Should I be nervous? 6+ months without closing anything
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[{"id": "gtqtpus", "text": "Too soon. What do you mean by family office and syndicator? As in they invest in syndications? \n\nApproach them about direct ownership?", "replies": [{"id": "gtqw212", "text": "By family office I mean small group (less than 5 people) with private capital. By syndicator, I mean they raise and capitalize deal by deal, they don\u2019t have a \u201cfund\u201d.", "replies": [{"id": "gtr9yn5", "text": "Gotcha. I think of managing your own money when you say family office.", "replies": [], "depth": 3}, {"id": "gtrj9vr", "text": "Family office is an institutional level organization that invests the private wealth of a family (or group of families). I think the proper nomenclature for your organization is private investor/syndicator (source: worked for several family offices). The tell tale difference is how the principals sustain themselves. Are they driven by fees? That is not a family office. Are they so fucking wealthy they could never do another deal and still lap the rest of humanity for 1,000 years? That\u2019s a family office.", "replies": [{"id": "gtrkw8t", "text": "We are a family office by your definition", "replies": [{"id": "gtrl319", "text": "Ok. Then have a conversation with the principal. You may find him understanding. Btw, one of the acquisition guys at my firm got axed so, not to scare you, but its a real concern", "replies": [{"id": "gttct1q", "text": "Commercial RE is in flux right now.  I'm seeing posts about firms canceling trips to ICSC this year, etc.. Office and retail is going to be difficult.  Probably lots of redevelopment opportunities in the coming years.", "replies": [], "depth": 6}], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gtqvzrl", "text": "This seems normal for 2020 for a small operation. As long as you can personally survive financially, I wouldn\u2019t worry that the principal isn\u2019t doing deals right now. How long have they been around? CRE is usually feast or famine and experienced participants know and plan for that. It wouldn\u2019t hurt to have a side gig in an unrelated field just in case the market stays wobbly for quite awhile.", "replies": [{"id": "gtqwh2z", "text": "To be clear, this isn\u2019t brokerage, it\u2019s acquisitions. I\u2019m paid a salary (which honestly makes me more worried about job security).", "replies": [{"id": "gtqx9e4", "text": "Would you feel comfortable asking what kind of reserves they have in place? If they have two years plus before they consider cutting costs, you can at least have some idea of when to worry.", "replies": [{"id": "gtqz9gb", "text": "It\u2019s a good thought but i don\u2019t know if I\u2019m comfortable asking them that, yet. This was a stange transition for me since I came from a large PE fund that could take time off from buying new deals and survive off of hefty AM fees.", "replies": [], "depth": 4}], "depth": 3}, {"id": "gubfudm", "text": "Are the \"acquisition\" criteria reasonable for the market you are looking to acquire property in?", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gtqwjt6", "text": "It varies on the principals, strategy and class but I would say small firms might average 1 or 2 $5MM-$15MM asset size deals per year. Prices are going through the roof with all the funny money. It's very hard to find value. Its too soon. Give it 1-2 years.\n\nAre they paying you a base salary? It is going to be a bumpy ride to start on a commission basis.", "replies": [{"id": "gtqys1p", "text": "Yes they are paying me a strong base salary, which honestly makes me more worried about job security. I\u2019m on the younger side with only 5 years of experience, so they certainly weren\u2019t expecting me to come in and be a rainmaker. My proposition to them when they interviewed me was: \u201cI cannot guarantee we do any deals but if you hire me I can guarantee we are going to at least vet every deal that comes to market\u201d.", "replies": [{"id": "gtswfwz", "text": "Gotcha. Nothing you can do about market conditions, but if you\u2019re doing acquisitions it might add value to look the hard way and call on owners yourself and try and run into something. I would also take the opportunity to network with all the brokers in your market and laterally with other developers.", "replies": [], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gtrhk6l", "text": "I don't know about your job performace, but the market is heated in every sense of the word. People are overbidding and pushing prices up even in the funkiest tertiary markets. Many many groups are not closing anything right now because the numbers just don't make sense.\n\nHopefully your principals understand this and are practicing disciplined valuation and underwriting hygiene, lol..It's so easy to futz a little here or there on the underwrite..maybe not expand the residual cap rate or keep that organic YoY rent growth at 3% in a place St Louis city...something, anything to be competitive in the bidding process. \n\nAlso keep in mind brokers are specialists at having us bid against ourselves with the \"call for offers\" and \"best and final\" bidding system. That's their job..they don't care if your group is successful on the backend. Hell, if it fails they'll probably be the first ones that get called to try and sell it.\n\nFOMO kills!!  