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(1/x) Want to highlight the best podcast episode I've listened to this year, Ofer Yardeni on @NYMultifamily's "Behind the Bricks". Real estate fintech has been a really hot area for investment (and conjecture) and Ofer had the best answers I've heard for where MF RE is headed
(2/x) Taking a step back, he's been investing in NYC MF for 30 years and has been through several cycles and he said that what's allowed him to make it through cycles is his ability to see how the industry is changing, both in demand / supply trends, but also in technology
(3/x) Ofer believes that the 12-month residential lease is on its last legs - tenants will want a variety of options. Lease for 3 mos, 6 mos, 2 years, furnished, unfurnished, wifi / cleaning included essentially a longer-term hotel with a suite of upcharges that a LL can provide
(4/x) He has embraced technology which creates WAY less friction for customer acquisition - you can go directly to Stonehenge's website, get qualified for a lease, see floor plans, tour units, apply, and sign a lease without having to go to an office or deal with an agent.
(5/x) You don't have to put up a security deposit because there are now companies that will insure your credit - you get a lease done in a matter of minutes. Tech won't replace the traditional brokerage - it's streamlining pain points in the rental / sales processes
(6/x) and the landlords that understand this and provide that frictionless experience are going to be able to a) lease units more quickly and b) charge premiums.
(7/x) The investment side was really interesting as well. He used a case study of a building he bought on the UWS back in 1995. He paid $80/sf, rents were $800, and replacement cost was $140. Building appraised at $800/sf, replacement cost is probably $1,400, and rents are $1.6k
(8/x) He didn't speak to how much cash he's pulled out of it, but the NAV has 10x'ed and I bet the equity has done multiples of that. He bought at a 2% cap rate, took it to about a 5% in 5-6 years, and then it's just about riding the market
(9/x) Not every deal is a winner, and I'm sure he's got far worse returns than that elsewhere He spoke about a portfolio of 20 buildings he recently sold that did between 10%-13% IRR's over 20 year holds - where else can you get that type of risk-adjusted return over 20 years
(10/10) than gateway RE? Adjusting it for the tax advantages and it's probably more equivalent to a mid-high teens IRR in other asset classes. Anyway, link here: player.fm/series/behind-… go listen!
