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Every Friday, join us as we dive into the latest in real estate multifamily with David Moghavem, Head of East Coast Acquisitions at Trion Properties. David invites top experts who know the ins, outs, and trends shaping the real estate multifamily market across the nation!
Whether you’re a seasoned investor or just curious about where the next big opportunity might be, Deal Flow Friday brings you the weekly inside scoop on what’s hot, what’s not, and what to watch for in today’s ever-evolving real estate scene.
Omar Morales (00:00)
There's a 13 mile stretch from the Everglades and the Atlantic Ocean. So there's just not that much land. This is why you're not buying the deals or finding the alpha. That is the X factor. Everyone else was like, I don't understand how they made the numbers work at the price that they paid for that land.
David Moghavem (00:04)
Everyone's talking about tariffs right now.
to have conviction beyond the number
Omar Morales (00:18)
It's a competitive game now.
And did you start in real estate as soon as you took off from like college or?
David Moghavem (00:39)
So I actually joined Tryon straight out of college, online job posting, applied, met Max and Mitch and we hit it off together when it was like an interview. You know, in college, I actually didn't even major in the beginning. was in real estate or finance. I was first in engineering and then I realized like I'm studying my ass off just to.
get by. I'm like, this isn't coming natural to me. And you got to find the intersection of like what you're good at and what you love. And I realized that I'm really good at finance and I love real estate. So then I applied. I got the analyst position with a growing company that was pretty small at the time with Tryon. We were about a fourth of the size that we are today. I would say we were only in Pacific Northwest, like Portland and the Bay Area in L.A.
Now we're in South Coast. Yeah, we're coast to coast. We have a Miami office running acquisitions here. We have our headquarter in L.A. still been with the company for 10 years. It's been an incredible run and you know, we're just getting started, I guess.
Omar Morales (01:44)
So yeah, and you guys are all action oriented in the firm for sure. I told you Max, Eric Sharkansky, a prior guest, he DM me on Twitter and was literally like, hey, I have investors I want to be in South Florida. Like I'm so and so in California, like send me deals. within like six months, you guys have tied up a Patterson court. Yeah. Hundred plus million dollar deal in Orlando. And I was like, dude, this dude like DM me on Twitter and is throwing like five million dollar deposit six months later on a deal of ours. Yeah.
David Moghavem (02:11)
Exactly and I think those relationships that you're forming just like what you said you probably wouldn't have met Max in the way you did unless you were out there and he was out there on social media and through one text one Twitter text ⁓ you end up getting deals done and there's opportunities in that way so it's good to have the person-to-person connection but it's also good to put yourself out there and see what connections you can make online.
Omar Morales (02:36)
Yeah, I read this content, it's like increasing your luck surface area. And it's just like, you're just trying to do the most. So then people reach out to you and are like, like this guy, I have something to talk about this guy. Yeah, yeah, that's pretty good. ⁓ For you then, you've been at Tryon for how many years now? 10 years. And then Tryon, since you started, has always been buying the same things like multi. I know locations have changed, but it's always been value add. Has it been cold?
David Moghavem (02:48)
Yeah.
Almost 10 years.
Yeah, it's always been multi. We started, you know, even before I joined, Max and Mitch were buying REOs and non-performing notes during the downturn, securitized by multifamily. Once that business dried up, started doing value add, rent control, apartments in LA. And then when I joined, we just broke into Portland and we were buying traditional garden style value add.
you know, change the counters, change the carpet to LVP flooring and very bread and butter type of deals. Then we started breaking into other markets. led the spearheading the market into Colorado, which is the biggest state we own in. And then we have our office in Miami. We opened about four years ago when Max moved here. And then I joined shortly after he told me to come to Miami. Yeah.
Omar Morales (03:57)
You'll twist my arm, man.
