For the AppFolio State of the Real Estate Market Roundtable, Quincy Oswald, Product Manager at AppFolio Investment Manager, sat with Lauren Wells from 7e Investments, Heath Binder of LBX Investments, and Devin Elder from DJE Texas Management Group to explore the current dynamics of the real estate market and share expert insights on investment strategies and the impact of technology, as well as their respective outlooks for the future of the industry. Here are some key takeaways from the roundtable.
Navigating Market Trends
The discussion kicked off by emphasizing the importance of understanding real estate trends in the context of the broader economy. Panelists shared an overall optimistic view of the real estate market, noting opportunities despite challenges such as high interest rates and economic downturns.
Lauren remarked on the resilience and opportunities within the distressed mortgage market, especially during economic downturns:
“From the asset class that we’re wheeling and dealing in, there’s a lot of opportunity coming our way.”
This optimism was echoed by Heath, who pointed out the transformative sentiment in retail real estate:
“If you go back five years, you had all these narratives around retail that were predominantly negative. There was the retail apocalypse and the fear that Amazon was going to eat everybody’s lunch. As we looked at 2024, it’s almost the exact opposite. Our occupancy rate is in the 90s. We’re actually seeing a lot of core plus opportunities hit the market, not as many value add opportunities as we’ve seen over the past couple of years because, frankly, a lot of the best retail is doing really, really well.”
Devin Elder from DJE Texas Management Group discussed the diversity of their portfolio and the strategic adaptations necessitated by economic conditions, emphasizing, “We play in a couple of different asset classes, so because we think there’s going to continue to be some opportunity on the buy side for multifamily, I’ll give it a positive outlook.”
Capital Raising and Investor Relations
Regarding capital raising, Devin Elder explained the shift toward a fund model to accommodate varying asset classes, stating, “We started a debt fund in January 2023. We’re looking to grow that to $25 million this year.”
Lauren talked about expanding into the broker-dealer space, utilizing technology to streamline processes: “Most of our capital will be coming from the broker-dealer space towards the end of the year and into 2025.”
Devin mentioned a decrease in investor demand for multifamily deals due to reduced deal flow and increased caution among investors. However, demand for rural land and flex industrial investments is growing. This shift reflects a broader trend of investors seeking diversification and stability in uncertain markets.
Heath shared that investor inquiries are focused on the timing of the next deal, highlighting the high demand but limited supply in the retail sector.
Leveraging Technology for Operational Efficiency
The incorporation of vertically integrated investment management software was praised for improving operational efficiency. Lauren credited AppFolio for its scalability:
“AppFolio Investment Manager allows us to manage over 500 investors pretty seamlessly.”
This sentiment was supported by the other panelists, who acknowledged the platform’s role in enhancing investor relations and streamlining management processes. Panelists emphasized the critical role of technology in enhancing efficiency and transparency in real estate operations. They discussed the advantages of using comprehensive platforms to streamline processes, enhance investor communication, and manage financial transactions effectively. The ability to consolidate various operational aspects into a single platform is seen as a game-changer for real estate professionals.
The Role of AI in Real Estate Investment Management
The discussion on technology trends, particularly AI, revealed its growing importance in real estate. Devin expressed curiosity about AI in underwriting, noting the tediousness of the process. He also explained how he leverages AI for content creation:
“We just launched a funnel for our debt fund. So, we’ve always raised capital organically. Now we’re saying, ‘Hey, we’re going to go out and actually market and have content that people go through.’ So, I created a bunch of video content here in the studio and then scraped the transcript, threw it into ChatGPT, and had it clean it up for me. I could have had somebody on the team spend a couple of days doing that, and this is something that got done in seconds. We’re on the hunt for more ideas like that, where AI can take something that would take somebody a couple of days and do it in a fraction of the time.”
AI and the Future of Real Estate Professions
A thought-provoking question from the audience about the threat AI could pose to real estate brokers and agents sparked diverse opinions. While Heath suggested that AI could be a threat to less-differentiated agents, Lauren argued that “people like doing business with people,” indicating that AI could be more of an enhancement tool than a replacement.
Perspectives on Real Estate Asset Classes
The panelists also shared their cautious stance on certain real estate asset classes, with a common sentiment around the unpredictability of the office space market post-pandemic. Devin Elder succinctly put it: “I don’t know what to make of office.” The conversation highlighted the need for real estate professionals to remain adaptable and informed about market trends to navigate the evolving landscape successfully.
The roundtable discussion encapsulated the dynamic nature of the real estate market, emphasizing the need for continuous learning, adaptability, and technological integration to stay ahead. As the industry navigates through economic fluctuations and evolving market demands, the insights shared by the experts during the AppFolio roundtable serve as a valuable guide for real estate professionals looking to refine their strategies and operations.
For a deeper understanding of these insights and to gain firsthand knowledge from industry leaders, watch the discussion on demand and stay informed about the latest trends and strategies in real estate investment.
