Darren Fisk, CEO of Forum Investment Group, discusses multifamily real estate, lending, insurance, and development. He emphasizes cash flow over cash, a unique LLC investment structure, and the importance of aligning interests in real estate investments. The conversation covers market opportunities, successful refinancing strategies, and navigating challenges post the global financial crisis.
Forum Investment Group focuses on multifamily real estate and offers a unique integrated approach encompassing credit, equity, and development.
Transitioning from real estate financing to development during the GFC enabled Forum Investment Group to diversify, adapt, and expand their investment strategies.
Forum emphasizes patience, strategic decision-making, and cash flow stability to weather market fluctuations successfully in the real estate industry.
Deep dives
Unique Strategies in Multifamily Real Estate
Forum Investment Group stands out by offering a range of real estate services encompassing credit, equity, and ground-up development, a distinctive approach that sets them apart in the multifamily sector. By emphasizing direct lending and developing their own assets, they provide a unique investment perspective in the real estate market. This integrated strategy has allowed them to navigate various market conditions efficiently and strategically over their 23-year journey.
Lessons from the Global Financial Crisis (GFC) and Adaptation
Darren Fisk reflects on his transition from real estate financing to development during the Global Financial Crisis (GFC) in 2008, marking a pivotal shift in his career. By capitalizing on the GFC's opportunities, they ventured into developing and acquiring multifamily properties, eventually expanding their portfolio to include various strategies. Their experience during the GFC emphasized the importance of diversification and adaptability in real estate investments to weather market fluctuations successfully.
Navigating Current Challenges and Opportunities in Real Estate
Amidst shifting market dynamics, including changes in cap rates and interest rates, Forum Investment Group underscores the significance of patience and strategic decision-making. Leveraging insights into demographic shifts and market trends, they strategically manage their portfolio by balancing development and acquisitions. Focusing on cash flow stability, they highlight the critical role of cash flow in real estate investments to ensure long-term sustainability through changing market conditions.
Preventing Overbudget Projects
Ensuring projects stay within budget is crucial for success. By buying out 75-80% of subcontractors before breaking ground and having multiple layers of contingencies, risks of cost overruns are minimized. This approach focuses on managing potential issues to maintain financial stability and avoid unexpected expenses. Keeping a firm grip on costs and cash flow helps in safeguarding against budgetary challenges and ensures smooth project execution.
Need for Construction to Permanent Financing
Advocating for construction to permanent financing programs can revolutionize the real estate industry. Such programs could streamline housing development by providing stability in costs and financing options. The call for agencies like Fannie Mae and Freddie Mac to offer extended construction to permanent loans aims to enhance financial predictability and lower financing costs. This proposed solution could empower developers to plan effectively, eliminating uncertainties and fostering growth in the multifamily housing sector.
Darren Fisk, Founder and CEO of Forum Investment Group, LLC, stops by The Business Brew to discuss his real estate investment firm, strategy, and thoughts. Darren focuses on multifamily real estate. His background is in lending and he added an equity focus during the GFC. This conversation covers lending, insurance, how to think about development, and more.
Darren's father in law taught him that "Cash may be king, but cash flow is queen." Thus, in the beginning of Forum they were focused on cash flow. Today they are willing to develop real estate as well.
Forum's investment structures are through LLCs as opposed to an LP/GP structure, which is interesting. We hope you find this conversation enjoyable.
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