David Moghavem (03:59)
Exactly. In hindsight, best decision ever. Yeah. I mean, I don't need to tell you. It's amazing. We could talk about it. I mean, it's great. Honestly, I mean, running into you at So House, we know how the weekends are. It's beautiful weather. But from a business perspective, there's so much opportunity. It's crazy. It's and you see it. You see as both of us being boots on the ground. Yeah. I mean, you're seeing the immigration. It's very real. You go out at night and there's it's alive. It's vibrant. ⁓
There's and another thing that's so beautiful about Miami, know, L.A., they always said it's a melting pot, but it always felt more like a salad bowl. Like, you know, you different places that had different vibes. think in Miami, all cultures are really coming together and really loving one another. Yeah. And there's there's it's just it's just good positive energy here. So like as someone with boots on the ground and it translates financially to.
appreciation in real estate deals and in, you know, we're, we can go into kind of the fundamentals in Miami, but the immigration, like it translates on paper to the strong fundamentals in multi-family settings.
Omar Morales (05:12)
Yeah,
having been here for 21 years like myself, it's absolutely wild. Like I just can't explain to people how much has changed. I almost left nine years ago because I was like, man, the people in Miami aren't as like hustle bustle ambitious as like my counterparts in New York and Boston and these other primary cities. And now like my friends there are the people I meet are working at Google, Stripe, Ramp, Citadel, Coinbase. And I'm just like, dude, this is actually crazy. I'm like, none of you guys existed here like five years ago.
David Moghavem (05:42)
Yeah,
it's all COVID. mean, that was COVID is clearly the turning point and it really turned Miami into a standalone market. Yeah. If anyone says, is this just a boom or a bust? Miami in the past has been boom bust in certain downturns. This is here to It's here to stop. Yeah, it's very different this time.
Omar Morales (05:58)
think it's different.
And I started noticing it too, like when I met Matt Ferrari at True America. He's a beast. He's like, yeah, I just moved to Brickell. And like in my head, I'm like, damn, look at the CIO of like this huge company moving to Brickell, which for me was like, when I moved to Brickell 10 years ago, it was like a young early 20s, like running around type of neighborhood. And now Matt Ferrari is there, you live there, Max Jarkanski moved to Edgewater. And like, it's just like crazy to me to see partners, owners, founders being like, no, yeah, Miami is great. Like that's where I want to be and like raise a family and stuff like that.
David Moghavem (06:31)
And just honestly look at the office market where it's struggling nationally. Meanwhile, in Brickle, I mean, don't quote me on like what the true vacancy is, but it's sub 10 % probably in office and class A 830 Brickle right across from me is commanding $120 a foot. 300 % pre-lease.
Omar Morales (06:52)
Microsoft, Tomo Bravo. ⁓
David Moghavem (06:55)
Also
a lot of like you have the big names, right? But then you also have these ⁓ law firms that are following these big employers that do work and these big employers are their clients. So it's a ripple effect. So kind of like how, you know, when I was in my early 20s, long time ago, when I was in my early 20s, everyone was moving to New York. I mean, that was like a place to be. Exactly. think Miami is now.
there with New York as like a destination coming out of college of where young professionals, highly educated professionals want.
Omar Morales (07:28)
Well, now I meet people that are graduating like Harvard, MBAs, Yale, all these things and they're like coming to Miami or wanting to be in Miami. And I'm just like, amazing, cool. Like back then, we weren't even in your radar. You're just like New York, Boston, whatever it was. And to your point, it does translate to the fundamentals, right? So, you know, for sure the office leasing market, I'm not an office leasing broker, but it slowed down. But it's like from where we were, we're still net up a dramatic amount. And then same thing with multifamily, right? So we had a ton of supply.
as most markets did because money was cheap in 2021. So everybody put a shovel in the ground. So those buildings started delivering in 2023, 2024, 2025. But if you look at the construction pipeline, like we're already over the hump of like peak supply and this little sort of like, you know, this cycle, if you will. So for me, as it relates to like investing in multifamily, it's yeah, right now, maybe rents are flat in some markets. Maybe they're down in some markets, but you're catching it as the rent.
as the supply demand dynamic is changing and you're also catching it as like insurance is changing. And you might be also buying a deal from an operator that's like got in over his skis and things like that, where I feel like, yeah, the last three years has been hard to do deals. And I know you guys have been successfully active. But I really think that now and I'm curious your thoughts on this is you can underwrite through a lot of the noise and be like, man, this is a really good asset at like a really good basis in a phenomenal market.
