By Michael D’Agostino
Commercial real estate brokerage is a skillful balance of art and science. The middle market encompasses many personas and investment needs. Being able to appeal, present and understand the investor profile of each persona is the art of the deal, while being able to uncover the numbers to back the deal is the science.
Who is a mid-market investor? You could say there are four distinct personas that encompass this multifamily niche.
- Local owners- people that buy $1M of investment property each year or every other year
- Family shops- owners who have been acquiring apartments for generations
- Private equity shops- a small team of professionals buying and selling investment property
- Institutions- pension funds, banks and publicly traded companies looking for non-core deals and portfolios
Each of these personas have different needs, but they all require a broker to know their numbers. A good broker must have a deep understanding of economic factors such as interest rates, knowing what’s happening in the stock market, the unemployment rate of the market and other impactful data as well as know the numbers related to the investment. Understanding statistics, current rents and everything that builds on each other are what investors need to know.
The numbers should answer the question “why does the investment make sense?” A mid-market broker understands that. Like the stock market, an investor shouldn’t buy one thing and hope for the best. It’s best to help the investor build a portfolio. Building a portfolio is similar to legging into the stock market, the idea is to get the best exposure to the market throughout time. Similarly to the stock market you can’t time the real estate market, so sticking to a plan of buying one building a year spreads out the market timing risk which should protect against a major downturn in the market
In being able to explain why purchasing the multifamily asset is a wise decision, a good broker presents the numbers in the most up front and honest way. Integrity and honesty are the core of being a good broker. Honesty with the numbers and the parties involved are the traits that take a broker from a one-time service provide to a go-to resource.