Finding our own Path

A little over a month ago I attended a dinner in Houston sponsored by a local title company aimed at wooing real estate investor clients. This was the same day we closed on our last deal and I had just jumped off a plane to find Wildhorn’s next opportunity. A group of about 15 investors, all in the multifamily space, were gathered and naturally the topic of equity came up; specifically how everyone was sourcing capital for their deals.

I explained to the table about how we invest significant time into marketing activities with the goal of providing incremental insight and value to our investors. These include things like managing social media accounts, deploying email newsletters and writing unique content focused on what we’re learning (amounting to articles just like this one). After I finished talking you would have thought I had grown a third eye. No one else at that table had ever heard of, or even considered these activities as part of their day to day operations. They were all using “traditional” equity sources–REITsReal Estate Investment Trust: financial operation designed to allow individual investors to invest in large-scale, income-producing real estate assets without having to directly own or manage the properties themselves. View Definition, Funds, Family Offices, Private Equity shops and the like. It was clear that we were both seeing success in our business, but we were reaching that success in completely different ways. One old and one new.

A few weeks later the Wildhorn Leadership team had the chance to attend and speak at two different real estate focused conferences. Reed attended (and actually MC’d) the Multifamily Mastery event in Nashville, while I spoke on a panel in Chicago at the Middle Market Multifamily Forum. We each came home with a slew of lessons learned and were eager to share with each other some of the key insights we found. However, what became quickly apparent was that the things we learned were from two totally different universes in the real estate space. It echoed what I had experienced at the dinner in Houston and reinforced that there are subscribers to the old and new ways of operating as a real estate investor. What Reed and I found even more interesting is that we weren’t sure which universe Wildhorn Capital was living in.

Reed’s experience at Multifamily Mastery is totally what I would call the New World. The audience came from a huge variety of backgrounds with varying levels of real estate investing experience. Many had full-time jobs and were investing as a side hustle, so the conference took place on a weekend to accommodate. The dress code defaulted to jeans with a blazer. In terms of the content, training sessions were focused around building a strong brand, educating yourself to be a thought leader and leveraging platforms for effective distribution of communications. Facebook live streams and selfies were common sights, all in the name of #learning.

My experience at the Middle Market Multifamily Forum was the Old World. Think institutional equity managers all sporting suits and ties. I came away with a lot of tactical advice and good conversation about Cap Rates, Improvement Plans and the general state of the Real Estate market. It was all good, but just different. The general atmosphere was corporate, structured and all business.

After interacting with all of these investors all over the spectrum I think that Wildhorn, in our current life cycle stage, is right there in the middle somewhere. We aggressively explore new strategies and tactics to grow our business quickly, but still have a foundation in mastering the basics and conservative underwriting. All in all, I like to think it’s working for us. We have a new deal under contract that will take us to 1100+ units in the past 12 months. What’s even more exciting is that we’ve sourced all our equity for these deals ($42mm and counting) from individuals and private investors. So while we’re talking to all the old world groups and keeping a foot planted in that realm, we’re also acutely aware we’re coming from the new world and will remain true to our roots.

For all the investors reading this, what do you see as the pros and cons of each world? Which one do you like better?