David Moghavem (08:54)
Yeah, I think it's important nationally. There was a ton of a glut of supply in all markets everywhere and Miami was no different. I mean, when people saw the construction pipeline in Miami, it was scary. It's like, is this the same as the construction boom that Miami had before that the condos didn't absorb basically until covid? know, Miami historically has been oversupplied up until covid. Is this another one of that?
What's interesting is like when you're looking at these markets compared to other markets in the southeast that have had a ton of supply, know, we have we're in Atlanta, Orlando. ⁓ We're looking in the Carolinas and we're seeing that Miami, even with all the construction, has really strong absorption and has single digit vacancy rates kind of in the mid like five, six percent vacancy rates.
Omar Morales (09:48)
despite all the supply.
David Moghavem (09:49)
Exactly. So the inventory, I think for Miami-Dade, I always look at it as inventory expansion as like a percentage of inventory. think in Miami, it's like 13, 14 percent, which is scary. And in Broward and Palm, it's like around six or seven percent. But the vacancy rates are still very low. It's like five, six percent. And forecasting, it might get from five, six percent to like six, seven percent. Why? Because
people are moving here and people are ⁓ wanting to be here. especially with Broward, what's interesting is people are looking for affordability. So the people that get priced out of Miami-Dade are moving up to Broward, moving up to Palm Beach County. And it's just a healthy market for South Florida.
Omar Morales (10:39)
100%. So the way I see it too is if you look at Miami, for example, there's some markets that, yeah, the supply is still working through the system. And think the worst it'll get is like two months of concessions as like some buildings are all leasing up and competing against each other.
David Moghavem (10:53)
Where
are you seeing the two months? where is Wrenwood. Wrenwood, yeah.
Omar Morales (10:56)
Yeah, when we saw a ton of supply and it's sort of working itself out right now. But as soon as you drop the rents and you add those concessions, like it's not a matter of like, the people there? It's like the buildings are leasing up, you know, 20 plus leases a month. And it's as soon as the rents go down and it makes sense for them to be there, like they're going to be there. Yeah. It's not like, we build in a place that there are no people and now our building's going to sit vacant or it's going to have 15 percent vacancy. It's just not what we see.
David Moghavem (11:21)
You know, I'm curious to hear your thoughts because you and your team do a lot of land deals. Yeah. And we're at an interesting time because you can kind of build by below replacement costs and developments tougher with cost of capital and now with tariffs. Where are developers solving to? And are you seeing on the bid sheet that it's tougher now to make a deal pencil to build in Miami with all the growth going on?
Omar Morales (11:45)
Yeah, it absolutely is tougher to make development pencil right now. The biggest thing I've learned through this sort of cycle where development has really dried up is that like if you own a development shop and you have capital and investors looking at you to develop stuff, like you're going to just figure out how to develop something and you're going to try to, it might not be the best time to develop, but I need to buy land and I do because I have a development shop. just need to. You need the volume. got to do it.
David Moghavem (12:09)
You need
your vendors to be active, you need a bill to...
Omar Morales (12:12)
to build.
Correct. And for me, it's also like, hey, but it kind of makes a lot more sense to buy an existing deal below replacement costs. But like, that's not their game. That's not what their company does. And that's not what their investors want them to do. So they're like, we need to build. to answer your question right now, I'd say the most aggressive I'd heard and as it relates to like untrended yield on cost, like to solve for is in the low sixes, like six and a quarter. And that's like prime, prime real estate. There's one group, I don't want to name them, but they're building a deal at a 575 untrended yield on cost was just just like,
insane, like can buy an existing cash flowing deal for that much, but they're insanely well capitalized and long term oriented. But I would say the market is like six to six and a quarter. And then if you look outside of primary sub markets within Miami, so more so like Plantation, Davey, Tamarack, Marga, like maybe markets that some people don't really know off the top of their heads. Those markets is probably like six seventy five to seven percent on trend to deal down cost. Yeah. And what's happening in South Florida, we can talk about also the fundamentals. It's like the reason I love it is because of the land scarcity.