So many traps right now that are exacerbated by seeing peer companies going under contract daily on all kinds of deals when your group hasn't locked one down in a half a year. Feels sort of like watching GME skyrocket from the sidelines without keeping in mind it's probably going to crash the next day. Creates an itch that gets you wondering if maybe it's you...\ud83d\ude05\ud83e\udd23", "replies": [{"id": "gttbr45", "text": "\\^This\\^  I just happen to be a broker in St. Louis and prices are ASTRONOMICAL.  Junk properties are trading at prices that would make you think you are on one of the coasts.  There are two paths for this market (1) everything ends in tears like 08 or (2) inflation/hyperinflation make all of these buyers geniuses.  I wish I could tell you which one, but I can tell you these are not normal times.  \n\nlvxn0va is also right on brokers..... I represent sellers in a niche asset group.  I am 100% ethical and above board, but my job is to get the most for the seller as possible.  That includes all of the tricks mentioned above (and more) to drive prices up.  It is what it is... and that is my job.", "replies": [{"id": "gttce04", "text": "It's the game. Try to buy differently than you sell. Believe me I'm ok with how our broker is approaching one of our large dispositions right now.", "replies": [], "depth": 3}, {"id": "gtti6ll", "text": "&gt; lvxn0va is also right on brokers..... I represent sellers in a niche asset group. I am 100% ethical and above board, but my job is to get the most for the seller as possible. That includes all of the tricks mentioned above (and more) to drive prices up. It is what it is... and that is my job.\n\nI had one of the local funds (who I have clients that are partners in) get super pissy with me a while back because they were trying to buy my listings and getting outbid.  its like \"hey I'd love to do business with you, pay more\".  I don't know how else to say that, I think people are doing stupid deals right now too and I kinda feel for the guys who need to do good deals to stay in business.  I bet its frustrating as hell.\n\nTBH these syndicators and close held funds need to understand they are competing against 1. dumb money 2. international money with different concerns than they have and 3. there is just more capital out there than ever in recent memory.  It is competitive.  If you think deals are overvalued fine but ya know your option then is to sit out and wait for a correction, no one is giving you a discount because someone else wants to pay too much", "replies": [{"id": "gttlkr5", "text": "I feel really bad for those that have to do \"good deals.\"  I'm included in that group on the buy side for my own investment purposes.  I haven't bought anything for a few years.  I am sitting out waiting for the correction because I am not (1) betting on appreciation from this market level or (2) willing to play hot potato.  Maybe I miss out, and maybe not.  I've been through market cycles and it is still really hard to sit back and watch everyone else get rich on deals.  I generally know how it ends.    \n\nThe dumb money out there is unbelievable and its everywhere..... stock market, SFR, multifamily, commercial, etc.\n\nThe niche asset group I work in very unique in that it generally will not benefit from an inflation/hyperinflation scenario as revenues are locked in very long term (10-40 years out).  Even with that prices are SKY HIGH..... \n\nIt makes no sense...... If your going to take a flyer on the inflation/hyperinflation scenario I would at least get into something like multifamily where revenue reprices annually.  Crazy.", "replies": [], "depth": 4}], "depth": 3}], "depth": 2}], "depth": 1}, {"id": "gtrjmfg", "text": "Started up a new group for a family office last year. Did three deals. Have a couple under contract this year in DD but haven\u2019t closed on anything yet. Very hot right now and incredibly hard to make things work. Family offices typically are risk averse as they are more capital preservation organizations than fee driven. However, I am dubious that you are using the correct nomenclature. If they are fee driven, yes, you should be nervous. Even if the markets not your fault (and its not) they still have to make expenses.", "replies": [], "depth": 1}, {"id": "gtrlfx0", "text": "About 80% realtors are putting their career on hold. Those have listings are from past clients. Often no showing allowed locally. Need a plan B.\n\nHave 65 agents/broker associates in 1 established office. They closed a few leases. Since broker has not paid his rent for 1 year, there is a chain on the front door.  About 60 associates took off headed for other brokerages. The others just hang their licenses there.  We are all commissoned with the exception of the office manager. She was let go. A few are doing pandemic inspections, odd cash jobs. Rest are getting handouts from government.", "replies": [], "depth": 1}, {"id": "gtrm6pq", "text": "I would highly suggest expressing your thoughts to your hiring manager and having a constructive and open conversation. It could be framed in a positive way such as \u201cI\u2019m eager in achieving my goals and being a reason our sales are growing this year. At this moment, I haven\u2019t found an opportunity so I would love to hear any feedback you may Have for me that can make me more successful\u201d", "replies": [], "depth": 1}, {"id": "gtrqspr", "text": "Yes, you should be nervous.\n\nYour job is to produce. You need to produce, and the way you do that is buying properties. That\u2019s your whole job. Find ways to get more aggressive on your underwriting \u2014 and come up with reasons to justify it.\n\nSource: I am a former acquisitions officer who was canned because I didn\u2019t buy anything for 6 months.