Max Sharkansky | From Broker To $1.5 Billion Multifamily Portfolio
Aug 29, 2024
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Max Sharkansky, co-founder and managing partner of Trion Properties, shares his journey from broker to multifamily mogul with a $1.5 billion portfolio. He dives into strategies for scaling a real estate fund and his insights on underwriting in today’s market. Max discusses the significance of his first property purchase via Twitter, managing properties in-house, and the growing opportunities in Florida's real estate landscape. He also reflects on market trends and lessons learned navigating economic challenges.
Max Sharkansky transitioned from a commercial broker to multifamily property ownership, showcasing the potential for brokers to create wealth through direct investments.
During the Great Financial Crisis, he adapted his investment strategy to focus on distressed assets, highlighting the importance of seizing opportunities during market downturns.
Sharkansky emphasizes the significance of bringing property management in-house for operational efficiency, tenant satisfaction, and maximizing investment returns.
Deep dives
Transitioning from Brokerage to Investment Ownership
Max Sharkanski transitioned from being a commercial real estate broker to investing in multifamily properties. Initially inspired by the tangible nature of real estate during the dot-com bubble, he recognized that while brokers earned substantial commissions, property owners enjoyed significantly higher profits. Starting with a modest 12-unit investment, he and his partner demonstrated their ambition by rapidly expanding their portfolio to approximately 6,500 units valued at around $1.5 billion. This strategic shift highlights the potential for brokers to leverage their expertise and relationships to move into ownership and create wealth through direct property investment.
Navigating Economic Challenges and Opportunity Buying
During the Great Financial Crisis (GFC), Sharkanski and his partner adapted their investment strategy to focus on distressed assets by purchasing non-performing notes and properties. They capitalized on lower-priced opportunities due to increasing loan defaults, transforming run-down properties into profitable assets by improving occupancy and management. Their approach exemplified how understanding market cycles and seizing opportunities in downturns can be critical for growth. This strategy not only solidified their position but also emphasized the significance of operational efficiency and effective property management in enhancing returns.
Adopting In-House Property Management
A key lesson Sharkanski emphasizes is the importance of bringing property management in-house as businesses grow. Early in their journey, they recognized the inefficiencies of third-party management and decided to internalize operations to have better control over costs and processes. By managing properties themselves, they could ensure quality control, improve tenant satisfaction, and ultimately increase the value of their investments. This strategic decision allowed them to operate more efficiently and maximize returns for their investors.
Future Outlook on the Real Estate Market
Sharkanski's perspective on the current real estate market reflects caution amid ongoing economic shifts. He notes that while interest rates have surged, many lenders prefer to work with borrowers to avoid widespread defaults, contrasting the current environment with the GFC. His insights suggest an expectation of continued market volatility, where vacancy rates and rent growth are areas of concern as unemployment rises. In this context, he underscores the importance of conservative underwriting, focusing on achievable rent increases and thorough market analysis to navigate through uncertainties.
The Evolution of Miami’s Real Estate Landscape
Sharkanski's move from Los Angeles to Miami represents a broader trend in the real estate market as investors seek growth and diversification in emerging markets. His observations of Miami highlight a significant growth trajectory, driven by increasing demand, talent influx, and favorable public policy that encourages development. However, he also acknowledges the challenges of escalating rents and housing affordability affecting long-term residents. This juxtaposition of rapid growth with the associated social implications underlines the need for balanced strategies in managing real estate investments while considering community impact.
Max Sharkansky is the co-founder and managing partner of Trion Properties, a multifamily investment shop. Max has a large west coast presence in California and sent Omar a DM through twitter, that him and his investors are dying to buy property in Florida. Six months later, he was buying a $108 million property from our team in Orlando. Max started as a broker, before starting to buy his own multifamily properties. What started as a 12 unit investment, is now a portfolio of about 6,500 units valued at roughly $1.5 billon.
In this conversation, we discuss how to transition from brokering to buying your own properties, scaling a real estate private equity fund, how Max is underwriting properties in today’s environment, where he thinks multifamily valuations are headed, and more.
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0:00 - Intro
1:42 - Max’s background
5:10 - Beginning career as a broker at Marcus & Millichap
8:50 - Buying his first deal and competition
11:47 - Beginning to raise capital and building Trion
14:22 - Navigating the 2008 market
17:27 - Growing portfolio of notes
21:42 - Decision to go in-house for property management & constriction
27:42 - First deal and connecting through twitter
31:16 - Transition from LA to Miami
34:54 - Trion Properties payroll
35:42 - Trion Properties portfolio
37:42 - Lessons learned from Trion Properties
41:25 - Current market conditions and interest rates