There's a 13 mile stretch from the Everglades and the Atlantic Ocean. So there's just not that much land. Right. And if you look at a market like Orlando or maybe some markets in Texas, like there's just land. Urban sprawl. Like crazy, you know. So for me, two things. One, it's impossible to find garden style sites like surface park garden style sites. Twenty acres just like doesn't exist down here. It has to be a redevelopment. has to be like a mall that went under because of COVID and retail and all that stuff for you to tap into garden style sites.
If you do find a garden style site, the pricing skyrockets, you know, 80, 90, 100 thousand dollars per unit just because the math pencils, if you're building, if you're not building parking like structured parking and your rents are going to be three fifty four dollars a foot, like you can pay a lot for the land. But mostly people are finding opportunities in development space, either ultra luxury condos, which I know we sell a lot of because it's Miami and mid rise opportunities, which where you find like two to three acres.
and you go and build an eight-story wrap that's probably 250 to 350 units in markets like Coral Springs and stuff like that. And those are the ones that people are underwriting to like mid to high six on trended yield on cost. But it's tough right now. It's definitely tough. You have to like lean into the numbers and really be thinking like, hey guys, it doesn't look great now. But by the time we get site plan approval, by the time we break ground, we're gonna be delivering this building in 2028 when supply is gonna be all time low, rents are gonna be growing.
David Moghavem (14:37)
They see through it because there's not that many starts right now. Correct. You kind of have to have conviction beyond the numbers to say, we're building into a low supply cycle. All the high supply deliveries are now, no one's starting now, let's build.
Omar Morales (14:40)
You can barely any starts.
I'll give you a perfect example. don't want to name the client, but a client of mine just bought a piece of land in North Miami to build multi. And everyone else was like, I don't understand how they made the numbers work at the price that they paid for that land. And I know I'm very friendly with them. So I called them, talking to them and they're like, Omar, he goes, we've been looking at this site for like the last five years and it's never been this cheap to buy this site. It's always been way overpriced. And now just at a pure basis play like
The fact that we're buying, I want to keep it vague, but the fact that we're buying this piece of dirt at this price, we know we're going to make money. We just got to, you know, the numbers might not sing right now if you put interest rates where they are today and construction costs where they are today, but we're going to be doing plans for the next 12 to 18 months. And by the time we break ground and deliver this thing, like we're super confident that this is going to work. And I'm like, honestly, like I agree, know, that land is probably cheap relative to what it was priced out over last five years.
David Moghavem (15:50)
So
they're probably sitting on the land until cost of capital and cost of construction. Yeah. ⁓
Omar Morales (15:56)
They're basically working through entitlements and, and site plan approval processes. And then would hope that when those get approved, that the markets look better to be able to break it, break ground and go vertical.
David Moghavem (16:07)
Sure, and I guess on that note, like the biggest thing, everyone's talking about tariffs right now, and I'm sure that's affecting developers underwritings on land. Are you seeing that translate on the bit sheet? Like with tariffs specific?
Omar Morales (16:20)
Yeah, the only reason I've heard it is just like we're negotiating like best and final and we need like the developer to lean in ability.
David Moghavem (16:26)
It's
like, things are crazy right now.
Omar Morales (16:29)
like my price got to go down, not up. we're like, my God. And then from pivots with the tariffs and reduces it. And we're like, all right, now you can go back. But no, heard it's like it's a real consideration, right? Understanding that lumber, steel, concrete, like all these things might just get a lot more expensive. Labor might get more expensive. So it's a real consideration. But I have no idea how you like try to quantify that. Like it's just crazy degrees of separation. Yeah, you know, you just got to buy something with enough margin that
David Moghavem (16:33)
Yeah
Yeah, it's tough to
Omar Morales (16:59)
you're safe to some respect, but it's definitely the stuff that people are talking about right now.
