Trion's Founders' Year End Reflection and Future Outlook: Max Sharkansky & Mitch Paskover - Trion Properties
Jan 3, 2025
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Max Sharkansky and Mitch Paskover, managing partners at Trion Properties, delve into their entrepreneurial journeys in multifamily real estate. They share insights on the shift to Miami and its lifestyle implications while reflecting on market surprises from 2023. The duo discusses interest rate predictions, the impact of tariffs on inflation, and the promising outlook for Atlanta and West Coast markets. They also explore investment strategies amid economic shifts, emphasizing suburban opportunities and cautious optimism for the future.
The podcast highlights optimism about multifamily real estate investments due to their cash flow potential and tax advantages compared to other assets.
Max and Mitch discuss their strategic shift towards stabilized, quality assets amidst rising operational costs and increasing market volatility.
Deep dives
Market Observations and Predictions for 2025
There is an expectation for surprises to the upside as 2025 approaches, particularly regarding interest rates and transaction volumes. Despite high cap rates, many investors remain cautious and are not risking significant capital, leading to an overall muted transaction volume. The economic landscape suggests a potential stabilization of interest rates, with the possibility of cuts earlier than anticipated, driven by decisions from the new government and decreasing inflation. Moreover, the podcast highlights that historical volatility in the bond market could also affect borrowing costs, impacting investment strategies across various asset classes.
The Appeal of Multifamily Investments
Multifamily real estate is being juxtaposed with other investment avenues like CDs and Bitcoin, emphasizing its tax advantages and higher cash flow potential. Unlike fully taxable CDs, multifamily investments can yield nearly 5-6% straight out of the gate, offering a protective layer against inflation due to their appreciation potential. The market is considered close to its low point with expectations for rising rents and values over time. Given these dynamics, investing in multifamily is portrayed as a stable and lucrative choice, especially in comparison to speculative assets like Bitcoin.
Regional Market Insights
There is optimism regarding several regional markets heading into 2025, particularly in Atlanta and the West Coast. Despite concerns about delinquency rates and market instability, it is believed that strong management and quality assets can mitigate these issues in Atlanta. In California, political certainty returned following recent elections, suggesting improved prospects for real estate as vacancy control adjustments were rejected. The integration of suburban strategies alongside urban opportunities is seen as a balanced approach to capitalize on demographic changes and potential rent growth.
Shifts in Investment Strategies Amidst Uncertainty
The discussion centers on the evolving strategies within real estate investment, particularly a cautious approach towards floating-rate debt due to rising costs and market volatility. Investors are currently prioritizing stabilized assets with strong cash flow rather than older, riskier vintage deals, responding to market pressures and operational challenges. The focus is shifting towards acquiring quality, newer assets that can yield solid returns, as older properties face declining demand amid increased operational costs. This shift represents a broader trend in the market where underwriting practices are becoming more conservative as firms adapt to ongoing economic uncertainties.
In this episode, we’re joined by Max Sharkansky and Mitch Paskover, the managing partners of Trion Properties. Founded in 2005, Trion Properties is a private equity investment firm specializing in multifamily real estate with a proven track record of transforming undervalued properties into high-performing assets. With over $1 billion in assets under management and a focus on the West Coast and Southeast markets, Trion has built its reputation on delivering superior returns through strategic value-add initiatives. Max and Mitch share their extensive expertise, entrepreneurial journeys, and insights into the real estate industry, providing a behind-the-scenes look at how Trion has become a leader in the multifamily investment space.
Chapters
00:00 Intro 00:17 Episode Teaser 00:55 2024 Reflection and Community Connections 02:27 The Move to Miami 04:14 2024 Biggest Surprises 09:48 The Future of Interest Rates and Economic Predictions 13:20 Tariff Policy vs Inflation and Impact on Borrowing Costs 15:24 Trion's Bullish Markets Heading into 2025 19:08 Insurance Challenges and Opportunities 21:43 Shifts in Trion's Investment Strategy over The Years 25:19 Urban vs. Suburban Dynamics 29:36 Distress in the Market: Future Outlook 32:09 Comparing Current Market to the Great Recession 35:06 IRR, Cash on Cash, Return on Cost, and Target Returns in 2025 37:29 Why Invest in Multifamily Real Estate? 41:12 Looking Ahead to 2025
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