\n\nI\u2019m a developer now because there\u2019s so much more room for creativity and less immediate pressure.", "replies": [], "depth": 1}, {"id": "gtsqnu1", "text": "Doing deals in 2020 and doing good deals in 2020 are different, sounds to me like they and you should be focused on doing the right deals and not just doing deals (which is sounds like you\u2019re doing). As long as you are producing viable opportunities and the principals don\u2019t like them, in my opinion you are doing your job. Cap rates are low in my world, hard to make acq deals work!", "replies": [{"id": "gtssvu2", "text": "Seriously, we are seeing good multifamily deals trade below 4% caps. My boss and I are shocked, I think it\u2019s prudent to be disciplined but I also don\u2019t want to lose my job lol", "replies": [{"id": "gtsthnu", "text": "Yep, big markets are 3.5% on real numbers no matter the vintage. But rates are super low so people are competing. Maybe focus on more secondary markets? Are they IRR driven or cash on cash driven? Can you help anywhere else in the firm?", "replies": [], "depth": 3}], "depth": 2}, {"id": "gttcc2z", "text": "There aren't good deals in 2020.  Just looked at a small old self storage at 60% occupancy and a 4% cap rate priced at about $2 million with vacant land all around.  It's laughable", "replies": [{"id": "gttgzgq", "text": "I don\u2019t disagree but cap rates have been going down for 20 years and rates are cheap, depends on what you define as a good deal but what\u2019s the alternative? I definitely sold deals 4 years ago where I thought the buyer was going to be buried and they\u2019ve gone on to make a lot of money, maybe we look back in 4 years and think the same about today?", "replies": [{"id": "gtucr36", "text": "It's possible, but rates are about as low as they can go so I don't think cap rates can go much lower.", "replies": [{"id": "gtui67p", "text": "One way I\u2019ve thought about this is if cap rates go from 6 to 5.4 there was a 10% reduction with 60bps, but from 4 they have to go to 3.6 or 40bps for the same percentage, so rates may not go down much more but the values could still go up from where we are, just a random thought I had.", "replies": [], "depth": 5}], "depth": 4}], "depth": 3}], "depth": 2}, {"id": "gtun70v", "text": "Same here.  We buy in the affordable housing market and pricing is obscene.  I am picking off smaller deals that the big players don't want, but anything of size is very competitive and generally going above asking.\n\nIf you worked for me I would be understanding of the market conditions and my veto power.  But I would still expect you to work deals and look for off market.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gtt42ng", "text": "Have you done a  back-of-napkin calculation based on the fees they took in from the '20 syndication and cashflow from existing deals? It's only a short-term guesstimate but it might help you understand how they support your role until they want to become active buyers again. If the principals have been through a couple of market cycles they'll be looking at the long play and it might be very smart to remain on the sidelines. \n\nI've seen similar fears become self-fulfilling by focusing on what you can't control. Maybe focus on proactively sourcing potential deals, building industry relationships, and adding tangible value to your current role would help?", "replies": [{"id": "gtt8ap9", "text": "Thanks this is helpful. They are definitely well-equipped from the AM fees and Acquisitions fees from 2020 to go a year without new deals. I guess my concern is the perception of \u201cwell how did we do 4 deals last year without this new guy, and now *with* the new guy we have nothing in the hopper?\u201d I think the answer is, they jumped on buying opportunities when covid hit, it took a lot of competition out of the  marker (temporarily). Now there is pent up demand to get capital deployed.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gtt7xkj", "text": "What type of assets do your primarily buy? Acquisitions in general is tough because the larger plays are willing to cut their return criteria to make a deal happen in this market.", "replies": [{"id": "gtt81t6", "text": "Multifamily, mixed-use, and neighborhood/lifestyle retail.", "replies": [], "depth": 2}], "depth": 1}, {"id": "gtt93az", "text": "Guessing you're geographically limited? The market is difficult at the moment, prices being pushed up, but with the pandemic tenants are struggling to keep up. Seen a lot of local retailers close up shop, but then I've seen new developments pop up just as much. Not sure what it's like that side of the pond, but I'd suggest speaking with management and sharing your concerns. Take some time to research and check what 'hidden' opportunities there may be in your area etc.", "replies": [], "depth": 1}, {"id": "gtunwa8", "text": "Try using technology [https://www.mapzot.com/real-estate-site-selection/accusite](https://www.mapzot.com/real-estate-site-selection/accusite)", "replies": [], "depth": 1}, {"id": "gubfd3a", "text": "We recommend agents moving into this field have 12-18 months of living expenses set aside. I would be concerned with no acquisitions in the last 5 months. The question is....are you having trouble finding product or is their analysis of the properties too conservative? If they want a 6% CAP in a 4% CAP market, you are wasting your time. Covid hasn't made prices drop and CAP rates increase the way the news tells people it has...at least, not in my market.", "replies": [], "depth": 1}]