David Moghavem (17:04)
Let me ask you, how many of these buyers on the bid sheet for some of these development deals are merchant developers that are solving to untrended rock and going to exit, going to give it back to you when it's built and flip it versus the ones that are built to core that are going to build, they're solving to a cash flow and they're just going to hold through and this is like a forever asset.
Omar Morales (17:26)
Yeah, mostly merchant builders. Mostly. Yeah, like we just tied up a site implantation. We just put it under contracts, about 14 acres. And we had like a who's who of merchant builders like bidding for the thing. Mill Creek, Trammell Crow, Grey Star, ⁓ Altman, like all the big boys were competing for the site. Yeah. So for them, they're like, hey, we're going to build it. You know, we're going to give it back to you hopefully in three years to sell or refinance.
David Moghavem (17:51)
Yeah, and you know what's interesting is on the existing side, we're seeing that you are getting some institutions that are kind of going much longer and I think that's something that Miami didn't experience five years ago as much.
Omar Morales (18:08)
But when you say longer, mean like investment horizon.
David Moghavem (18:10)
Yeah,
that investment horizon. Miami has turned into a market where people want to go long on much further. Yeah, where it's like a, you know, a prime MSA standalone market like what we were saying before. So I was always interested to see like our developers, are there developers that are built to court here now? Which I think you may have some and but it's also yeah. Yeah, but it's also pretty lucrative as a developer to develop here. I think you might know this a little better than I do,
I guess there's like a way where you can deposit money for condos can be used for financing. You can't do another.
Omar Morales (18:47)
Yeah,
Florida has that law. So basically, if I'm building a building and I'm selling million dollar condos and that million dollar condos, the buyer, you are buying one of those condos and you put a 10 % deposit, I could use a portion of those deposits to like fund part of the construction. So basically, when the construction loan gets taken out, like you can use buyer deposits and then start using your construction loan. Whereas in other markets, it's just like that's a deposit to close on the building, but you got to go and deliver the building.
David Moghavem (19:15)
Yeah, and as a result, you see a lot of supply that comes and a lot of housing and a lot being built and you see a lot more of those merchant developers. Yeah, because it's pretty lucrative to do that. can't.
Omar Morales (19:27)
You're using people's money.
David Moghavem (19:28)
Yeah, yeah. It's like you're syndicating basically. Yeah, 100%. Yeah. So it's I think it's ⁓ Miami has good fundamentals in that regard for supply because you can do that.
Omar Morales (19:38)
So yeah, we're busy with land. Our primary business is selling multifamily. would say like 30 % of our business selling land, 70 % of selling multi. So on the multi front right now, like we put a value add deal on our contract, North, you know, call it a hundred million dollar deal, 1980s vintage, had 31 offers, which is like absolutely insane. It's funny, we sold this asset like four years ago, like the heat of the market. And we had, I think it was like 25 offers or something like that. So we had even more offers. Why? Because obviously like there's not that much inventory of like
available product to buy. Everyone's for that vintage, a good vintage. Everyone's clamoring for a deal right now. Like, you know, they haven't been as active as they wanted to be for the last three years. So they're like underwriting everything. So we had a ton of activity. And it was, again, when you get 31 offers, it's like a who's who of like, you know, funds, syndicators, best managed, like the whole thing. Yeah. So that one, I don't want to say what what deal it is, right. It's under contract, but basically went under contract in like a low five cap just to talk about metrics. Yeah.
David Moghavem (20:10)
vintage.
It
is you
Omar Morales (20:37)
Yeah, like five to five and a quarter in place cap rate and then underwriting to probably like a six plus or minus post renovation. And yeah, it's in a phenomenal market and had a ton of interest. And then we just got a listing now for a high rise in Miami. So, a hundred and twenty million dollar deal. You know, don't quote me on that. Yeah, like four, five years old. Six years old. Yeah, twenty nineteen bill. Yeah, exactly. So that one same thing you're.
David Moghavem (20:54)
Construction high-rise.
it's kind of the cap rate on that.
