One Invests in the Guy behind the Deal, Above All else

by Joe Stampone on January 29, 2012

Reading the January edition of Bloomberg Magazine, I came across an interesting quote from a segment titled “Advice from Billionaires”

When asked “what’s the best advice you’ve received”, one billionaire replied, “good deals are like bus stops; there is one on every corner.” This advice illustrates that the investor is not as interested in the deal as in his dedication to it. One invests in the guy behind the deal, above all else.

Working for a real estate owner/operator, I’ve witnessed this a number of times. The fact remains that wealthy individuals have their pick of investments. Many times however, ultra wealthy individuals don’t just want to hand off their money to a Blackstone or Carlyle fund; they want to be active in their investments and have a personal relationship with the person actually handling their hard earned money. This is the major selling point of smaller real estate operators. Small owners provide LP investors the opportunity to have an actual say in the operations of the asset and interact with the general partners.

Owner/operators therefore must rely, not just on relationships, but on their reputations as operators and businessmen. How do you get a great reputation? As Peter Linneman says, “always do the best to fulfill what you said you would do, help others simply because you can rather than because you believe it would indirectly benefit you, and do this for the next thirty years, and you will have a great reputation.”

What do you think?

{ 0 comments }

The Disconnect Between Real Estate Research and Market Outcomes

by Joe Stampone on January 19, 2012

Dr. Sam Chandan of Chandan Economics is amongts the commercial real estate industry’s leading voices in relation to capital and credit markets and the dynamic relationship between the economy, regulation, and market performance.

I was reading an interview with Sam and he said something that I found interesting.

One issue I am very conscious of is the disconnect between the research function and market outcomes. We now have access to a wealth of data. A decade ago, the industry was far less transparent. At the same time, the reality is that information is not yet driving markedly better decision-making when it comes to managing risk. We have some work to do here.

I’m not entirely sure why this is the case, so please weigh in if you have any ideas. My hunch is that people simply aren’t taking advantage of the plethora of data at their disposal.

I wanted to lay out a few of the major sources of real estate data. The following companies will provide you with all the market data you need to make informed decisions and ensure the deal upside is sufficient for the inherent risk:

Real Estate Information Services (REIS)
REIS provides real estate practitioners with transaction data including rent comps, sales, and construction activity for apartment, office, retail, and industrial property. Users can refine the information by various data points and center around a specific address.

REIS also provides market data including vacancy, inventory trend, and their own economic forecasts.

Real Capital Analytics
RCA is similar to REIS, but covers transaction data all across the world. RCA provides sales transaction data, capital trends reports, troubled asset and distressed debt tracking, and a variety of special reports. However, RCA does not provide sub-market data.

Chandan Economics
There are two big services that Chandan Economics brings to the market that are not directly addressed by other services. First is their Real Estate Economics service which tracks real estate trends in the context of the broader economy and  capital markets. It informs investors and lenders understanding of how macro trends, policy developments, and capital and credit flows into and out of real estate are driving outcomes in the industry.

The second service analyzes the quality of loans on both a macro level as well as specific loan pools. This research is intended to empower debt investors, lenders, and regulators with a better understanding of trends in loan quality and credit risk.

Property and Portfolio (PPR) Research
PPR (owned by Costar) provides objective thinking in analyzing and forecasting real estate markets. PPR uses a unique set of analytic tools to provide actionable insights to investors.

These are just a few of the many sources  real estate practitioners have at their disposal. So why, with this wealth of data at our finger tips, is there a disconnect between what real estate research is telling us and market outcomes?

P.S. Here are a few other research tools which are out there:

  • aptindex.com
  • city-data.com
  • blacksguide.com
  • icsc.org
  • tortowheaton.com
  • economy.com
  • ccienet.com
  • propsourcebook.com
  • sior.com
  • columnfinancial.com
  • epodunk.com
  • Axiometrics

 

{ 6 comments }

BiggerPockets Rethinks the Real Estate Investment Conference

by Joe Stampone on January 13, 2012

BiggerPockets Real Estate Investment SummitIf you’ve spent any time in the online commercial real estate space, you’ve come across the online network BiggerPockets. BiggerPockets is a one-stop shop for real estate investors to participate in lively forum discussions, network with like-minded professionals, or list investment property. Whether you flip single-family homes or manage a massive portfolio of institutional-quality multifamily properties, BiggerPockets has resources and tools to help your business.

In a recent discussion with founder Josh Dorkin, I learned the history behind BiggerPockets. As part of his continued goal to create a network that brings credibility to an industry that often carries an unwarranted stigma, Josh has created the first annual BiggerPockets Real Estate Investing Summit and Expo which will take place at the Colorado Convention Center March 23-24, 2012.

Josh has arranged a diverse set of speakers who specialize in real estate investing, marketing, and technology. This is not your typical capital markets conference where you find the Head of Real Estate for Blackstone or the CEO of a major fund. Here, you’ll find tech entrepreneurs, small business owners, and individual investors who you can relate to. You’ll receive advice which you can immediately apply to your business.

I got to ask Josh a few questions about the conference. Hopefully his insight can help you determine if the conference is the right fit for you.

Enter Josh:

What’s the nexus of the idea behind the conference?
For years, our members have encouraged us to bring the no-nonsense BiggerPockets attitude to the live event space.  They have been telling us that they’ve grown tired of showing up for events where they don’t get what is promised of them.   Our goal is to create a credible, no-upsell conference where visitors get to learn from successful, active real estate investors and professionals.  We want to create an environment where networking and deal making come about naturally, and we want people to walk away realizing that the old way of doing business doesn’t have to be the only way.

Describe the lineup of speakers in three words.
Credible, Successful, Passionate

What type of person would benefit most from this conference?
Our goal is to make the conference one where both novice and experienced investors can both benefit through a diverse set of speakers who will cover a broad set of topics.  Ultimately, we want active investors and real estate professionals, as well as those people who are thinking of getting involved in the industry to feel like they are getting value, both from the speakers and from the quality of attendees.

I don’t care how much you know about real estate investing, you can’t know everything about everything when it comes to this business – everyone who attends will walk away with either some new tips, ideas, tricks, techniques, colleagues, business partners, or deals.

Where do you see BiggerPockets in 5 years?
In five years, I see BiggerPockets as continuing to lead in the real estate investing space and growing to become a one stop shop where real estate investors and others who work in the business, can come to network, learn, do business, find and make deals, get information and data, manage their business, and much more.  The goal is to create a destination that makes their business lives easier in every capacity.

Say someone wants to group this conference with a ski vacation. What’s your favorite mountain and why?
I don’t really think that you can go wrong with any of the mountains in Colorado.  I’ve skied Copper, Breckenridge, Arapahoe Basin, Vail, Beaver Creek, Aspen, Aspen Highlands, and Snowmass, and I like all of them.  If forced to pick one, I’d go with Beaver Creek because I’m a huge fan of the Birds of Prey both for the challenge and because they are never crowded.

I encourage everyone to consider the BiggerPockets Real Estate Investing Summit and Expo. You never know who you’re going to meet or what you’re going to learn that’s going to change your business.

And hey, if nothing else, take the short ride out to Vail and catch some fresh pow in the back bowls.

{ 5 comments }

← Previous Entries