August 3, 2023

Buy Real Estate Now!!!

I haven’t written a Real Estate Philosopher in a bit since I try to only write if I feel I have something useful to say – and I do now – so here goes. It is pretty simple and straightforward: Buy Real Estate Now! Right now from my catbird seat at one of the largest real estate law practices in NYC – coupled with my work with clients helping them on the business side, I see just about everyone doing the same thing, which is not doing deals.

Read More

June 1, 2023

A Solution to the Leverage Problem

I was speaking with a client just the other day.  He had a multifamily deal that required about $20M of equity.  His plan was to get about $40M of debt (i.e., 2/3rds leverage).  The target IRR return for the deal was in the mid-teens.  Sound straightforward enough?   However, right now, there are not that many investors that want to do that deal.  Part of the reason is that the cost of the debt is just too high.  It could be over 6% and even hit 7%, so it is hard to get the capital for a deal like this to make sense.   Then I asked him, “What would the total projected return on the deal – i.e., the IRR -- be with no leverage at all?”  He said about 10%-ish, and then it hit me….kind of obviously…..why are we seeking leverage if it is so expensive?

Read More

May 23, 2023

How To Make Good Real Estate Decisions

As a real estate player, you make many decisions.  These include where to invest, what markets to be in, what asset class to focus on, whether to develop a niche, who you want to hire, who you want to fire, who you want to do business with, who you lend to, who you borrow from, who you invest with, whether to build or buy or improve, whether to take high risks for high rewards or be more conservative and…..this sentence could go on for quite a bit longer couldn’t it?

Read More