Omar Morales (21:04)
probably like going in is like a high fours, low fives because, so here's like perfect example. And this is like something, this is part of the pitch as well. Their insurance number right now is like $3,700 per unit per year. We went out to like three insurance brokers as we were pricing the steel to BOVIA for the owner. And the insurance brokers bids came back at 2,100 on average, right? So just from going- I'm- Yeah, it's crazy. So just from going from $3,700 per unit per year to $2,100 per unit per year,
It translated to like half a million dollars and you put that out of five cap and I'm like, all right, well, there's a ton of value that like someone else can capitalize on. So for us, it's like if you adjust for that insurance number, it ends up being like a five to five and a quarter going in cap rate. And you've got the insurance quotes like in front of you, you know? So that's kind of the pitch. ⁓ But it's a true like high force in place.
David Moghavem (21:57)
Yeah, one thing about when we were looking at deals in Miami a couple of years ago, mean, insurance completely skyrocketed. And our thesis was, and like many others, is like if you can make a deal pencil with today's insurance, like you've seen that things normalize when some of these natural disasters have had time afterwards to recover from. And you see that some of those premiums are making it a creative.
for insurers to come back in, like Amris, for instance, is totally back in. Now you're seeing insurance prices drop. So that's real upside on these deals. So I think those groups that, like you said, have that 3,700 a unit insurance come down to almost 2K, that's real upside that people are benefiting from. And I think it's going to continue.
Omar Morales (22:45)
Yeah.
100%. And for me, that is like the X factor and what separates like boots on the ground versus not boots on the ground. Yeah. Everyone I talked to like across the country is just like Miami. insurance is crazy. Insurance is crazy. And I'm like, this is why you're not like buying the deals or like finding the alpha. Yeah. Because all the guys that I know locally are like, dude, I'm getting this at a five cap, but really it's like a five and a half cap just with the insurance. I'm already getting quoted. Yeah. And that's, know,
how you generate alpha in this business. Yeah. information.
David Moghavem (23:16)
think our edge at Tryon is we have our master policy that we put together in the Southeast and we had our renewal April 1st and we already got like a 15 % decrease in our whole portfolio in the Southeast. Amazing. And you're starting to see how not only insurance is coming down, but if you have a master, you're not as prone to the volatility of a renewal.
jumping from 2K to 37. You know, you have a master, it's more diversified. You can price in an insurance number that you know isn't going to move so year over year, which is that's how that's what can kill you. You know, before when we didn't have a master, sometimes we would have a deal where we've done a tremendous amount of NOI growth through upside and value add. And then we get our renewal back and the insurance doubles. ⁓
It's like, man, we're at the same NOI now, when we bought it. So I think having that master policy is a huge edge and competitive advantage to buying deals, especially in high volatile markets like South Florida.
Omar Morales (24:23)
is
a reason why operators like you and like, you know, these other large operators have such an advantage over people just, you know, trying to do their first few deals or something like that, right? It's a competitive game now.
David Moghavem (24:35)
Let
me ask you another question, know, Mr. Miami. So where do you think is like the neighborhood or hidden market or area? And it could be all of South Florida, not just Miami, where you would where you think like you should buy or go long on that. You're like, I love what's happening here. It's story like a nice micro market in Miami or.
Omar Morales (24:59)
So let me give you all the markets where we have listings right now. No, no. I really like Coral Springs. I feel like not a lot of people. What I like about these markets, because obviously Coral Gables, Coconut Grove, like, you know, people know those markets, right? But you're paying for the fact that people know those markets. But other markets like Coral Springs, Pompano Beach, Boynton and stuff like that. These markets have now recently gotten Whole Foods, Trader Joe's, like the full grocers, full retailers and stuff like that. And there's not that much.
on a relative basis, there's not that many eyeballs chasing those types of markets. And there are the more primary markets that like just people recognize in Miami. Yeah. Right. So and the the thesis I like a lot with like Boynton Beach, Pompano and stuff like that is if you look at affordability is like driving this thesis, by the way, but things are getting so expensive that even the people I know that used to live in Miami, Doral, Coral Gables, Coconut Grove, they're now moving further north and they're going to live in like Fort Lauderdale, for example. Right. Like, hey, similar quality of life.
