Getting an Edge in Real Estate Market Chaos

11/21/23 • 45 min

The Real Estate Market Watch - current events through a real estate lens.

My guest today is David Moret, founder and president of Highline Real Estate Capital. David brings a wealth of experience and a unique perspective especially in the wake of the Federal Reserve's rate hikes.

His insights are particularly timely as we weave our way through a market that's shifting from its previous exuberance to a phase marked by strategic caution and adaptation.

David discusses the launch of Highline’s Real Estate Fund One, set up as a direct response to the current market dynamics. He talks about the fund's objectives and strategies, emphasizing the need for agility and foresight in today's economic climate, and discusses how the fund is positioning itself to capitalize on market dislocations.

You’ll learn about Highline’s take on the current significant decline in deal flow and transaction volumes and why owners are reluctant to sell at this point in the cycle. David discusses the 'extend and pretend' strategies adopted by banks, a trend that's creating a unique set of challenges and opportunities for investors.

David's approach to sourcing deals is a masterclass in strategic thinking and adaptability. He talks about leveraging a network of brokers, forming strategic partnerships, and using advanced search tools for targeted acquisitions.

In this episode, you'll gain a comprehensive understanding of the current commercial real estate market dynamics. David's expertise offers insights into managing investment portfolios, adapting strategies in a fluctuating economic environment, and the art of identifying and capitalizing on investment opportunities in a market that's constantly evolving. Join us for a deep dive into the world of real estate investment with one of the industry's most astute investors.

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In this brand new podcast series at GowerCrowd, The Real Estate Reality Show, we take a realistic view of commercial real estate investing, providing pragmatic insights for passive investors who are looking for sponsors they can trust and distressed opportunities they can invest in.

You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

You’ll learn how to build your wealth while protecting your capital investing as a limited partner in commercial real estate investments, even and especially during an economic downturn. Subscribe to our free newsletter here.

His insights are particularly timely as we weave our way through a market that's shifting from its previous exuberance to a phase marked by strategic caution and adaptation.

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You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

Previous Episode

The Hidden Risks of Real Estate Crowdfunding

Today’s guest Ian Ippolito, a seasoned investor known for his conservative investment strategies, discusses his take on the real estate market's first significant recession since the advent of real estate crowdfunding.

Ian draws parallels between the initial impact of COVID-19 on multifamily properties and the current challenges facing the office sector. He discusses the office market's decline as a direct result of the remote work revolution leaving a surplus of vacant office space and a swatch of struggling deals, and talks about the impact on multifamily of the end of the rent increase era and the ensuing strain on investment models that failed to anticipate the current trends.

You’ll hear about the importance of taking a conservative investment approach and how fixed vs. floating rate debt and leverage levels measured against value (LTV) are used to protect principal as a priority to the lure of exponential but risky returns.

In light of the recent troubles CrowdStreet has had, Ian talks about the critical role of due diligence for investors even (or especially) when investing via a platform. He reflects on the recent incidents of fraud within the industry, stressing the need for investor vigilance and the responsibility platforms bear in maintaining transparency and integrity.

Offering advice to sponsors, Ian encourages a conservative approach, focusing on long-term survival and stability rather than short-term gains. His message is clear: in a market bracing for a potential massive repricing of assets and grappling with the implications of a high-interest rate environment, prudence is key.

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You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.

Next Episode

The coming banking crisis

Today’s guest, Lew Feldman, is a prominent figure in real estate crowdfunding and the founder of Heritage CRETech. Lew shares insights from his time in the world of real estate crowdfunding and his role on major advisory boards, discussing its current state, trends, and future prospects.

Lew begins by examining the challenges and adaptations within the real estate crowdfunding industry, especially under the pressure of rising interest rates. He discusses on the performance of leading platforms like Fundrise, RealtyMogul, and CrowdStreet, highlighting how their business models and investor bases have responded to the fluctuating market conditions. This discussion provides a view of the sector's resilience and adaptability in the face of economic shifts.

Our conversation then pivots to the broader real estate market, exploring the impact of increased interest rates and liquidity issues on financing options and Lew discusses the struggles facing sponsors and investors due to these challenging conditions.

A significant portion of our conversation covers governmental interventions in the real estate industry. Lew elaborates on historical and current government programs, emphasizing their role in supporting and stabilizing the market during downturns. Additionally, he touches on the transformation of crowdfunding entities into broker-dealers, bringing more fiduciary responsibility and transparency to the industry.

Venture capital's influence on real estate crowdfunding is another critical topic Lew addresses. He explores how this type of investment shapes the business strategies of crowdfunding platforms. Moreover, he provides predictions for the future of the sector, considering the ongoing economic and regulatory changes.

Lew also discusses sustainable development initiatives and contrasts publicly traded REITs with private real estate markets, highlighting their differences in liquidity, transparency, and market responses.

Concluding with his predictions for the commercial real estate market in 2024, Lew offers a unique and informed perspective on navigating the complexities of today’s market. This podcast is a must-listen for anyone interested in real estate crowdfunding, market analysis, and strategic investment planning in the real estate space.

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You’ll find no quick fixes or easy money ideas here, no sales pitches, big egos or hype.