The Rent Roll with Jay Parsons EP#38 James Ray | Cap Rates Are B.S., and Other Hot Takes
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Jun 12, 2025 James Ray, co-founder of CRE Analyst and managing director at MetLife, shares his insights on misconceptions surrounding cap rates and the complexities of the buy versus build debate. He draws from his personal journey from trailer parks to Wall Street, emphasizing the need for mentorship in the real estate industry. Ray discusses the latest trends in multifamily investments, renter demographics, and the gap in affordable housing construction costs. Meanwhile, Jay Parsons provides data on recent rent growth trends, making for a rich conversation full of valuable takeaways.
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James Ray's Inspiring Early Journey
- James Ray grew up in very challenging circumstances, frequently moving between homes and experiencing family struggles.
- Despite this, he motivated himself early on to succeed and eventually built a career managing large real estate portfolios on Wall Street.
Cap Rates Often Mislead
- Cap rates alone don't represent the true value or risk of real estate deals.
- Understanding growth assumptions and cost of capital is essential to properly assess deals.
Multifamily Capital Buckets Differ
- Income-oriented capital deeply supports multifamily housing due to predictable growth and long-term horizons.
- Higher risk, lower income deals have more uncertain values and require timing and bet.