better on my pocket, right? And when you look at up and down the coast, basically between Fort Lauderdale, Aventura, Boca, Delray, West Palm, all names that people know, in between those markets, you've got like Lantana, Boynton Beach, Pompano, which are markets that people don't know as much. And those markets are filling in very fast. Why? Because people can't afford those primary markets. And at the end of the day, you're getting
East of the I-95 real estate, like, you know, closer to the water. You're getting accessibility to the ocean within 10 minutes away and you're getting ⁓ you're able to offer renters a home at a comparative discount to where they were 15 minutes north or south of that just because they're not in Delray anymore. Yeah.
David Moghavem (26:44)
I mean, I love that play, especially Miami, because you mentioned some other markets that have more of like an urban sprawl. we as Tryon, we've made a lot of great money and returns through first ring suburbs in markets. And part of like the issue, if you try to bet on a first ring suburb is it's too far. No one's going to live there and commute, you know, so far. Miami, everything is pretty close from like a miles perspective. And so.
these like first ring suburbs you're naming are still east of the 95. You're still getting the great quality of life there, being close to the water. And they're not that far on a map to like these prime areas. And so you get great value for these like first ring suburbs, call it, that are not that far.
Omar Morales (27:29)
And not only that, I also think the quality of life, especially post COVID where people aren't typically going to the office like nine to five Monday through Friday. They're like, I actually don't have to commute to Boca or Fort Lauderdale or downtown Miami five days a week. know, I'm in the office two, three times a week, for example. Yeah. They're like, now I'm okay living in Boynton Beach and walking to the ocean, right? And not necessarily having to be five minutes away from work. And I'm saving a lot of money. So for me, I would say Boynton, Pompano.
⁓ Coral Springs. love Doral. I grew up in Doral, so that's super biased opinion.
David Moghavem (28:01)
into each other in Dural.
Dural is amazing. mean it is poppin. ⁓
Omar Morales (28:07)
people
don't know about Doral is that there is no other like sub market, I think in Florida that has as many parks as Doral. There is like five or six like when I when I'm telling you huge parks like parks with four soccer fields, six tennis courts, three pickleball courts, pools, volleyball, eight basketball courts, football fields. And there's like six of them. Yeah. And like when I grew up there, I just remember I'd be riding bike from park to park to park to park every day.
And as much as I love Coral Gables, Coconut Grove, all these things, they have like a park. They've got like a couple of tennis courts. And like you just think about a kid's quality of life and like you just want them running around outside, like having fun.
David Moghavem (28:46)
that's
true suburban living, but still close to the urban core.
Omar Morales (28:49)
Correct, correct, correct. Yeah. So that, and I wanted to ask you on like fundraising and stuff like that, right? Because you guys obviously raise a bunch of capital. Sure. By these deals. Has that like picked up? Has, obviously it slowed down from 2021. Is that sort of turning a corner? You still, people are still sort of like, you know, gun shy to be putting out capital. Yeah.
David Moghavem (29:08)
mean, anyone that tells you that fundraising is easy right now is lying to you. ⁓ And that's just like the reality of it. Yeah. You know, I would say pre-rate hike, there was a lot of funny money. There was a lot of syndications and small checks and people were choosing whether to invest in a value-add real estate deal or some meme coin. ⁓ there was a lot of money out there trying to put it into anything that has some sort of yield. And that's what really got the run up.
That money is for the most part gone right now. And I think what's made us successful during this downturn is we have our existing investors that have vested with us through cycles and they understand where we're at in the market and they trust us as an operator and are willing to continue to invest with us. We have programmatic relationships. We have foreign capital programmatic relationships. ⁓ So I think that's been.
huge for us. So in terms of fundraising from like the funny money side, it's very tough. It's very hard to get those smaller checks to come back and they don't have that disposable capital to invest. But there are very sophisticated investors that are not institutional necessarily because the institutions right now we're seeing are on the sidelines or investing in data centers or industrial where they're seeing a little bit.
of a better play than multi right now. What that's led to is multifamily cap rates expanding to a yield where it's super compelling. And so a lot of these family offices, foreign capital, all our existing partners or ultra high net worth individuals that trust us as a sponsor are continuing to invest alongside us. And so we're having success there where we're not getting a flight, a big glut of capital from.
different directions. have like our targeted investor base that we're
Omar Morales (31:04)
Yeah, but if you tie up a good deal, you can capitalize it and it's not like, where are we going to go find this money now? Because I mean, there was a time sort of, know, 2023 as the market was changing that it was like, it was tough. was very tough.
