We’re talking real estate today. Brad walks us through the ins and outs of finding a good deal in real estate — covering the basics and then diving deep further into the episode.
Everybody should have some real estate exposure outside of their current residency. You don’t want to think of your home as a real estate investment so you should get out there and look at some real estate deals!
This episode we discuss the three main reasons why real estate is a worthwhile asset class to be looking at, what cap rate is and why it’s an important determining factor when looking to invest, how to measure the risk of return, and when you should ultimately decide to “pull the trigger” in a deal.
[:27] Why we’re talking real estate today and the three reasons why it’s a worthwhile asset class.
[7:17] As a sponsor, how do you know you’ve found a good real estate deal? What do you look for?
[8:25] Clarifying what ‘cap rate’ is and what it indicates.
[10:50] What other metrics does a sponsor look at when trying to find a good deal?
[14:13] The different real estate strategies and the opportunities you’ll see as a passive investor.
[15:42] How do you know how much you want to pay for something? And the right way to consider cap rate in a deal.
[19:03] How to decide when to ‘pull the trigger’?
[21:05] The most important but toughest aspect about looking at an investment: Figuring out what your annualized return on a deal will be and how certain you are that you’ll get that.
[22:20] Considering cap rate and measuring the risk of the return.
[23:40] Ultimately, it comes down what your annualized return is going to be and how risky it is.
[24:52] How to think about growth in real estate.