He Bought After 2008, Sold at the Peak, and JUST Bought Again
BiggerPockets Real Estate Podcast Podcast Recap
Published:
Duration: 38 min
Guests: Brian Burke
Summary
Brian Burke discusses his strategic approach to real estate investing through market cycles, highlighting the importance of timing and recognizing opportunities in distressed assets. His insights into current market conditions and predictions for the coming years provide a valuable framework for...
What Happened
Brian Burke, a seasoned real estate investor, notes that some real estate market segments are experiencing discounts up to 60% lower than a few years ago. He has a reputation for predicting market cycles and timing his portfolios effectively. Burke forecasts that the real estate market will 'end the dive in 25, it's fixed in 26, and buyer heave in 27,' indicating a gradual recovery followed by a surge in buying activity.
Burke highlights a significant shift in seller attitudes, with more owners now acknowledging the possibility of having to sell at a loss. He recently capitalized on this trend by purchasing senior housing properties at 45% of their loan balance through lender short sales. This strategy aligns with his prediction of more short sales in commercial real estate, particularly in large properties over 50 units.
Multifamily delinquency rates are at their highest since the Great Financial Collapse and are on the rise. Burke suggests that investors should be sector agnostic and seek opportunities where they exist, as he did with senior housing. He believes that rent growth and expense compression could enhance the value proposition of multifamily properties.
Finding real estate deals requires a proactive approach, according to Burke. He emphasizes networking with brokers, property managers, and attending conferences. Potential avenues for deal discovery include foreclosures, courthouse auctions, and local banks with small balance commercial lending, which often have distressed properties.
Burke advises networking with bank presidents and brokers, but he points out that focusing on management companies, brokers, and smaller commercial lending banks may yield better results. This approach can uncover opportunities that are not immediately visible in the broader market.
The episode also touches on the residential real estate market, which has weakened with the lowest transaction velocity since the early 1990s. Despite this slowdown, Burke sees opportunities for long-term holders due to softening prices and fewer landlords. The exit of flippers from the market presents opportunities for new investors.
Burke's book, 'The Hands Off Investor,' serves as a guide for evaluating syndications, emphasizing the importance of assessing both the deal and the operator. He cautions investors to be mindful of timing and the types of assets they invest in, particularly in multifamily syndicates.
Key Insights
- Brian Burke predicts a gradual recovery in the real estate market, with significant buying activity expected by 2027. This forecast implies a strategic waiting period for investors aiming to capitalize on future opportunities.
- Multifamily delinquency rates are increasing, reaching levels not seen since the Great Financial Collapse, indicating potential distress in the market. This trend may lead to more short sales and opportunities for investors to acquire properties at significant discounts.
- Networking is crucial for uncovering real estate deals, with Burke emphasizing the importance of connecting with brokers, property managers, and smaller commercial lending banks. These relationships can provide access to distressed properties and unique investment opportunities.
- The residential real estate market is experiencing a slowdown, with transaction velocity at its lowest since the early 1990s. However, this creates opportunities for long-term investors as prices soften and competition from flippers decreases.