David Moghavem (31:16)
tough.
The market was paralyzed. ⁓ People didn't know what was going on. was bank failures. And I think right now there's a little bit more stability. I know that's crazy to say with like what's happening with tariffs, but at least you have a year or two, years long worth of data points of where deals have traded. And so everyone's kind of looking at this as we're in a new reality. We know where values are. And so the investors that are putting out money, they understand what they're getting themselves into.
Omar Morales (31:46)
I think despite the volatility of the 10 year, like realistically to your point over the last 36 months, like you have seen where trades are falling into. And like if in Miami, they're like, hey, here are these value add deals trading in the low to mid 200 a door range. Like where are these mid rises trading at like 350 a door range. And it's just like, okay, there's some sort of pricing discovery. The people that were buying deals in 2023 and like early 2024.
like finding sales comps and stuff like that was impossible, right? Because your sale comp, I mean, for appraisers, it was amazing because the last sale comp was 50 % higher. But I'm just saying like you're, you're pioneering this new reality, but now you're not. Now it's like, here are three other value add deals that traded sort of within the same box. Which is the data point.
David Moghavem (32:25)
This data.
Exactly. You one conversation that we were having with an investor was the conversation, and this is a little more philosophical, but was the run up where rates were at zero post COVID, the ZERP era, as people call it, was that overpriced and now we're in where real estate should be priced today? Or was that somewhat market and now we're at a time where
everything's at a discount and it'll go back to that. And I'm curious to hear your take. My take is like, it's a little of both, right? Like with, from a cap rate perspective, I don't think we'll get back there, but from a price per unit perspective, I think we could. The answer to that is the decision of whether people want to invest right now. That's kind of like the whole idea of that.
Omar Morales (33:13)
Yeah, it's an interesting one. I never sort of thought about those two narratives. I think the answer is a little bit of both. One thing that somebody told me was, you know, when these deals traded in late 2021, early 2022, which was like peak market, they were like, do you think that is like the highest, you know, per door pricing Miami's ever going to see in its history? And like the answer is no, it's going to get back up there. Now, is it going to get back up there in three years or 10 years? Like, we don't know.
But I do think obviously some of those trades felt a little inflated. And I feel like now we are at this point where, at least to me, these deals are happening in the five to high five cap range, low to high five cap range. And I think that feels, you know, it feels not safe, but like it feels it feels right. You know, because I remember when we were selling deal, I we sold two billion dollars worth of real estate in 2021 and it like it felt it felt a little crazy. Yeah.
there was one week where we closed three $100 million deal. was like 130 million, 120 million, 140 million in a week. It was like Tuesday, Thursday, Friday. And I was like, this is crazy. I don't know what's happening. And then we would be selling those deals again in four months because their exit pricing, their exit projections, we would hit them in four to six months instead of three years. Why? Because they bought it at a four cap and then we're calling them up saying, hey, we can sell us at a three and a half cap now. And it was just so it did feel, you know, a little too rosy.
And I feel like now where we're at, a lot of sort of boxes are being checked and the basis feels right. And like we said, the fundamentals are sort of turning and getting better, which gets me optimistic about selling deals right now. Like feel like the deals that we're selling right now, I feel good about the buyer making money on those deals. It's hard to tie it up, it's hard to close it. There's volatility in the 10 year, it's hard to raise capital. But I'm like, if you're able to successfully buy deals right now, like...
with a good story at a good basis. I'm like, when you go and exit these deals in 2020, 7, 8, 9, I think you're going to be very happy camper.