and strategies to find what works in the environment you are operating in.

I'm not worried about "missing the market."  I learned a long time ago that it is better to be a week late than a day early.  I realize that sounds like an odd statement, but I've been both and I can say, from my own experience at least, which one has been far more profitable.  So as far as buying is concerned, I'll wait for clearer signals (or a screaming deal).  I'm not there yet.

Glad the book is off to a good start for you, @Preston Gagg!

I think that will be a problem in some areas. Not a problem at all in other areas. It most likely won't be as bad as it sounds, either. Many of these units will never see the light of day because financing will be a challenge for those projects that don't already have it. These numbers come from approved permits, not from number of units actually under construction. A more important metric is the construction/absorption ratio. This measures how many units get leased relative to the number constructed. And looking at that ratio on a submarket basis tells a far better story than looking at a National or state statistic.

No courses I can recommend, but check out @Jim Pfeifer’s Left Field Investors and this book (full disclosure—I wrote it):  www.BiggerPockets.com/syndicat... 

With the caveat of not taking legal advice from non-attorneys on the internet, in my opinion, yes, that entity could qualify as an accredited investor.  I’d be interested to see how the SEC or a court (in the event of a lawsuit) would establish the “specific purpose” of an entity…meaning I’d be careful about using this as a means to skirt the regulations. You should have solid evidence that this entity is a legitimate business engaged in this other purpose.

This regulation isn’t saying that you can’t form an entity for the specific purpose of buying securities.  Doing so is fairly common.

What this is saying is that an entity formed for the specific purpose of buying securities cannot be considered to be an accredited investor, unless all of the members are accredited investors.  An entity with more than $5 million in assets is considered to be an accredited investor if it was not formed for the specific purpose of buying securities.